Postbank Systems AG provides IT services to Deutsche Bank.
The technology unit has up to 1,400 employees, mainly in Germany, and a deal may allow Deutsche Bank chief executive Christian Sewing to meet his target to cut jobs.
Deutsche Bank unveiled a plan last year to cut 18,000 jobs as a part of a larger restructuring. The bank has set 2022 as the deadline for the technology migration of Postbank’s systems. Deutsche Bank is an existing customer of TCS and runs its Bancs software suite.
“It could be even bigger than a billion-dollar deal,” said a source familiar with the conversation, adding that the multi-year contract would help Deutsche Bank transform its technology. The deal is likely to be structured in such a way that TCS pays upfront for the acquisition with a long-term technology outsourcing contract.
Tech Mahindra was also in talks for the deal, another person said. TCS and Tech Mahindra did not respond to ET’s queries, while Deutsche Bank declined to comment.
Bloomberg first reported on Thursday talks of TCS acquiring the Deutsche Bank unit.
Analysts said maintaining captive technology units has proven difficult and many companies are looking for ways to shed them to cut costs, especially after the Covid-19 pandemic. “Deutsche Bank has been a long-time outsourcer for multiple IT services and would have considerable business size in its IT unit. It would be beneficial for TCS,” said Mrinal Rai, principal analyst at technology consulting firm ISG.
“It could not only benefit their (TCS’) BFSI practice but also bolster their application services practice as in-house IT units (like Postbank Systems AG) develop custom apps for the bank,” Rai said.
TCS, which clocked revenues of over $22 billion in fiscal year 2020, earns nearly $7 billion from the BFSI vertical, its largest contributor.
TCS last year acquired the captive centre of General Motors, with over 1,300 people in Bengaluru as part of a multi-year deal. In 2008, it acquired Citigroup Global Services for $505 million.