Wipro in $500-m deal for US cloud firm Appirio India’s third largest IT services exporter Wipro on Thursday said it will acquire US-based cloud services company Appirio for a cash consideration of $500 million, making it the second largest buyout in its history. This is the second major acquisition for Wipro in the current year, having bought out Healthplan Services in February for $460 million.
“Once completed, Wipro’s acquisition of Appirio will create one of the world’s largest cloud transformation practices, a game changer in today’s software-as-a-service and digital economy,” the company said in a statement. Following the acquisition, Wipro will also have access to Topcoder, a crowdsourcing marketplace connecting over a million designers, developers and data scientists around the world with customers, it added. The company will consolidate its existing cloud applications practices of Salesforce and Workday under the Appirio brand and structure.
Appirio CEO Chris Barbin will lead the expanded business.Established in 2006, Appirio, which is headquartered in Indianapolis, has 1,250 employees worldwide, including in India. Key customers include Facebook, Coca-Cola, Sony PlayStation and eBay. The acquisition of this company gives Wipro a strong footing in the cloud services space. According to sources, Appirio posted a revenue of close to $200 million in CY15 and is a profit-making company. It is a privately held company, with key investors like Salesforce, Sequoia and General Atlantic.
The acquisition is subject to customary closing conditions and regulatory approvals and is expected to be closed in the quarter ending December 31, 2016.
“Appirio and Wipro are coming together to unlock transformational synergies in the applications space and help enterprises create new business models,” said Wipro CEO Abidali Neemuchwala.
In a blogpost on the company website, Appirio CEO Chris Barbin said: “By combining our strengths, we’ll have a direct and realistic shot at returning to the number one market and mindshare position, and will immediately become the biggest of the TWITCH crew (TCS, Wipro, Infy, Tech Mahindra, Cognizant and HCL). Watch out Accenture and Deloitte — we’re coming,” Barbin said.
Wipro under its CEO Neemuchwala, who took over in February of this year, has laid out an ambitious plan of achieving $15 billion of revenue by 2020 with an operating margin of 23%. The target is almost doubling of revenues from the current level.
Wipro has been most active among the Indian IT services companies on the acquisition front and has followed a string-of-pearls of strategy to acquire smaller companies that will either fill gaps on the technology front or give market access.