TCS Acquires Coastal Cloud for $700 Million in its Largest Deal to Date

On December 10, Tata Consultancy Services (TCS) agreed to pay $700 million in cash to purchase IT consultancy business Coastal Cloud, marking its biggest buyout since going public in 2004. The transaction is noteworthy since it occurs less than three months after the largest IT services company in India announced that it would invest $6.5 billion over six years to develop 1 GW of data centre capacity, highlighting the company's recent efforts to investigate new market categories.

The US private equity firm TPG committed to investing $1 billion to purchase a 49% share in the data centre company last month. As per the CEO, Aarthi Subramanian, this purchase represents a significant turning point in expanding our worldwide Salesforce capabilities and quickening our drive for AI-led transformation. It is an important step towards TCS's goal of being the biggest AI-led technology services provider in the world.

TCS to Close Acquisition Deal by 31 Jan

TCS anticipates completing the acquisitions by January 31. With over $5.1 billion in free cash flow from operations last year, the corporation has the funds to finance this significant acquisition. According to a press release, Coastal Cloud made $132 million in revenue in 2024.

Founded in 2012, it provides solutions and Salesforce experts to assist businesses in managing their operations more effectively. As of the end of September 2025, the company employed 400 people. TCS has always placed a high priority on building technologies and has acquired fewer than six companies. Additionally, the majority of its senior leadership has been with the company for decades, and it seldom ever hires outsiders.

Recent Developments at TCS

Its greatest acquisition to date was the $505 million purchase of Citigroup Global Services Ltd. in 2008. After purchasing the US-based digital marketing services company ListEngage MidCo for $73 million in October, TCS has now acquired two companies in less than two months.

TCS, which concluded the year with $30.2 billion in revenue, has had trouble expanding under K. Krithivasan, who became CEO on June 1, 2023, following the sudden resignation of his predecessor, Rajesh Gopinathan, in March of the same year.

It could announce a full-year revenue decline, which would be the first in its more than two decades since becoming public, according to analysts at Motilal Oswal. Even in the 2020–21 pandemic year, TCS increased its sales by $143 million, or 0.7%. Since TCS is the jewel in the crown of the Tata Group, its success is crucial. As of March 31, 2025, it accounted for 41% of the $365 billion combined market capitalisation and around 84% of parent Tata Sons' total income in 2024.