The country's third-largest IT services exporter, Wipro, in keeping with its “string of pearls” acquisition strategy, on Thursday announced the buyout of US-based design and business strategy consultancy firm Cooper for $8.5 million.
The country’s third-largest IT services exporter, Wipro, in keeping with its “string of pearls” acquisition strategy, on Thursday announced the buyout of US-based design and business strategy consultancy firm Cooper for $8.5 million. The acquisition is aimed at strengthening its digital technologies portfolio, signalling a shift in its overall acquisition strategy.
Wipro has been the most aggressive among the large Indian IT companies, inorganically acquiring newer capabilities and markets. In the past, a large number of acquisitions were focused on getting market share or newer clients, but now the bets are being placed on technology trends.
Wipro in the past had acquired companies which gave it access to markets or customer accounts, like the Atco I-Tek acquisition for $195 million in 2014 or SAIC’s oil & gas technology business for $150 million in 2011.
Wipro has now placed big bets on major technology trends such as cloud and digital. It had acquired Danish firm Designit for $94 million in 2015, which gives it the push in the digital space. Similarly, in the cloud technology space, it had acquired Healthplan Services for $460 million in early 2016.
“Wipro’s inorganic strategy has been a smart one as they are now not focusing on the current trends but on what can be expected in the next two to three years,” said Sid Pai, managing partner, Tekinroads, a technology consulting company.
The acquisition of Cooper by Wipro Digital strengthens its portfolio in the professional design education space. It had acquired Appirio, a crowd sourcing marketplace for technologists in October 2016 for $500 million. These kind of acquisitions are unlikely to bring any immediate benefit in terms of customers or revenues for Wipro, but possibly yield results in the medium term. “There is a thread I see where they are willing to take the risks expecting that it would turn out to be the technology trends in the mid-term,” Pai said.
The IT major earned 22.5% of its revenue from the digital segment for the first quarter of FY18 with a 3% sequential growth rate.
Wipro has trained more than 75,000 of its employees in digital skills. The latest acquisition of Cooper gets it niche skill offering as the company has only 35 employees. One of the founders of the company, Alan Cooper, is regarded as ‘father of visual basic’.
Rajan Kohli, global head and senior vice-president, Wipro Digital, said: “Our combined capability across design, strategy and technology gives us a unique platform for working side-by-side with clients on the entirety of their digital initiatives.”
Besides, Wipro has committed $100 million towards investing in technology start-ups globally and has already invested in close to a dozen such entities. Wipro’s peers such as Infosys and Cognizant have also acquired niche companies in the digital technologies space.