Wipro Acquires Appirio for $500M to Reach for the Cloud, Leverage Power of the Crowd

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Wipro Limited, a leading information technology, consulting and BPO business, announced this week that it will acquire Appirio, a global cloud services company, for a sum of $500M. Appirio is half-owned by institutional investors, and—according to one source — the most recent investment in the company indicated a valuation in that ballpark.

What’s Up?

The acquisition — Wipro’s second largest — is not a consolidation play in a maturing industry, rather it is a way for Wipro to extend from its own mature core business into the fast-growing cloud technology transformation segment. It will also take ownership of what is probably the largest software development/analytics crowdsourcing challenge platforms, Topcoder (which was acquired by Appirio in 2013). Clearly, the acquisition of Appirio is a step into the future for Wipro. Why?

Wipro describes itself as a $7.7B global information technology, consulting and outsourcing company with 170,000+ workforce serving clients in 175+ cities across 6 continents (revenues of latest fiscal year). Wipro — which entered the IT industry in 1981 — is one of a number of large India-based businesses focused on legacy software maintenance, system integration, and IT outsourcing.

Appirio, founded in 2006, is a new breed, quite a different animal. It describes itself as “a global services company that helps customers create next-generation Worker & Customer Experiences using the latest cloud technologies” (Salesforce, Workday, et al) and its own 1,250-strong pool of uniquely talented and skilled employees. The company notes that high-value outcomes are also produced for customers “by harnessing the power of one of the world’s largest crowdsourcing communities and thousands of pre-built solution accelerators.”

A Marriage Made in Heaven?

Appirio Co-Founder and CEO Chris Barbin recently stated that “Traditional systems integrators have experience with SAP, Oracle, and Microsoft practices. That’s a different model. Those software companies are legacy providers that grew up in the older world of on-premises software deployment. As those software makers adjusted to the new [SaaS] distribution model, so did their service partners.”

But now there is an accelerating shift to cloud technologies and a new set of cloud-based applications, and the question becomes whether to build those capabilities or buy them. Wipro has gone the latter route.

Abidali Z. Neemuchwala, Chief Executive Officer & Executive Director, Wipro Limited, was quoted as saying: “In an increasingly digital world, as consumer behaviors and expectations continue to be reshaped by experiences, companies are recognizing that they need to transform how they engage with customers and employees by leveraging the power of [the] Cloud. Appirio and Wipro are coming together to unlock transformational synergies in the applications space and help enterprises create new business models.”

Work Also Moves to the Cloud

As noted above, Wipro’s future-step acquisition also includes Appirio’s crowdsourcing platform Topcoder. Today the Topcoder platform hosts a community of 1M+ designers, developers, and algorithmists. Some key statistics about Topcoder include:

  • 500+ customers have executed over 41K challenges
  • Topcoder members have generated over 125K design and development challenge submissions
  • Topcoder Data Science challenges have helped researchers, companies, and agencies make critical advances in the fields of Advanced Robotics, Bio-Agriculture, DNA Sequencing, Environmental Protection, Pharmaceutical Testing, Precision Medicine, and beyond
  • Topcoder designed, developed, and helped test the first mobile application created through crowdsourcing, to fly on orbit aboard the International Space Station – the NASA ISS-FIT iPad

Wipro’s move into the future is not only about new technology and markets, it’s also about the future of work and the growing importance of work intermediation platforms (WIPs). As such, it provides a snapshot of the changes that are occurring in services businesses today as they evolve to serve evolving technology and markets. Such changes and developments should keep services category managers on their toes for some time to come.

If you would like to follow our coverage of contingent workforce, crowdsourcing and All Things Gig, then visit us at http://spendmatters.com/contingent-labor/ and sign up for our weekly email digests.

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