Wipro makes its biggest acquisition ever with $1.45bn takeover

He said the large acquisition was one he would have expected from one of the larger Indian suppliers, Cognizant or Infosys, but not Wipro. “Delaporte’s initiatives reflect that he is not only trying to make Wipro faster and more agile by simplifying and decluttering the company’s bureaucracy but, more importantly, he is also trying to differentiate Wipro by adding and developing new capabilities,” he said.

Schumacher said it was a major gamble, however. “Many of Wipro’s past acquisitions have failed and it’s no surprise many financial analysts and other industry experts are sceptical that this deal will deliver the synergies and earnings growth Wipro has promised,” he said.

He posed the question of whether Wipro was “overstepping its ability to manage all of these major activities in parallel” and “bitten off more than it can chew”.

Schumacher added that Wipro, like many large India-based IT services companies, is cash-rich and very eager to further strengthen its market position.

A number of Indian IT services companies, including Wipro, have also been expanding their capabilities through the takeover of customer operations. Some takeovers have also supported the cost-cutting plans of customers.

Only in December 2020, Wipro took over the IT units and 1,300 employees of German wholesaler Metro as part of an IT outsourcing deal worth up to $1bn (£745m) over nine years. The Indian supplier will pay £36m for the unit with the acquisition giving it additional IT staff in Germany, Romania and India.

Meanwhile, late last year Tata Consultancy Services (TCS) acquired the staff and some of the assets of an IT operation of Prudential Financial as the US insurance company for free. This followed the company’s €1 takeover of the IT unit of Postbank from Deutsche Bank.

Although the acquisitions were for token amounts, the acquirers take on the operating costs.