Porsche has signed a five-year contract worth 1.25 billion euros ($1.46 billion) for artificial intelligence with India's largest IT services firm, Tata Consultancy Services.
As part of the deal, TCS will acquire Porsche's IT consulting business, MHP, for 320 million euros, the company said in a release.
This will combine Porsche's "automotive expertise with TCS's digital and AI capabilities," Michael Leiters, chairman of Porsche, said in the press release. The partnership will boost the European sports-car maker's innovation, efficiency and competitiveness "in an increasingly data- and software-driven world of mobility."
Since the start of the year, TCS has secured multiple AI-led business transformation deals and has said its annualized AI revenues were $2.6 billion in the June quarter, up 13.6% from a quarter earlier.
AI is widely expected to hurt the business prospects of Indian IT services companies. The Nifty IT index, a benchmark for stocks of IT service companies, is down nearly 20% from the beginning of the year, as compared to the Nifty 50, which has slipped just over 7%.
The deal with Porsche will be effective once the Indian software giant completes the acquisition of MHP, which employs around 4,500 people. With this acquisition, TCS aims to "industrialize AI at scale for Porsche," said K. Krithivasan, chief executive and managing director of TCS.
It will also enhance the presence of the Indian software service company in the German market and among European automotive and industrial customers.
The sale of MHP is part of Porsche's "Sportwagenschmiede 35" strategy, which aims to improve the profitability and cash flow of the automaker. "We are firmly aligning our company with our core business," Leiters said last month, adding that the key element of the strategy would be to streamline the operations at all levels
