Big deal: TCS strikes its largest acquisition ever, buys Coastal Cloud for $700 million

Tata Consultancy Services (TCS) on Wednesday made its largest buyout since going public in 2004, agreeing to acquire technology consulting firm Coastal Cloud for $700 million in cash.

Significantly, the buyout comes less than three months after India’s largest IT services firm stated it would invest $6.5 billion over six years to build 1GW of data centre capacity, underscoring a new effort by the firm to explore new business segments. Last month, US private equity giant TPG agreed to invest $1 billion to acquire a 49% stake in the data centre business.

“This acquisition marks a pivotal milestone in advancing our global Salesforce capabilities and accelerating our AI-led transformation agenda,” said chief operating officer Aarthi Subramanian. “It is another significant step towards realising TCS’s vision of becoming the world’s largest AI-led technology services company.”

Incidentally, there was no prepared statement from TCS chief executive officer K. Krithivasan in the press release about the acquisition.

TCS expects to close the acquisitions by 31 January. The company has enough cash to fund this large acquisition: Last year, it generated over $5.1 billion in free cash flow fromoperations.

Coastal Cloud ended with $132 million in revenue in 2024, according to a press release. Founded in 2012, it helps firms run their business better by offering solutions and people proficient in Salesforce. The company had 400 employees at the end ofSeptember2025.

TCS has bought fewer than half a dozen firms and has always prioritized building technologies. It also rarely hires from outside, and most of its senior leadership have been with the firm for decades.

Until now, its largest acquisition was in 2008 when it bought Citigroup Global Services Ltd for $505 million. TCS’s latest buyout is its second in less than two months, following its October purchase of ListEngage MidCo for $73 million, a US-based digital marketing services firm.

TCS, which ended with $30.2 billion in revenue, has struggled to grow under K. Krithivasan, who took over as CEO on 1 June 2023 after his predecessor Rajesh Gopinathan, abruptly resigned in March that year. According to analysts at Motilal Oswal, it runs the risk of reporting a full-year revenue decline, a first in its over two-decade journey since it went public.

Even during the pandemic year of 2020-21, TCS added $143 million in incremental revenue, a 0.7% growth.

TCS’s performance is essential as it is the crown jewel of the Tata Group, accounting for about 84% of parent Tata Sons’ total income in 2024 and 41% of the combined market capitalization of $365 billion, as on 31 March 2025.