TCS acquires Sydney firm

Tata Consultancy Services, India's largest software services company with a 2004-05 consolidated topline of $2.2 billion, has acquired Sydney-based Financial Network Services (FNS), a core banking solutions vendor, for $26 million (about Rs 117 crore) in an all-cash deal.

TCS' first major international acquisition comes at a time when Indian software firms have begun taking on their global peers in bagging big-ticket deals.

All the 190 employees of FNS will be absorbed into TCS and this acquisition will strengthen the company's portfolio of banking and financial services. Revenue from the acquisition will start to come in with immediate effect.

FNS has a topline of $25 million and its products are used by 115 banks in Asia, Latin America, Africa and West Asia.

TCS, which has had a long standing relationship with FNS, is also the implementation partner for the FNS product in State Bank of India's core-banking solutions across its 10,000 branches. TCS has implemented this product at Central Bank of India and Indian Bank.

With this acquisition, TCS adds a core-banking product to its financial services solutions portfolio of Quartz (private investment banking product) and NCS ( custody product). Product revenue currently accounts for 10-11 per cent of the $750-million revenue TCS earns from the BFSI sector.

Said S Mahalingam, CFO, TCS, "From a strategic perspective, the FNS acquisition will help us in being a complete solutions provider for the global banking industry. We have gained a deep insight into the FNS product through our implementations and this will form the nucleus of our core banking strategy for the global market."

He added that FNS had good deals in the pipeline and that TCS hoped to benefit from this in the near future. "This acquisition will add great value to us as it enhances the range of our asset-based solutions for the banking industry, besides giving us a number of new global banking customers in Asia, Europe and South Africa," Mahalingam said.

FNS has a development centre in Australia, besides a product support centre in Manila. These two centres will team up with TCS' banking product centres in India and Switzerland.

NG Subramaniam, head of TCS' global banking practice, said, "FNS' product is a robust, well-established solution and we are confident of being able to implement this in any bank in any part of the world."

We will compete aggressively in the core banking enhancement and replacement market by leveraging its capabilities developed on complex banking projects." The TCS stock gained marginally to close at Rs 1415.95 on the Bombay Stock Exchange today, up from Rs 1402.30 posted yesterday.