KPIT Cummins buys out American IT firm Sparta

Information Technology firm KPIT Cummins Ltd said on Friday that has signed a deal to acquire US-based Sparta Consulting Inc for $38 million.

The money will be paid as milestones over three and a half years to Sparta, which provides high-end SAP solutions, KPIT said in a statement. The all-cash agreement includes a bonus of $4 million.

The merger with Sparta Consulting will further strengthen KPIT's business model - to focus on select industries and achieve market leadership by creating best-in-its-class practices and offerings. The acquisition is expected to result in greater efficiencies and increased market share, the statement said.

With over 1,000 consultants in the combined entity, the SAP-led consulting practice provides a scalable alternative to ter I companies which usually pursue larger ($25 million) multi- service opportunities.

With global demand for SAP based services growing at over 24 per cent, the consulting practice has the potential to grow into a $100 million business in the next three years, the company said.

Sparta's footprint in the energy and utilities sector would provide KPIT a head start into this adjacent space, the statement added.

Kishore Patil, managing director and chief executive of KPIT Cummins, told newspersons in Mumbai, ''Sparta Consulting is an excellent strategic fit and growth accelerator to our focussed business model. It has a very committed team with extensive experience in rapidly scaling up ERP consulting business, and we see a large market opportunity in this area.''

He further said, ''We are particularly impressed with the excellent track record of the Sparta team. The team has created a SAP services business which has grown nearly 300 per cent year-on-year under trying economic conditions. The same team has earlier successfully created and growth an enterprise consulting business to over $250 million. We look forward to jointly helping our customers achieve their post-downturn growth objectives.''