Tata Consultancy Services (TCS) will expand into artificial intelligence and automotive technology with Porsche AG the German luxury carmaker in a five-year agreement valued at €1.25 billion, or roughly US$1.46 billion and will be involved in bringing AI to many areas of Porsche’s business.
To this end TCS will establish a dedicated AI Mobility Centre of Excellence for Porsche as part of the agreement. TCS will be responsible for developing and scaling AI applications in engineering, manufacturing, operations and customer experience.
The partnership is to enable Porsche to pursue digital transformation faster that it needs to as software, data and artificial intelligence become increasingly important to the automotive industry.
The deal also includes TCS purchasing 100% of MHP Management- und IT-Beratung GmbH, Porsche’s Germany-based management and IT consulting arm. The transaction has an enterprise value of €320 million or approximately $373 million and is subject to regulatory and competition approval. It is expected to be completed in the next months.
MHP is an international consulting and technology company with over 4,500 employees worldwide.
It provides automotive and industrial consulting, artificial intelligence, SAP, digital manufacturing, supply chains, cybersecurity, and software-defined mobility. TCS said that the acquisition will enhance the firm’s presence in Germany and the broader European automotive and industrial technology market.
Moreover, MHP will retain the existing brand and continue being an independent consulting firm in TCS. Porsche and MHP will also continue their long-standing business relationship after the ownership transition.
Porsche’s partnership is coming at the moment when the automaker is looking to improve its focus on the core business and accelerate digital technology use.
TCS’s AI and technology expertise combined with its automotive expertise and the automation technologies of TCS will enhance efficiency and competitive advantage in a world of software-driven mobility solutions which will come into play for the car sector.
With TCS, it is a great opportunity to expand its automotive technology business across Europe.
The MHP acquisition gives the company the expertise, talent and broad customer base for specialized automotive consulting from a highly specialized company and it also gives TCS the opportunity to scale AI at an industrial level.
The announcement also showcases how AI is changing the relationship between technology companies and traditional manufacturers.
Rather than just making AI a tool for product engineering, factory operations, supply chain and customer service, companies are marrying AI to product engineering and factory operations and product development.
TCS has been building its AI strategy through partnerships and acquisitions and investment, aiming to play a larger role for enterprise AI services.
Porsche strengthens that strategy and gives the Indian IT major a stronger foothold in Europe’s automotive technology ecosystem.
Overall the TCS-Porsche agreement represents a major technology partnership between India and Germany.
TCS is positioning itself well to play a bigger role in the next phase of AI-driven automotive transformation with a multi-billion-dollar service commitment and the acquisition of MHP.
