Key Points:
- TCS Coastal Cloud Acquisition marks TCS’s largest-ever $700M deal to expand AI-led and Salesforce services.
- This acquisition strengthens U.S. presence, Salesforce capabilities, and digital transformation offerings.
- Analysts say the TCS Coastal Cloud Acquisition signals a major strategic shift as TCS faces slowing revenue growth.
TCS Coastal Cloud Acquisition marks Tata Consultancy Services’ largest-ever deal as it buys U.S.-based Coastal Cloud for $700 million in cash, strengthening its AI-led and Salesforce-driven services.
Tata Consultancy Services, India’s largest IT services firm, said the deal is expected to close by Jan. 31. The move comes less than three months after the company announced a six-year, $6.5 billion investment to build one gigawatt of data center capacity, signaling a strategic expansion beyond its traditional outsourcing business.
“This acquisition marks a pivotal milestone in advancing our global Salesforce capabilities and accelerating our AI-led transformation agenda,” chief operating officer Aarthi Subramanian said in a statement. She said the deal aligns with TCS’s goal of becoming the world’s largest AI-led technology services company.
TCS did not include a comment from chief executive officer K. Krithivasan in its announcement. The company said it will fund the acquisition through existing cash reserves after generating more than $5.1 billion in free cash flow last year.
TCS Accelerates Shift Toward New Business Segments
TCS Coastal Cloud Acquisition underscores TCS’s recent push to diversify into high-growth technology segments as competition intensifies across the global IT services market. Last month, private equity firm TPG agreed to invest $1 billion for a 49 percent stake in TCS’s data center unit, highlighting investor confidence in the company’s infrastructure expansion.
Analysts say the Coastal Cloud deal reflects a shift in strategy for a company known for building capabilities in-house and avoiding frequent or large-scale acquisitions. “TCS has historically prioritized internal development and stability, so a $700 million purchase signals a meaningful change in its approach to growth,” said Anuj Kapoor, an IT sector analyst at Motilal Oswal. Kapoor said the move could help the company strengthen offerings in digital transformation and cloud consulting.
TCS Coastal Cloud Acquisition, is TCS’s second acquisition in less than two months. In October, it bought ListEngage MidCo, a U.S.-based digital marketing services firm, for $73 million.
Coastal Cloud Brings Salesforce Expertise And U.S. Talent
Founded in 2012, Florida-based Coastal Cloud provides Salesforce solutions and consulting services for enterprises seeking to modernize business operations. The company reported $132 million in revenue in 2024 and employed about 400 people as of September.
By TCS Coastal Cloud Acquisition, workforce will enhance its global Salesforce delivery capabilities and deepen its presence in the U.S. market, the company’s largest revenue generator. Industry experts say the acquisition may also help strengthen TCS’s AI-led offerings by pairing its platform development capabilities with Coastal Cloud’s domain expertise.
“Salesforce transformation remains one of the fastest-growing service categories worldwide, and this is a logical market for TCS to scale quickly,” said Boston-based technology consultant Lisa Thornton. She said the buyout could help TCS compete more aggressively with Accenture, Deloitte and Cognizant in customer relationship management services.
Analysts Link Deal To TCS’s Slowing Growth Under Current CEO
The acquisition comes as TCS faces pressure over slowing revenue growth. Krithivasan, who became CEO in June 2023 after the abrupt exit of Rajesh Gopinathan, has struggled to revive momentum. Analysts at Motilal Oswal said TCS could post a full-year revenue decline, which would be a first since the company went public more than two decades ago.
TCS posted $30.2 billion in revenue in the last fiscal year. Even during the pandemic year of 2020–21, the company reported slight growth, adding $143 million in incremental revenue. The latest deal signals a renewed attempt to reinvigorate growth and expand into segments that promise higher margins.
Before Wednesday’s announcement, TCS’s largest acquisition occurred in 2008, when it bought Citigroup Global Services Ltd for $505 million.
TCS Coastal Cloud Acquisition will begin immediately after regulatory approvals are completed.
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