IT service giant Capgemini announced plans to bolster its offshore outsourcing capabilities with the proposed acquisition of Indian IT services specialist Kanbay. The $1.25bn cash deal is subject to shareholder and regulatory approval and is expected to close by early next year.

Capgemini said the move would almost double its presence in India to around 12,000 employees and strengthen its presence in both North America and the financial services and consumer goods sectors.

"The acquisition of Kanbay supports our growth strategy and significantly enhances our global banking, financial services and insurance practice, particularly in North America and India," said Capgemini CEO Paul Hermelin in a statement. "The acquisition also gives us valuable capabilities in consumer and industrial products, telecommunications, media, life sciences and the travel and leisure verticals."

Analysts broadly welcomed the announcement with Douglas Hayward and Dominique Raviart of Ovum claiming in a research note that the deal would make Capgemini a significant player in India. "Kanbay shows that Cap understands that with Indian labour costs rising, as talented staff become harder to find, offshore is no magic bullet, and that suppliers combining onshore/offshore models need client-focused vertical specialism offshore as much as onshore," they added.