Capgemini on November 24, 2010 announced it had acquired Thesys Technologies, a small, India-based IT services company. While little known, Thesys is a Temonos Certified Services Partner that provides banking implementation solutions to the global financial services industry. Temonos is a leading provider of banking software, serving over 1,000 financial institutions in more than 125 countries around the world. In May 2010, Capgemini and Temenos formed a strategic relationship to expand global delivery and sales capabilities.
With that background . . . why should the outsourcing industry care about Capgemini’s acquisition of Thesys? Actually, there’s ample reason for providers, buyers, analysts and market watchers alike to take note of this acquisition.
Capgemini didn’t buy Thesys to build its revenue base but rather to gain access to Thesys’ market base and its delivery of the Temenos banking solution, which is primarily in the relatively untapped IT markets of West Asia, Asia Pacific and Latin America. Further, in Capgemini’s and Temenos’ strategic alliance announcement mid 2010, they stated they were aiming to have more than 300 Temenos subject matter experts. Tidily, Thesys employs more than 300 people, so that component of the partnership goal has already been achieved. All this, coupled with Capgemini’s acquisition of Kanbay in early 2007 makes Capgemini a highly formidable competitor in the financial services outsourcing space.
Buyers stand to gain from this acquisition as it couples Thesys’ Temenos service delivery expertise and its specialized service delivery infrastructure for Temenos’ T24 system with Capgemini’s capabilities as a leading core banking and wealth management service provider.,This should accelerate clients’ speed to market, assisting in risk mitigation, and enhancing operational efficiency.
However, the most interesting aspect of this acquisition is the willingness of a major MNC with ~25,000 employee base in India to buy out a company operating in a smaller niche segment, especially given that Thesys is a service focused firm rather than a software developer. This deal helps Capgemini to be perceived as a leader in banking solutions, filling in service and footprint gaps. But even more so, it could signal a trend wherein more MNCs end up adopting similar strategies to expand their businesses in less penetrated regions and fill the competence gap in their service portfolio. Should this ring some warning bells for Indian service providers, who normally have championed the cause of small acquisitions? I think it should !