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DXC Acquires Digital Consulting Firm Luxoft for $2 Billion

DXC Technology has acquired digital consulting firm Luxoft for roughly $2 billion, the two firms confirmed today. The deal comes as major IT consulting firms worldwide scramble to acquire digital, cloud, automation and security expertise that could boost revenues amid multiple IT market transitions.

Luxoft will maintain its brand and operate as “A DXC Technology Company.” Luxoft CEO Dmitry Loschinin will run the business unit and report to DXC CEO Mike Lawrie.

Luxoft, backed by 13,000 employees, provides digital strategy consulting and engineering services for customers across North America, Europe and the Asia Pacific region.

Based in Zug, Switzerland, Luxoft achieved $911 million in revenue over the last four quarters, and a double-digit compound annual growth rate (CAGR) over the last three years, DXC says.

DXC Business Challenges

DXC had 6,000 private and public-sector customers in 70 countries ahead of the deal. Though massive and making acquisitions, DXC’s business has been under pressure. Revenues were $5.01 billion for the quarter ended September 30, 2018 — down from $5.45 billion for the corresponding quarter in 2017.

The revenue figures were roughly $200 million below DXC’s expectations for the quarter, CEO Mike Lawrie said at the time. “The two primary causes were slower ramp-up on a few large digital contracts and a decline in our application and maintenance management business,” he conceded in November 2018.

Luxoft: Digital Consulting in Vertical Markets

Luxoft key focus areas include analytics, user experience, IoT, Blockchain, cloud and DevOps services. The company’s vertical market expertise includes:

  • automotive (digital cockpit, autonomous drive, connected mobility);
  • financial services (digital consulting, regulatory & compliance, platform implementation) and;
  • healthcare/life sciences (digital lab, customer engagement).

Additional focus areas include travel, media & communications and energy & utilities, DXC says.

DXC Acquires Luxoft: Executive Perspectives

Describing the deal, DXC CEO Mike Lawrie said:

“Luxoft and DXC are highly complementary, and our shared vision of digital transformation makes this strategic combination a great fit for both organizations — as well as enormously beneficial for our clients. Luxoft has a proven track record and expertise in producing measurable business outcomes at-scale for global clients across key industries, including automotive and financial services. The addition of Luxoft accelerates DXC’s growth strategy as we equip the company to meet the digital requirements of our clients today and in the future.”

Added Loxoft’s Loschinin:

“Our success in recent years has been led by our talent and ability to design, develop and deliver truly innovative digital solutions tailored to client business needs. Aligning with DXC presents an exciting opportunity to unlock new value for our people, clients and partners. We will gain the scale, resources and market presence to better serve and compete, and to more rapidly realize our vision. As part of DXC, we will preserve Luxoft’s differentiated capabilities and culture while driving growth for the combined company.”

The deal is expected to close in June 2019.

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