BENGALURU: Wipro has announced the acquisition of London-based global management tech consultancy firm Capco for $1.45 billion, making this the largest services acquisition by an Indian IT firm till date. Wipro’s closest rival, HCL tech had, in 2018, acquired IBM’s software products unit for $1.8 billion.
Peers such as Tata Consultancy Services and Infosys have also stated that they will remain focused on M&As especially due to the drop in company valuations.
Wipro’s latest acquisition will enable the IT giant to provide digital, consulting and technology services to financial institutions in the Americas, Europe and Asia Pacific.
Industry experts said that large buyouts by Indian-origin tech firms signal a shift in strategy—to integrate with foreign companies, absorb a culturally district workforce and scale to new geographies.
On Thursday, Infosys also announced its expansion to Calgary, Canada, and a plan to double its workforce in the unit to 4,000 by 2023.
Indian IT firms have typically shied away from large buyouts, unlike global peers like Accenture, IBM, and Cognizant that allocate billions of dollars for M&A budgets.
As 2020 saw valuations drop, TCS, Infosys, Wipro and HCL tech all announced smaller acquisitions in the US and Europe to gain market share in key segments.
TCS’s CEO Rajesh Gopinathan had earlier said that like the global financial crisis of 2007-08, a lot of M&A activity will be noticed in the Indian IT services sector.
As a result of Wipro’s big acquisition, nearly 5,500 employees of Capco will now be a part of the larger team and help scale up Wipro’s customer delivery services, it said.
London-headquartered Capco’s clients include many marquee names in the global financial services industry.
In addition, Capco also services clients in the energy and commodities trading sector.
Industry Analyst Pareekh Jain said that the acquision would help Wipro close the gap with HCL Tech while also building scale, global presence, and differentiated capability in consulting for the BFSI segment.