Wipro buys Salesforce integrator Appirio for $500m
- Indian IT services and outsourcing giant Wipro buys Appirio, a pioneer cloud integrator with big Salesforce and Workday practices
Indian IT services giant Wipro has announced it is spending $500 million to buy Appirio, a leading cloud integrator specializing in Salesforce, Workday, Google and Amazon. Appirio, founded in 2006, was one of the last major independent Salesforce SIs left standing after Accenture bought Cloud Sherpas and IBM acquired Bluewolf, both last year.
The announcement came today after news of the impending deal broke in the Times of India, having discovered the web domain 'appirio-awiprocompany.com' was registered at GoDaddy on October 13. Wipro is due to report quarterly results tomorrow and its shares had risen sharply yesterday, closing 4% higher today than Tuesday's close.
The Appirio name will live on, as Wipro plans to consolidate its existing Salesforce and Workday practices under the Appirio structure and brand. Appirio co-founder and CEO Chris Barbin will lead the expanded cloud transformation practice.
Like most of its rivals in the Indian IT services industry, Wipro is currently in the throes of reinventing itself to embrace the opportunities (and avoid the existential threats) of the digital era. A long-time transition plan at the outsourcing giant is said to be nearing completion under CEO Abidali Neemuchwala, who stepped into the top job in February this year. The firm has made acquisitions to fuel that transition, but none as large as Appirio, which is the second largest in its history.
Appirio currently has 1,250 employees worldwide and its enterprise customer base includes brands such as Stryker, Robert Half, Johnson Controls, Cardinal Health, Coca-Cola, eBay, Facebook, Home Depot, and Sony PlayStation. It is headquartered in Indianapolis with offices in San Francisco, Dublin, London, Jaipur, and Tokyo.
It also owns the Topcoder crowdsourcing marketplace, which hosts contests in which web designers, software developers and data scientists compete to solve projects for business customers.
Venture-funded Appirio had raised almost $112 million in five rounds over the past 10 years, including significant investments from Fidelity, General Atlantic, GGV Capital, and Sequoia. Salesforce was also an early investor. It has grown both organically and through acquisitions, including strategic HCM consultancy Knowledge Infusion in 2012 to bolster its Workday and Cornerstone practice, and Dublin-based Saaspoint in 2011 to spearhead expansion in the European market.
The acquisition was welcomed by both Salesforce CEO Marc Benioff and Workday CEO Aneel Bhusri, who are quoted in today's prepared news release. Benioff comments:
I couldn’t be more proud of Appirio as it joins Wipro, where together they will continue to drive customer success on a much larger scale.
While Workday's Bhusri adds:
With Appirio, Wipro gains an organization with deep industry expertise and a strong commitment to customer service, dedicated to helping companies take their businesses to the cloud.
At its annual Dreamforce conference earlier this month, Salesforce revealed it anticipates a need for a tenfold increase in the global population of Salesforce consultants by 2020. Workday, which has seen significant consolidation amongst its integration partners in the past year, is also dependent on a thriving consultant ecosystem to sustain its rapid growth.
This has been on the cards for a long time — certainly since last year's acquisition of its closest rivals, Appirio was looking increasingly isolated — but the identity of the acquirer comes as something of a surprise. It's quite a bold move by Wipro, which IT services expert Phil Fersht, CEO of HfS Research, commends:
One of the most compelling and bold moves from an Indian-heritage major to date.
My take is somewhat tinged by sadness at the end of an era, even though it's also a new beginning. I've written about Appirio literally since the company got started and I've always enjoyed (and occasionally amplified) its trademark railing against the old-school global systems integrators. That's been less evident of late, but CEO Chris Barbin was still talking it up during Dreamforce two years ago when he posted this warning on the Appirio blog:
We need a seismic shift in IT services, not just a better way ... Three year, $100M ‘transformation’ initiatives are great for vendors and service providers (us included). But rarely are they good for customers.
Well it turns out that Appirio couldn't after all follow its ambition to beat them, but instead has had to join them. Still, I take comfort from the news that Appirio is expected to maintain its identity and brand once the deal closes before the end of this year. When Accenture acquired Cloud Sherpas, it successfully imported a significant dose of cloud integrator DNA into its operations, which may yet lead to a wider transformation of the organization.
Can Barbin and his colleagues at Appirio bring the necessary transformation to Wipro? I suspect there will be struggles ahead, but the explicit support from both Marc Benioff and Aneel Bhusri may be telling — they are clearly going to watching carefully to see what the outcome will be, as both their companies rely on a dependable partner ecosystem to sustain their growth. It's now incumbent on management at Appirio and Wipro to ensure there's enough commitment and energy on both sides to achieve the right outcome.