DBT Bureau
Bengaluru, 7 May
French IT major is at a critical juncture as its existence has come under threat. The heavily-indebted company is currently seeking bailout from outside investors for running its day to day operations.
The company on Monday said David Layani’s OnePoint, a group of Atos creditors, private equity firm Bain Capital and billionaire Daniel Kretinsky alongside credit fund Attestor Ltd. submitted offers last week.
The French firm had earlier sought the French government’s intervention for taking over its strategic businesses. The company has reached a 100 million euros ($108 million) interim financing agreement with bondholders and is currently in discussions with banks and the French State on the remaining 350 million euros, Atos has said.
How Atos turned into an IT major?
Atos, which was founded in 1997, had made series of acquisitions in different domains over the years to emerge as a leading IT services provider.
- Atos bought Siemens IT solution & Services in 2011.
- It acquired French supercomputing leader, Bull in 2014.
- It also bought Xerox ITO for $1 billion in 2014.
- Atos acquired American IT services company, Syntel for $3.4 billion to improve its geographical footprint in the US.
What brought down Atos?
- Atos, the International Olympic Committee’s service provider, saw its stock going down owing to high debt and series of missteps.
- Its failed acquisition attempt of DXC Technology- its US competitor- for around $10 billion.
- The company reported accounting errors in two of its US entities in 2021. This led to market value erosion owing to sharp fall in the stock price.
- Frequent changes of CEOs have made the company weaker. Over three years, Atos has seen five CEOs.
- The company was slow to adapt to the cloud computing era and lost market share to the likes of Amazon and Microsoft.
- Atos reported a net loss of 3.4 billion euros ($3.7 billion) for 2023 due to asset write-downs.
Will Indian IT firms gain market share from Atos’ falling share?
There is a likelihood that Indian IT firms may turn out to be major beneficiaries of the shrinking market share of Atos. The French major has many marquee clients, which are likely to pull out contracts from the firm if its woes don’t end soon. In that case, its major competitors in the IT services space- the Indian IT firms are expected to gain. In recent years, Indian IT services firms have gained market share in the global outsourcing market on the back of their cost-effective service delivery and domain knowledge.
