Wipro Acquired Appirio in USD 500 mn Deal

India’s third-biggest software service provider, Wipro has acquired US-based large cloud service provider, Appirio in the area of workforce and customer management.
The deal valued at USD 500 million took place to accelerate the shift towards cloud computing and digital services.
The deal is expected to bring Bengaluru’s Wipro the ability to provide a formidable portfolio of services on the internet to the clients, including Facebook, Johnson Controls, and Coca-Cola, said Wipro in a press release.
The value is about 2.5-times Appirio’s 2015 revenues of USD 200 million based on an April report in Indianapolis.
“This transaction will catapult Wipro into one of the largest cloud service providers among the Indian peers,” said Sandeep Gogia, associate director at Equirus Capital in Mumbai. “Appirio’s revenue per employee is about 3.5-times that of Wipro’s currently. This will strengthen Wipro’s offerings around newer technologies and could create cross-selling opportunities,” he added.
India’s IT sector that values at USD 110 billion is desperately struggling to keep its core IT services business going that accounts for the bulk of the sector’s revenues, but is more or less stagnating, even as new opportunities arise in cloud computing and digital services.
One of the worst fiscal second-quarter revenues for the top-ranked Tata Consultancy Services, along with No 2 Infosys, which cut its full-year revenue forecast by more than a third.
Wipro’s fiscal second-quarter revenues have grown by a mere 0.5 percent from the previous quarter, although the company to forecast current quarter revenues to increase by as much as 3% which would put Wipro in a position to report a better second half of the year that ends on March 2017. For now Appirio’s acquisition is expected to help.

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