IT Giant Takes A Massive Step: Wipro Acquires ATCO I-Tek
IT Giant Takes A Massive Step: Wipro Acquires ATCO I-Tek
The third largest IT services company Wipro has acquired ATCO I-Tek which is the IT services arm of a Canadian company. The company in question is logistics and utilities provider Atco which has sold its IT arm for $195 million so as to boost its revenues from natural gas and utilities operations.
The company also aims to expand its footprint in Canada through this acquisition. The acquisition also carried with it a $1.2 billion IT outsourcing deal. This is the largest deal the company has ever undertaken which will generate revenues of $112 million every year for the next 10 years till 2024.
This transformational deal has considerable amount of business outcomes and it is clearly one of the biggest deals for Wipro, according to Anand Padmanabham who is the chief executive-energy, natural resources and utilities.
The Atco I-Tek purchase is the second largest one by Wipro following its acquisition of US based IT infrastructure management firm Info Crossing in a 2007 cash deal for $600 million. Wipro also acquired Science Applications International Corporation/SAIC around 3 years back. The transaction was completed in a $150 million deal. Though the IT firm has made on acquisition in the past 3 years, it has also signed strategic partnerships and collaborations with US based Axeda and Opera Solutions in areas such as machine learning and analytics.
ATCO I-Tek has one of the largest operations in Western Canada. It offers end-to-end IT services and specialises in managed infrastructure services, customer care as well as billing and applications management services. It has around 700 employees and expertise in over 750 applications which enable clients to meet their IT and business needs. The rest of the 200 employees will be retained to run BPO operations.
Wipro's latest acquisition through this deal will help it to access resource filled regions such as Alberta and Perth. It will also enable the countries to strengthen their capabilities and improve consulting as well as process implementation. Significant opportunities will now open outside the Atco Group.
Energy and natural resources are 2 of the quickest growing fields for Wipro at the company as well as the industry level. The division contributes around 16% to the revenues in the current fiscal, according to company sources. The deal has a lot of value and it provides visibility over a long tenure.
Wipro could expect more business from ATCO as well, according to a Credit Suisse report widely quoted in media reports. With TCS firmly lodged in the numero uno position, Wipro has some catching up to do. Acquisitions such as these could possibly lead to record profits and boost in margins for the IT firm.
With Wipro's strong focus on energy and natural resources, two very critical fields in the current scenario, the IT firm is taking crucial steps towards giving stiff competition to its rivals.
