Indian IT Services major Wipro continues its acquisition run this year to strengthen its digital transformation and cloud capabilities. After acquiring 4 companies earlier this year, Wipro has now entered into a decisive agreement to buy Encore Theme Technologies, a SaaS and Cloud solutions provider in financial services, for INR 95 crores.
Headquartered in Chennai, Encore Theme implements a broad suite of Trade Finance solutions, developed by Finastra, one of the world’s largest fintechs to bolster digital transformation support for financial institutions across the globe. The purchase will enable Wipro to further fortify its capabilities to modernize the IT and digital infrastructure of financial institutions.
The acquisition of Encore Theme is subject to customary closing conditions and likely to close in the quarter ending December 31, 2020, Wipro mentioned in a statement. This transaction represents Wipro’s fifth buyback this year, with an overall investment of INR 18 bn in purchases in 2020.
Businesses are taking rapid transformation routes toward next-Gen integrated cloud technologies such as artificial intelligence, the internet of things (IoT), and analytics. To successfully overcome the ongoing crisis and emerge stronger in the growing virtual ecosystem, enterprises seek smarter IT environments and accelerating their digital transformation efforts.
IT services companies realize the importance of network transformation-related investments that can help meet growing clients’ needs to construct agile, integrated, and insights-based network architectures. This brings a unique opportunity for the IT Services firm to bring more value to businesses.
Along with Wipro, several other IT Services firms such as Infosys and HCL are on an acquisition spree this year, utilizing their cash reserves to fortify their digital transformation and cloud offerings. (See: Infosys buys GuideVision to boost Dx capabilities)
Supporting networks modernization
Wipro’s aggressive push toward acquisitions is also likely to lead to increased investor confidence in the future. Wipro is now having much more capacity and packaged offerings to deliver its services to enormously investing in IT infrastructure modernization.
This year, Wipro’s notable acquisitions include 4C, IVIA Serviços de Informática Ltd, and Eximus Design. (See: Wipro’s 4C buy to firm up its Europe presence)
Along with the latest Encore buy, Wipro also announced its plan to expand its strategic relationship with IBM to strengthen its Hybrid Cloud Practice. The practice is an initiative led by IBM to support global system integrators and independent software vendors to enable their clients to modernize workloads for any cloud environment.
In its Q2 results announced last month, Wipro posted a 3.2 percent sequential growth in consolidated profits and 3.7 percent QoQ growth in IT services revenue, ahead of the previous industry estimates. The results reflected strong growth across all its verticals.
At BM NXT research, we expect Wipro’s revenues to get a significant boost in the next two to three years because of its strategic investments this year and the organization’s continuous efforts to build capacities for remote working. Wipro, however, will need concrete execution efforts to gain a larger market share than its peers in the industry.