In the largest ever acquisition made in the history of Wipro, the company announced to acquire 22-year-old UK-based Capco for $1.4 billion. The informational technology multinational has acquired Capco in a bid to bolster its position in the financial services industry which contributes approximately 30% of the company’s overall revenue.
UK-based Capco is an information technology consultancy provider and provides tech solutions to financial institutions. With a team of more than 5,000 consultants across 30 locations across the world, Capco’s clients include the biggest financial services companies and companies in the energy and commodities sectors.
Wipro in its public statement after acquisition said, “By combining Wipro’s capabilities in strategic design, digital transformation, cloud, cybersecurity, IT and operations services with Capco’s domain and consulting strength, clients will gain access to a partner who can deliver integrated, bespoke solutions to help fuel growth and achieve their transformation objectives.”
Wipro Managing Director and CEO Theirry Delaporte in a statement said, “Together, we can deliver high-end consulting and technology transformations and operations offerings to our clients.”
Theirry Delaporte replaced Abidali Neemuchwalla who served as Wipro’s CEO for 4 years but failed short of helping Wipro achieving its target of becoming a $15 billion firm by 2020. The company’s revenue by the end of March 2020 was only $8.1 billion, almost half the target it wanted to achieve.
Under Delaporte’s leadership, Wipro has been eyeing clients across Europe and Asia. In October 2020, Wipro secured a 5-year contract from Fortum, a clean energy firm. The same year Wipro bagged a multi-year infra modernisation, digital transformation contract from E.ON.
Wipro had publicly gone on record to say that it wants to acquire more firms. Prior to acquiring Capco, Wipro made 3 acquisitions under the new leadership of Delaporte. In 2020, Wipro acquired 4C, a Salesforce multi-cloud partner for €68 million (Rs. 589 crores), engineering services company Eximius Design for $80 million (Rs. 586 crores), and financial services cloud solutions company Encore Theme Technologies for Rs. 95 crores.
Drawing attention back to Wipro’s newest and biggest acquisition, Capco earned $700 million in revenue for the Financial Year 2019-29 with its top 30 clients accounting for 79% of the total revenue. The UK-based company has its footprints across the globe including US, UK, France, Poland, Switzerland, Singapore, Hong Kong, Malaysia, India, Brazil, Slovakia, etc.
After the acquisition, Capco CEO Lance Levy issued a statement saying, “Together, we will offer bespoke transformational end-to-end solutions, now powered by innovative technology at scale, to create a new leading partner to the financial services industry. We look forward to leveraging the complementary capabilities and similar cultures of both companies to drive industry change and offer exciting opportunities for both our clients, and our people.”
With acquiring Capco, Wipro now has the opportunity to become a large-scale BSFI (Banking, financial services and insurance) player, have an expanded wallet share, and establish domain expertise. On the other hand, Capco has the opportunity of having a competitive edge, increasing its scale as Wipro brings with it offices in over 60 countries, and having a stable business model.
In the past few years, top IT companies have been on a frenzy of acquiring smaller companies. The efforts to acquire smaller companies can be seen as an opportunity of larger companies to grow even larger rapidly and accelerate their digital business arm that was in high demand during the COVID-19 pandemic. These smaller firms have a specialty in particular niches and bring with it nurtured talent and technology expertise that complement the existing domain expertise of the larger companies that acquire them.
Global software and technology consulting firm Infosys acquired three companies in digital spaces in 2020. In February 2020, Infosys acquired Simplus, a Salesforce consultancy firm for $250 million. The company also acquired GuideVision, an enterprise management consultancy company for €30 million. In the last quarter of 2020, Infosys acquired Blue Acorn iCi, a digital customer experience company for $125 million.
American multinational tech consultancy company Cognizant Technology acquired a whopping 11 companies in the last year with a cumulative investment of about $1.4 billion to strengthen its focus areas like cloud, AI, data engineering and IoT (Internet of Things).