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"It’s a significant bet by Wipro that they can pivot out of the lower value outsourcing application development space"
Marty Wolf Interviewed Regarding Wipro’s Acquisition of Capco
martinwolf Managing Partner Marty Wolf was interviewed in CRN regarding Wipro Limited’s (NYSE: WIT) $1.45 billion acquisition of Capco. Wolf, who has been involved in more than 180 IT M&A transactions during the last 20 years, categorized Wipro’s move as strategic but risky.
“It’s a significant bet by Wipro that they can pivot out of the lower value outsourcing application development space which is largely becoming commoditized and into higher-margin financial technology services consulting. Whether it is Snowflake or others a lot of the work of those traditional Indian IT outsourcing companies is being minimized and marginalized. This means Wipro will compete more with companies that focus on higher gross margin services like Accenture, Deloitte and EY,” Wolf said.
In addition to this acquisition and others, Wolf expects the consolidation in the IT services sector to continue, “The way technology is evolving is accelerating the market consolidation,” he said. “You have innovators growing very rapidly, carving out their space.”
Indian-based Wipro and London-based Capco will face significant culture and business model challenges, according to Wolf, “In this case the higher gross margin business is the company that is being acquired and that is always an issue. Wipro is a smart company and I am sure they have thought that through.”