Wipro bets big on consulting biz

Inorganic Growth

- Infosys acquired WongDoody, Fluido, Simplus

- Acquisitions to boost its consulting practice

- Recently said it'll acquire Texas-based Edgile for $230 mn

- It looks to strengthen Wipro's position in fast-growing cybersecurity services space

- However, experts opine that consulting practice can be margin dilutive

Bengaluru: Wipro is slowly picking up its strategic bets under the leadership of CEO, Thierry Delaporte, with a major focus on consulting business for accelerating revenue growth in coming years.

The Bengaluru-headquartered firm announced this week that it will acquire Texas-headquartered cybersecurity consulting provider Edgile for an all-cash consideration of $230 million, as it looks to strengthen its position in the fast-growing cybersecurity services space.

Edgile provides consulting services for cybersecurity risk and compliance, information and cloud security, and digital identity among others. In March this year, Wipro had done its largest ever acquisition of technology consultancy to banking and financial services industry Capco for $1.45 billion.

"Of course, Wipro seems to be betting big on the consulting business which is crucial to bag the large outsourcing contracts. The company under the new CEO is picking up its strategic bets like cybersecurity, consulting and other such emerging areas, which can accelerate its revenue growth. At a time, when consulting business is growing, this acquisition puts Wipro on a strong position," Pareekh Jain, an IT outsourcing advisor and founder of Pareekh Consulting told Bizz Buzz.

He, however, pointed out that the success of these acquisitions will be known after a few years.

Consulting business is growing at a faster clip in the recent quarters as companies undertake large digital transformation projects amid the pandemic. This trend has been prominent in the recently announced Accenture first quarter results. While Accenture reported a margin increase in its outsourcing revenues as compared to previous quarter, its consulting revenues grew at a faster pace. Such uptick in consulting revenues show that enterprises are seeking consultancy services before deciding on their big ticket IT spends.

For decades, Indian IT services firms have been seen as not so strong in the consulting space as compared to their global counterparts like Accenture, IBM and Capgemini, among others.

However, this is changing in recent years as domestic IT biggies are fast catching up by not only hiring external talent, but by acquisitions of consulting firms to build up capabilities in this space.

Apart from Wipro, companies like Infosys have also taken the acquisition route to strengthen their consulting practice. Infosys has acquired companies like WongDoody, Fluido, Simplus among others over these years to boost its consulting practice.

However, analysts also pointed out that large consulting practice can be margin dilutive as seen in case of global IT firms.