European IT Services See Wave of Consolidation

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French IT consultants Capgemini and Atos Origin are strengthening their position in the European market by acquiring German businesses CS Consulting and Siemens IT Solutions and Services, respectively.

Atos Origin is paying Siemens a total of €850 million (US$1.13 billion) for its IT services arm, in a mix of shares, bonds and cash. The deal will leave Siemens with a 15 percent stake in Atos Origin. Siemens also signed a seven-year outsourcing contract with Atos Origin worth around €5.5 billion. They expect to complete the deal in July 2011.

Engineering conglomerate Siemens has been trying to turn around the fortunes of Siemens IT Solutions and Services since March. It has eliminated about 4,200 jobs and, on Oct. 1, spun the activities off into a separate company. Plans to cut another 1,750 jobs, including 650 in Germany, were announced on Wednesday.

Atos Origin, after swallowing Siemens' IT activities, will focus on cloud computing services, system integration and electronic payments, the company said.

Capgemini did not announce financial details of its acquisition of CS Consulting, with which it hopes to strengthen its position in the German banking sector. CS Consulting's customers include state bank Landesbanken and saving banks Sparkassen. CS Consulting's team of about 400 consultants specializes in the migration of core banking systems and the roll out of business intelligence systems, it said

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