Wipro Acquires Appirio – A Game Changer
Last week, Wipro announced its largest acquisition in history – $500 million for cloud integration firm, Appirio. This acquisition is the second bold blockbuster purchase by Wipro this year; they bought HealthPlan Services in February for $460 million.
It’s no revelation that the cloud services market has been consolidating for several years now. Large IT Services firms such as Accenture and IBM have been snatching up cloud services vendors focused on Workday, Salesforce, ServiceNow and Google at an unprecedented pace and at astronomical valuation multiples (relatively speaking). However, absent from all the consolidation has been the large Indian outsourcing firms; likely not from a lack of trying, but rather being out muscled by their US and European counterparts. Then, Wipro swoops in and buys Appirio. A business that was originally seeded by Salesforce in 2008 that went on to raise more than $100 million of capital from multiple institutional investors, made half a dozen small acquisitions and literally emerged as one of the largest independent multi-vendor focused cloud services companies in the marketplace with more than $200 million of revenue.
This is a great deal for Wipro and, frankly, we’re not surprised that an Indian firm won this process as many of the other larger domestic IT firms have already made their bets through recent acquisitions. However, one has to wonder what this means for the other Indian firms such as TCS, Infosys, Cognizant, Genpact, etc. who simply cannot afford not to be major players in the fast growth cloud services marketplace. With all the consolidation that has happened, the reality is that there really aren’t too many remaining independent cloud services firms with meaningful scale that could be potential acquisition candidates.