Cognizant to acquire German consulting firms with 500 employees

Cognizant said it is buying six companies of C1 Group, an independent consulting and IT services firm based in Hamburg, Germany. The terms, including the value and nature of payment, of the transaction were not disclosed.

“The companies focus on three industry segments: manufacturing and logistics, energy and utilities, and financial services. Known for their client-centric and innovative business culture, these companies bring deep expertise in enterprise application services (specifically SAP), and high-end testing services that range from test consulting, strategy and design, to implementation,” Cognizant said.

Under the terms of the agreement, about 500 professionals across multiple locations in Germany and Switzerland will join Cognizant. “The combination of C1’s proven client-facing expertise deeply rooted in the local business environment, and Cognizant’s global delivery capabilities will help clients in Europe to address their dual mandate of driving cost efficiencies and operational effectiveness, as well as innovation and business transformation,” the U.S.-Indian company said.

“With the acquisition, Cognizant is even better positioned to help European clients achieve agility and competitive advantage by embracing a broad range of services. The client-first culture of the C1 team, driven by extensive local business insights, strong relationships and entrepreneurial passion, makes it an excellent strategic fit for Cognizant,” Francisco D’Souza, Chief Executive Officer of Cognizant, said in a statement.

Cognizant is listed on the Nasdaq and has most of its operations in India, particularly Chennai. It is ranked third in size among IT and outsourcing companies in India. The acquisition represents an attempt by the company, which has typically charged lower prices compared to other Indian vendors, to move up in the value chain.

Most of the India-based outsourcing companies specialize in IT application development, maintenance etc.. Most of their consulting divisions have been unable to live up to growth expectations, or compete with the likes of Accenture Plc or IBM Corp. The acquisition of the German group is likely to give Cognizant a leg up in its quest to strengthen its reputation as a consulting firm.

Cognizant often holds up the fact that it started as a division of Dun & Bradstreet that focused on full lifecycle software projects, unlike most of its competitors that began life as providers of staff supplementation services. This, it claims, gives it an edge in taking on turnkey projects.

“The agreement announced today is a major step forward for us,” said Wilfried Förster, Founder of the C1 Group, on behalf of the companies acquired by Cognizant. “The outstanding growth and success of the C1 Group within the last ten years have been built on the foundation of customer satisfaction, expert teams with deep industry knowledge, and best-of-breed solutions. International expansion is critical for parts of the group to continue our strong growth, develop better solutions for our current and future customers, and provide greater opportunities for our employees.
“Cognizant is a company with a similar entrepreneurial culture, widely recognized for customer satisfaction and innovation, and for being a premier employer. The merger of the C1 companies with Cognizant would support Cognizant’s growth strategy for Europe and create a bond with C1’s remaining companies. This move will enable the two companies to drive future diversification, and realize the strong growth potential of our combined strengths,” added Wilfried Förster.

The deal is expected to close in the first quarter of 2013.

The C1 Group is a consulting and IT services group, formed of independent, individual companies into a flexible organizational structure offering a full spectrum of specialized services. The steadily-growing C1 Group has more than 1,200 consultants and IT specialists across a wide and diverse range of industries and lines of service, from strategic consulting, process and systems integration and application development to 24×7 support. The analysis and optimization of business processes, supported by customized IT solutions, are C1 Group’s core competencies, with a specific focus on the areas of supply chain management and ERP.

The details of the acquired companies are as follows –

1. btconsult GmbH [process and technology consulting, SAP]
2. C:1 Solutions GmbH [consulting and enterprise solutions: SAP, BPM, ECM, ERM]
3. psc Management Consulting GmbH [process and technology consulting]
4. C:1 SetCon GmbH [software engineering and testing]
5. Enterprise Services AG [a Swiss company focused on process and IT consulting]
6. C:1 Holding GmbH