TCS bags $1.45 billion Porsche deal, acquires carmaker’s IT arm for $373 million

Tata Consultancy Services Ltd (TCS) is acquiring Porsche AG's Germany-based management and IT consulting subsidiary, MHP, for $373 million. In exchange, the Stuttgart-based sports car maker has awarded India’s largest tech services firm a five-year IT modernization deal valued at $1.45 billion—marking TCS's second mega-deal in less than eight months.

As part of the IT deal, Mumbai-based TCS will implement an AI layer across Porsche’s engineering, manufacturing, operations, and customer experience units, while also delivering automotive technology services and software development.

On average, the contract translates about $290 million in annual revenue for TCS. The major win comes as the company seeks to reignite growth following its first full-year revenue decline since listing on stock exchanges in 2004, having ended last year at $30.02 billion, down 0.5% year-on-year.

European momentum

This marks the Mumbai-based IT services firm’s second mega-deal in less than a year, following a 10-year, billion-dollar contract with Telefónica SA to modernize the telecom company's back-end IT, as Mint reported first on 17 December 2025.

The MHP purchase also marks TCS’s second major acquisition in recent months, following its $700-million buyout of Florida-based Salesforce consultancy Coastal Cloud. This brings TCS’s 10-month acquisition spend to $1.15 billion—a sharp shift for a company that historically avoids big acquisitions.

The company’s revenue from Europe—which accounts for a third of its total top line—is expected to get a boost, as four of its recent big-ticket contracts originated in the region. Beyond the Telefónica and Porsche deals, TCS secured two other major European contracts: an $800 million IT modernization deal last month from Swedish bearings manufacturer SKF, and a $644 million application development and maintenance contract in September 2025 from Denmark-based insurer Tryg.

The Porsche deal remains conditional for now, taking effect only after TCS acquires the carmaker's IT and consulting wing, MHP Management- und IT-Beratung GmbH.

The acquisition is also subject to TCS clearing several regulatory hurdles. It requires merger control approval from the European Commission, clearance under the EU Foreign Subsidies Regulation, and a nod from Romania's foreign direct investment screening commission. Additionally, TCS will apply separately for a certificate of non-objection from Germany's Federal Ministry of Economy and Energy.

Strategic shift?

This acquisition also deviates from TCS’s stated strategy. During its first analyst day in over a decade in late December, TCS signaled that it "will be more acquisitive, mainly for capabilities”, according to Kotak Securities analysts.

But instead of acquiring capability-rich targets, TCS purchased a struggling IT unit. MHP’s revenue dropped 10.6% year-on-year to €742 million ($855 million) last year. At a price tag of $373 million, TCS is acquiring the company for less than half its annual revenue.

"TCS is effectively buying growth at reasonable valuations," said Sushovon Nayak, lead IT analyst at Anand Rathi Institutional Equities.

"Everyone wants to get a piece of Europe as companies want to diversify to Europe to hedge against uncertainties in the USA," added Nayak.

MHP, based in Ludwigsburg, Germany, was founded in 1996 and employs about 4,500 people. It has subsidiaries in Romania, the UK, the US, India and Mexico. It specialises in business consulting, SAP transformation, manufacturing digitalization, cybersecurity, and connected and software-defined mobility.

Market anxiety

This string of deal wins and acquisition spending comes as fears over automation tools replacing traditional tech outsourcing work have prompted investors to dump IT services shares. TCS’s stock has fallen 29% since the start of the year, driven by concerns that automation and a scarcity of large deals would squeeze growth.

Market anxiety was further stoked last month by management's somber commentary during its post-earnings analyst call, where it highlighted an uncertain demand environment and clients seeking to defer existing contracts. The recent spate of deal announcements may help quell those uncertainties.

For now, management remains upbeat. “As AI, software, and data redefine the automotive industry, this partnership brings together TCS’s capabilities in AI, engineering, technology and business transformation with MHP’s strong automotive consulting expertise,” K Krithivasan, chief executive of TCS, wrote in the stock exchange filing.

Dr. Michael Leiters, CEO of Porsche AG, wrote in the filing that selling MHP to Tata Consultancy Services allows the automaker to focus strictly on its core operations. “At the same time, we are gaining a strategic partner in TCS. By combining Porsche’s automotive expertise with TCS’s digital technology and AI capabilities, we will further strengthen our innovative power, increase efficiency, and boost our competitiveness in an increasingly data and software-driven world of mobility,” he added.