Persistent Systems, a global player in digital engineering, announced the acquisition of Arrka, a data privacy startup based in Pune, for INR 14.4 crore. The acquisition is scheduled to be finalized within 4-6 weeks. The price comprises an upfront payment of INR 10.3 crore, subject to usual debt and cash adjustments at closing. The founders will be entitled for a maximum cumulative earnout of INR 4.1 crore over the next two years. This amount is subject on meeting specified performance targets.

"This strategic acquisition greatly improves Persistent's AI-led, platform-driven services and expands its capacity to provide complete offerings in digital governance, such as data privacy, AI governance, and cybersecurity, among others. Persistent will use Arrka's expertise to help clients speed their transformation journeys while assuring ethical, responsible, and compliant AI, according to a company release. Arrka, founded in 2012, provides data privacy consulting services and generated INR 2.9 crore in revenue in FY24.

With the growing deployment of AI, organizations across industries are prioritizing the implementation and management of digital governance in general, as well as data privacy and responsible AI. Persistent is addressing AI opportunities through strategic investments in innovative platforms such as SASVA, an in-house cutting-edge platform that employs generative and deterministic AI, as well as tuck-in acquisitions such as Starfish Associates in July to strengthen its position in AI-powered Contact Center and Unified Communications. The integration of Arrka is expected to play a crucial role in scaling Persistent's AI practice and meeting the growing need for digital governance. It is critical to the Company's aim of providing responsible, ethical, and complete platform-based digital solutions.

Arrka's Data Privacy Management platform helps enterprises to manage data privacy risks while also meeting multi-jurisdictional legal and regulatory obligations in an integrated manner. Persistent will integrate and greatly enhance Arrka's solutions, establishing deep capabilities in the digital governance and trust domains.

"Arrka's acquisition is perfectly aligned with our aim to provide AI-driven services that accelerate innovation while ensuring data privacy, ethics, and compliance at all stages. By combining Arrka's knowledge with our AI-led, platform-driven services strategy, we enable organizations to develop responsibly while managing risk and compliance more effectively. Their robust frameworks and Data Privacy Management platform provide a scalable foundation to ensure that this new capacity is platform-driven and embeds control from the beginning, which is now vital for successful AI implementations", Sandeep Kalra.

Chirag Mehta, Vice President and Principal Analyst at Constellation Research, commented on the acquisition's relevance, saying, "As companies accelerate their use of AI, the necessity to address data privacy and compliance problems has never been stronger. Persistent's acquisition of Arrka improves its AI-led, platform-first strategy, allowing customers to safely pursue their business objectives while addressing major security challenges head on.