Big deal: TCS strikes its largest acquisition ever, buys Coastal Cloud for $700 million

Tata Consultancy Services (TCS) on Wednesday made its biggest acquisition since going public in 2004, agreeing to acquire technology consultancy firm Coastal Cloud for $700 million in cash.

Significantly, the acquisition comes less than three months after India’s largest IT services firm said it would invest $6.5 billion over six years to build 1GW of data center capacity; This underlines the company’s new effort to explore new business segments. Last month, US private equity giant TPG agreed to invest $1 billion to buy a 49% stake in the data center business.

“This acquisition marks a significant milestone in enhancing our global Salesforce capabilities and accelerating our AI-led transformation agenda,” said COO Aarthi Subramanian. “This is another important step towards realizing TCS’ vision of becoming the world’s largest AI-led technology services company.”

Incidentally, there was no prepared statement from TCS Chief Executive Officer K. Krithivasan in the press release regarding the acquisition.

TCS expects to complete the acquisitions by January 31. The company has enough cash to finance this major acquisition: Last year, it generated over $5.1 billion in free cash flow from operations.

Coastal Cloud has $132 million in revenue in 2024, according to a press release. Founded in 2012, this company helps companies run their businesses better by providing Salesforce experts and solutions. The company had 400 employees as of the end of September 2025.

TCS has acquired less than half a dozen companies and has always prioritized construction technologies. It also rarely hires from outside, and many of its senior leaders have been with the firm for decades.

Its largest acquisition ever was when it bought Citigroup Global Services Ltd for $505 million in 2008. TCS’s latest acquisition is its second in less than two months, following its acquisition of ListEngage MidCo, a US-based digital marketing services company, for $73 million in October.

TCS, which had revenues of $30.2 billion, has struggled to grow under the management of K. Krithivasan, who took over as CEO on June 1, 2023, after his predecessor Rajesh Gopinathan resigned suddenly in March the same year. According to analysts at Motilal Oswal, the company risks reporting a full-year revenue decline, a first in its over two-decade journey since going public.

TCS achieved revenue growth of $143 million with 0.7% growth even in the pandemic year 2020-21.

TCS’s performance is crucial as it is the crown jewel of the Tata Group; It accounts for about 84% of parent company Tata Sons’ total revenue in 2024 and 41% of its total market capitalization of $365 billion as of March 31, 2025.