Indian outsourcing giant Wipro is going to write a cheque for half a billion dollars to buy cloud services powerhouse Appirio.
The $500 million all-cash acquisition is expected to close by the end of the year.
Wipro said that bringing Indianapolis-based Appirio’s 1,250 global employees on board will create one of the world’s largest cloud transformation companies. This would make it the partner of choice for clients looking to modernise their processes and platforms on next-generation cloud applications.
Chris Barbin, Appirio’s CEO, said in a statement that if you combine Wipro’s global scale and deep digital focus with Appirio’s transformative worker and customer experience expertise, and best in class team, brand and partners, you create a formidable force in the industry.
“Our aim is to dominate the market and claim the top spots in industry Net Promoter Score, market share, and best places to work.”
Wipro’s existing Salesforce and Workday cloud applications practices will be consolidated under the Appirio brand and structure. Barbin will lead the expanded business,.
Appirio is a close chum of Google and created the Topcode marketplace that connects more than a million designers, developers and data scientists around the world with customers. It works with leading brands such as Coca-Cola, eBay, Facebook, Home Depot, Stryker, Johnson Controls, Cardinal Health and Sony PlayStation.
Appirio was founded in 2006 and incubated inside Salesforce’s San Francisco headquarters. The company today has offices in Indianapolis, San Francisco, Dublin, London, Tokyo and Jaipur, India.
The systems integrator has seen its revenue grow from $137 million in 2013 to $178 million in 2014 to $196 million in 2015, according to a filing with the Securities and Exchange Board of India.
Private equity outfit Blackstone is close to a deal to buying Hewlett Packard Enterprise’s controlling stake in Indian IT outsourcing services provider MphasiS.
The deal is worth about $940 million. HPE owns roughly 60.5 percent stake in MphasiS, and now wants out from the Indian outfit to shore up its capital.
Bids for MphasiS were submitted earlier this month and Blackstone is the front-runner for taking majority ownership of the mid-sized Indian IT services exporter.
Financial details of the possible deal were not immediately known. Based on MphasiS’ stock price on Thursday, the HPE stake in the Bengaluru-headquartered company is valued at about $940 million. The company’s total market value is about $1.6 billion.
MphasiS is a rival for Tata Consultancy Services and Infosys but is not likely to command a very high valuation as a major part of its business depends on subcontracting by HPE.
MphasiS used to generate half of its cash by providing services to HPE’s clients. This is now only 24 percent of the firm’s total revenue.
The MphasiS deal, if closed, will be one of the biggest M&A transactions in India’s $150 billion outsourcing sector and indicates that the outsourcing market may still have life in it.
MphasiS was formed in 2000 and six years later Electronics Data Systems Corp acquired a majority holding in the company. In 2008, EDS was acquired by Hewlett Packard, which resulted in the transfer of the shareholding to the computer maker.
Local authorities in the UK are starting to find that the outsourcing contracts they signed are saddling them with more costs than they predicted.
Outsourcing was being touted as a way to save money, but it is starting to look like the councils are having to scale down outsourcing operations or abandon them completely. The current belief is now that a move to outsource can be a false economy. Councils are beginning to realise they are quite adept at making savings themselves.
This year Cornwall Council was awarded the right to divorce its outsourcing contract with BT. The council signed a 10-year £160m contract with BT two years ago,. However Cornwall was far from happy and wanted out. So BT sued to keep it in.
The eventual contract with BT was a slimmed down version of the original deal proposed in 2012, which was overturned after councillors put forward a no-confidence vote to the leader of Cornwall Council over the plans.
It was not the only one which is unhappy with its outsourcing contract. Earlier this month, Somerset voted to terminate its 10-year SouthWest One deal with IBM a year early, due to a report finding it had become “increasingly unaffordable”.
Now it seems that other councils are getting less keen about being saddled with outsourcing contracts. Dorset County Council has rejected plans to outsource its IT services, as it was unlikely to be sufficiently flexible in the future.
Looking at the numbers the council decided that it would not get value for money.
This means that outsourcing sales teams hoping to interest councils in big contracts next year will find it a tough sell.
An Indian court has convicted the former chief of outsourcing giant Satyam, Byrraju Ramalinga Raju, and his mates over a massive accounting fraud.
Raju was the former chairman of outsourcing giant Satyam, and the case has tied up the Indian courts for nearly six years. All 10 accused,were found guilty by a special court in Hyderabad.
It was touted as the biggest accounting fraud in the country, and it first came to light in early 2009 after Raju confessed that he doctored key financial results and created a fictitious cash balance of more than US$1 billion.
Before that he overstated profits for several years, inflating the amount of debt owed to the company and understated its liabilities.
He was arrested two days later after he confessed to the fraud, along with his brother Rama Raju and others. They were charged with cheating, criminal conspiracy, forgery and breach of trust under relevant sections of the Indian penal code.
Satyam was once one of India’s biggest IT outsourcing companies. It was sold to Tech Mahindra in April 2009 in a government-overseen auction, which later absorbed the company in full.
Also involved in the case was Pricewaterhouse Coopers, which was in charge of auditing the firm when the scandal broke. So far there has been no indication what will happen to that outfit — after all they must seen the books and should have spotted what was happening.
The sentences will be announced on tomorrow. All 10 accused are presently out on bail.
The Information Commissioner’s Office (ICO) said today that when the government outsources technology it’s often very opaque.
Head of Policy at the ICO Steve Wood said freedom of information laws haven’t always been able to follow the public pound.
“We’re calling on public authorities and contractors to consider transparency from an early stage, before a contract is even signed. And we’re asking whether the government might need to step in to make sure the public can access the information they should be entitled to from big government funded contractors,” he said.
Expenditure on outsourced public services represents half of the £187 billion the government spends on goods and services. Sometimes, the ICO said, it is hard for people to negotiate their way through outsourcing contractors’ deals.
The ICO conducted a survey and 75 percent of people said that private companies acting on behalf of public authorities should be subject to the Freedom of Information Act.
Indian firm Infosys said today that it has spent $200 million to buy a company that specialises in automation technology.
The Bangalore based company bought Panaya, which is based in New Jersey.
Infosys has been seeking for some years to diversify its business after its initial success came in the outsourcing marketplace.
According to CEO Vishal Sikka, the company wants to leverage the importance of the cloud and AI. Sikka said that buying Panasya was an important step in diversifying its current lines of business.
Panaya sells CloudQuality, automation in the cloud and is intended as an automation method.
Sikka said: “This [acquisition] will help amplify the potential of our people, freeing us from the drudgery of many repetitive tasks, so we may focus more on the important strategic challenges faced by our clients.”
Infosys has over 165,000 employees worldwide and works in 50 countries.
A report from Gartner
said cloud services in the subcontinent will be worth $838 by the end of this year.
That figure will be up by almost a third – revenues last year totalled $632 million.
The revenues are being generated by cloud infrastructure as a service (Iaa), management and security, and infrastructure platform as a service (PaaS).
The market will be worth $1.9 billion by 2018, Gartner predicts.
Ed Anderson, a research VP at the market analysis firm, said Indian organisations looking to outsource their IT are turning to public cloud services.
“Cloud services are not only being used for low value or transient workloads, but also increasingly for production workloads, including some mission critical initiatives,” he said.
While business process as a service (BPaas) was worth $130 million in 2014, it will be with $351 million in 2018, while SaaS will grow from $246 million last year to $707 million in 2018.
Indian outsourcers Infosys have business results which were much better than the cocaine nose jobs of Wall Street predicted.
Infosys posted a 13 percent rise in quarterly net profit, as it won more outsourcing contracts from Western clients than many thought possible.
Infosys, which provides IT services to clients including Apple, Wal-mart, and Volkswagen, said profit in the quarter ended December 31 rose to $520.9 million. Analysts, on average, were expecting a profit of $498.8 million.
It has been a tough year for Infosys. It has lost ground to competition and staff have been leaving the building so fast they have had to keep the doors open all the time.
The company has been boosting growth by focusing on high-margin services including artificial intelligence and automation.
The company won 59 new clients in the December quarter, it said in a statement.
German airline Lufthansa is about to sell its IT infrastructure unit to IBM as part of an outsourcing agreement for the services.
Europe’s largest airline by revenue is undergoing restructuring and cost-cutting efforts to better position itself to compete with low-cost carriers and Arabic rivals
It earlier this year said it was seeking a buyer for the unit, which provides data centres, networks and telephony. Apparently, it is worried that it requires a high level of investment and economies of scale, which the airline could not afford.
Under the deal, Lufthansa will outsource all of its IT infrastructure services to IBM for seven years. The US firm will take over the airline’s IT infrastructure division, currently part of Lufthansa Systems.
The deal will result in a one-off pre-tax charge of 240 million euro for Lufthansa. It will allow Lufthansa to reduce its annual IT costs by around 70 million euro a year. It is not clear how much this will all cost in the end as this is still being ironed out.
While the services market grew in 2013, revenues failed to shine.
That’s according to a report from market research company IDC, which said the whole service market grew from 12.3 percent in 2012 to 13.4 percent last year.
But, as IBM and SAP results showed earlier this week, the gloss appears to have faded on the services industry.
Vendors, said IDC, attributed the small increase in income to cutting jobs, making people work harder for less money, and finind new places where labour is cheaper.
IT outsourcing appears to be on he wane, said IDC. It was the least profitable service line last year and in 2012.
But support and training services are still profitable, while the second and third most profitable lines were “business consulting” and IT project based services, said IDC.
Chad Huston, a senior analyst at IDC, said the lacklustre revenue growth hasn’t stopped what he described as “an upward trajectory”.
But, he added, that’s because vendors are cutting their costs.
It appears that the downturn in the outsourcing market is over with Infosys, India’s second-largest software services exporter, beating estimates.
The company reported a 21.6 percent rise in quarterly net profit and retained sales growth outlook for this year on surging demand for outsourcing services.
The news is a little surprising as Infosys seems to been reeling under a staff exodus and loss of market share to rivals.
Vishal Sikka, a former senior executive at German software Company SAP took over as CEO last month seen nearly a fifth of his staff leave after 18.7 per cent left in the last quarter.
Infosys added 61 customers in the quarter, maintained its revenue growth forecast for the year to March 2015 at 7-9 percent, as expected.
Consolidated net profit for the quarter ended June 30 rose to $480.20 million. Revenue in the quarter rose 13.3 percent to $212 million.
A market research company believes that by 2016 as many as 28 percent of UK datacentres will be outsourced.
DCD Intelligence said that companies now believe that outsourcing mission critical IT to a colocation provider is a viable alternative to having their own datacentre.
The company said that as the trend to outsource datacentre grows, it is adding a current to upcoming conference DatacenterDynamics Converged, in London.
The conference takes place at London Excel on the 20th and 21st of November.
Lyndsy Hancock has joined Comms-care as engineering supervisor.
Comms-care provides outsourced IT services for the channel and Hancock will work with the engineering management team giving support and guidance to field based engineers.
Part of her job will also be designing improvement programmes for engineers about technical procedures, standards and company policies.
Hancock has been with Comms-care since 2006 and before that worked for Canon at its service desk.
Technical Director Darren Briscoe said: “Comms-care is growing rapidly and we need high calibre, dedicated people to help us deliver the best possible service to our growing partner base. Lyndsy has proven to be an exceptionally customer-focused member of the Comms-care team and has always delivered beyond the requirements of her role to ensure we provide excellent 24/7 customer service.
“Lyndsy has also been tasked to implement new processes, procedures and working practices that will ultimately result in Comms-care improving the service we provide to our partners.”
Hancock’s previous role at Comms-care was as service desk team leader.
According to research outfit Information Services Group (ISG), the public sector outsourcing market in the UK has taken a massive hit in the first half of the year. The ISG Outsourcing Index for EMEA found just €2 billion of outsourcing activity in the UK for the first half of the year. Last year the market was worth €4.6 billion.
However, Britain still leads the way when it comes to public sector outsourcing in Europe. The whole EMEA market for the first six months of was just €2.3 billion compared to €3.1 billion last year. In other words, the UK accounted for five sixths of all public sector outsourcing in EMEA this year.
The ISG figures track all outsourcing contracts with an annual value of €4 million or more. They include IT contracts, business process outsourcing, back office processes, but IT dominates with more than two thirds of all contracts. Public sector outsourcing now accounts for 41 percent of all outsourcing activity in EMEA, with Britain in a clear lead.
The top 15 companies winning these lucrative contracts are Accenture, AECOM, Arqiva, Arvato, BT, Capgemini, Capita, CSC, Grupo Ferrovial, HP, Interserve, QinetiQ, Serco, Thales and Tieto.
While many companies are tightening their belts and looking for austerity measures until the economy picks up, outsourcing outfit Infosys is going in the opposite direction.
According to Indian newspaper, the Economic Times, the first concrete step made public after the return of founder Narayana Murthy to an executive role is to jack up all employee’s salaries.
The company will increase pay by an average of eight percent for staff in India and three percent for overseas staff.
The announcement was made to the stock exchanges after markets closed in Mumbai.
Murthy returned as executive chairman on June 1, 11 years after he was last CEO of Infosys. The move is intended to boost flagging morale at the company and to enhance Murthy’s stock of goodwill. It is also sending a message that the Infosys co-founder is back and means business.
The company has had two years of disappointing results and starting to lose market share to rivals such as Tata Consultancy Services and Cognizant Technology Solutions.
The pay increase will be effective July 1 for most staff, while the company’s global sales force will see increases effective May 1, the company said.