CSC acquires AppLabs for undisclosed sum

Computer Sciences Corporation (CSC), a US-based provider of technology-enabled business solutions and services, on Wednesday acquired independent software testing company AppLabs Technologies Pvt Ltd for an undisclosed sum.

Though both companies did not disclose financials involved in the acquisition, the first for CSC in the software testing space, sources close to the development said AppLabs was valued between Rs 1,200 crore and Rs 1,500 crore. UBS Investment Bank was the exclusive adviser to AppLabs.

“AppLabs now becomes CSC. It is a 100 per cent acquisition and the intellectual property of AppLabs will be transferred to CSC. Also, we have a non-compete agreement with AppLabs’ founder and chief executive, Sashi Reddi,” Brian J Manning, president and managing director of CSC India, told mediapersons.

AppLabs, based out of Philadelphia with its global delivery centre in Hyderabad, was named the largest software testing pureplay globally by analyst group Nelson Hall last year. It services 150 customers worldwide, including American Airlines, Experian, JP Morgan, VocaLink and National Australia Bank. There are eight customers that are common to both companies.

While Reddi holds a 40 per cent stake in AppLabs, private equity company Westbridge (which split from Sequoia Capital in February) holds 50 per cent. The remaining is with employees.

“Westbridge, which had invested close to $20 million across three rounds in the company, was looking for an exit option. That led us to sell our stake also,” Reddi said.

“According to the terms of the agreement, I will be involved with CSC at least for a year, playing a broader role in ensuring a very successful integration,” he said.

CSC, with revenues of over $16 billion, employs 92,000 people across the globe, including 6,000 testing professionals. Of these, 2,500 work out of its seven locations in India. The acquisition will take CSC's total testing headcount in the country to 5,000.

“The global testing services market is pegged at $13 billion and is poised to grow 20 per cent by 2013. Those companies that have outsourced testing are seeing significant results,” Manning said, adding the integration was expected to be completed by April 2012.