Watch out Accenture, Deloitte - here comes Wip-pirio

Phil Wainewright Profile picture for user pwainewright October 21, 2016
Can acquisition by Indian outsourcer Wipro put cloud IT services pioneer Appirio back in contention for market leadership against Accenture Deloitte et al?

Chris Barbin CEO Appirio
Chris Barbin, Appirio

Chris Barbin, CEO of cloud integrator Appirio, sees its pending acquisition by Indian IT services giant Wipro as an opportunity to regain the top spot that his company lost after being a leading pioneer of professional services for cloud applications. In a conference call with industry analysts today, and a blog post published yesterday, he said that Appirio as an independent had not proven able to keep up with the greater resources that established firms had brought to the cloud market:

I have huge respect for what Accenture and Deloitte have been able to accomplish in the cloud market over the last five years. They made early big bets, changed their selling and delivery models to adapt to cloud, on-boarded some incredible leadership and delivery talent, and ... have garnered disproportionate market share.

Appirio had not been able to extend its skill base fast enough into other cloud applications and vertical industries, he says, while customers wanted more than Appirio on its own could deliver in digital capabilities, transformational and vertical expertise, and global scale.

The competitive landscape for Appirio has been getting tougher. We've been trying to add technologies, locations ...

[With the acquisition] Overnight we were able to get a number of things we didn't have.

Combining forces with Wipro fills those gaps and puts Appirio back in play to regain market leadership, he believes:

I wanted to make sure we could regain the number one market position. We believe that together we can get back to the number one position.

One large deal that had been uncertain has already closed as a result of combining with Wipro, he says. Wipro's scale will help Appirio secure more deals against its bigger rivals, adds SVP global marketing Latané Conant:

From a competitive perspective, we want to be number one in market share, so clearly we have to take on Accenture and Deloitte. That's who I think we're going to see in these more transformational projects around customer experience and worker experience.

Done in 45 days

Additional detail about the deal included the revelation that the Topcoder crowdsourcing site will effectively separate from Appirio's IT services business, becoming one of Wipro's Horizon projects under the office of the CTO. Since Topcoder's million-plus community encompasses designers and data scientists as well as coders across a variety of platforms, this makes sense as it's relevant to many aspects of Wipro's business beyond what Appirio deals with. But the community will want reassurance that Wipro's stewardship of the site will remain supportive of its independence.

Appirio will continue to operate as a separate brand within Wipro's business application services division, with CEO Chris Barbin reporting to Hiral Chandrana, who heads up that unit. Barbin emphasizes his commitment and that he brings his team with him.

I'm going to be here for years to come. My team is all coming with. We're really excited about how we can take this to a billion and beyond.

The deal was done in just 45 days, says Barbin, following an initial meeting with Chandrana in Chicago less than two months ago. He admits he was initially skeptical of Wipro's reputation as an outsourcer but quickly found its culture came across as a much better fit than other firms Appirio had spoken to. Both companies are conscious of the need to integrate culture as well as bringing Appirio's tooling into the Wipro environment. A dedicated integration team has been established to manage the convergence and Barbin is optimistic it will be successful.

On the surface it looks like these organizations are very different but there's also a lot of commonality we've found ...

The way Wipro thought about the integration, allowing us to continue to build our brand, maintain our vision, maintain our team — that combined with the digital capabilities and the vision [on transformation] from the top, that was a win.

My take

It's inevitable that Barbin was going to be talking up the positives of the deal today — and characteristic that he was talking in terms of surging ahead to market leadership. That's fighting talk when comparing the combined Wipro+Appirio total of 1,300 Salesforce certified professionals against Accenture's 8,100, or Appirio's 650 Workday certifications against Accenture's 2,450. But Wipro's leadership shares his ambitions, he says:

We're both highly competitive, we want to go dominate the market.

The deal does make Wipro the biggest cloud player by far among the Indian IT services firms collectively known as TWITCH — TCS, Wipro, Infosys, Tech Mahindra, Cognizant and HCL. In a detailed assessment of the merger, HfS Research CEO Phil Fersht rates it:

... the boldest move yet by an India-headquartered service provider into the SaaS services market to date ...

While the Accentures, IBMs and Capgeminis et al have been in a hurry to replace declining ERP services revenues with the implementation and consulting dollars around the hot enterprise SaaS platforms, the Indian heritage majors have been notably absent in the SaaS services space. Until now ...

With Wipro's massive scale in IT services and its $720m dollar BPO business, the combined entity has huge potential if its leadership can get the integration right.

Beyond the integration, the next challenge will be to shake the dowdy factory-outsourcing image that (often unfairly) dogs the Indian firms (and which in reality is no less applicable to the likes of Accenture). All the signs are that Wipro's leadership knows what it has to do, and keeping the Appirio brand at least for a transition period will help spruce up its image with a further sprinkling of challenger fairy-dust.

When I wrote about the acquisition news yesterday, I recalled the days when Barbin and his colleagues at Appirio used to criticize the incumbent global SIs for their costly, labor-intensive business models and promised a different, more agile approach. Although that early generation of pureplay cloud SIs has now been absorbed into the incumbents they used to decry, I detect something interesting happening.

The cloud innovators may have lost their independence, but they've reached sufficient scale by the time they're acquired to bring their cloud practices and mindsets along with them. As a result, the global SIs are being hollowed out from the inside as they absorb their acquisitions' cloud DNA. That transformation doesn't happen without a struggle, but it's the firms that can't reform themselves that will have the most difficulty surviving.

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