TCS MHP acquisition: India’s largest IT services provider, Tata Consultancy Services (TCS), signed a five-year deal with Porsche AG valued at €1.25 billion ($1.45 billion) and acquired the German automaker’s IT arm, MHP, for €320 million ($373.4 million) in an all-cash transaction. The two deals are independent of each other.
The scale of opportunity is the primary motivation, TCS chief executive K Krithivasan told ET.
“Currently, MHP operates only in Europe, and now we are able to operate at a global scale with this combined entity,” he said. “Porsche will be our customer zero, but our centre will bring solutions to all other automobile customers, expanding the scale and scope of what we can do together.”
Michael Leiters, chief executive officer of the Volkswagen Group-owned sports and luxury car manufacturer, said in the joint ET interview that although MHP is a key subsidiary and IT solutions are critical, Porsche wants to focus on its core business. “We think that MHP is in much better hands in TCS because they have the breadth to extend business opportunities for MHP,” Leiters said.
The software company brings scale to MHP’s capabilities in product engineering, manufacturing, operations and customer experience.
It also has expertise in the areas of digital consulting, digital transformation advisory, S/4HANA transformation, and software-defined vehicles, Krithivasan added. S/4HANA refers to the modernisation of enterprise resource planning systems.
Porsche is a net new client for TCS and the deal will be a fresh one for the company. The acquisition will anchor a long-term AI transformation partnership between TCS and Porsche, the company said. As part of the transaction, TCS will also set up a centre of excellence (CoE) for Porsche to help with its future growth.
This marks the IT company’s third significant acquisition within the year. Following the $72.8 million purchase of digital marketing services business ListEngage in October last year, the IT services giant paid $700 million for Florida-based Salesforce consulting and AI solutions company Coastal Cloud in December.
The acquisition is expected to be concluded in the next three-four months, subject to regulatory approvals from the European Commission and others.
Ludwigsburg, Germany-headquartered MHP specialises in automotive and industrial consulting, digital transformation, artificial intelligence, SAP transformation, manufacturing digitalisation, connected mobility and software-defined mobility. It employs around 4,500 people and reported turnover of €742 million in calendar 2025.
The five-year engagement is expected to be margin-dilutive to the tune of 50-60 basis points for TCS in the next four to six quarters, Krithivasan said.
“In the short term it will be dilutive, but then we have to exercise all the other levers that we have at our disposal to improve the margin,” he said. “Even in this particular deal, currently MHP does not have any offshore component, which we continue to introduce more of, so the margin of the entity will keep going up.”
The deal gives TCS a deeper position within Porsche’s technology landscape at a time when AI spending is beginning to scale, said Gaurav Parab, principal analyst at NelsonHall.
“Being embedded in Porsche’s applications, data and engineering environment should put TCS in a good position to pick up future AI, data and transformation work,” he said. “While the deal will dilute margins initially, TCS should have room to improve the economics over time through global delivery, automation and, importantly, by bringing more AI-led and higher-value services into these relationships.”
The Indian company’s largest-ever contract was with British insurance giant Aviva, a 15-year agreement valued at $2.5 billion, signed in 2024.
