Wipro, India’s third largest IT services exporter, on Thursday announced the acquisition of US-based healthcare technology services firm HealthPlan Services for a cash consideration of $460 million. This acquisition is expected to give a boost to its healthcare vertical and makes it the second largest acquisition in Wipro’s history after its Infocrossing buyout for around $600 million in 2007.
The healthcare vertical accounted for 12% of Wipro’s revenue at the end of the December quarter. This vertical recorded a sequential growth rate of 5.2% and annual growth of 4.9% for the period. Wipro CEO, Abidali Neemuchwala, has laid out a target of $15 billion in revenue by 2020 with an operating margin of 23%. Industry experts believe that mergers and acquisition (M&A) will play a key role for Wipro towards achieving the $15 billion target. The IT major has been most active among its peers in acquisition of firms in a strategy called the string of pearls. This envisions buying smaller outfits which are easier to integrate.
The partnership with HealthPlan Services positions Wipro to participate in the shift of the US health insurance industry towards a consumer-centric business model. HealthPlan Services strengthens Wipro’s position in the health insurance exchange market while offering synergies with Wipro’s presence in the managed medicare and commercial group insurance markets,” said Jeffrey Heenan Jalil, senior vice president & head- Healthcare Life Sciences and Services, Wipro.
HealthPlan Services, part of Water Street Healthcare Partners, was founded in 1970. It is a business process as a service (BPaaS) provider for the payer segment in the US health insurance market. Headquartered in Tampa, Florida, HealthPlan Services employs over 2,000 people and offers technology platforms and BPaaS solutions to health insurance companies in the individual, group and ancillary markets. It reported a revenue of $223 million for 2015, an annual growth of 19% when compared to 2014.
According to Wipro, the acquisition helps it to gain the competitive, first-mover advantage in the high growth public and private exchange space for individual, group and ancillary markets.