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Wipro acquires Promax to strengthen analytics offering

Most large tier IT companies have now identified analytics as the next big growth area.  According to the McKinsey Global Institute, the US will face a shortage of 190,000 people with deep analytical skills by 2018 -  a $20 billion outsourcing opportunity.

twitter-logo Goutam Das   Bangalore     Last Updated: May 1, 2012  | 17:09 IST

Goutam Das
Wipro Limited on Monday announced the acquisition of Australian analytics product firm Promax Applications Group (PAG), continuing with its "string of pearls" inorganic strategy that seeks to plug holes in the company's domain, technology and geographical reach limitations with small mergers.   

The acquisition, the company's 17th in the IT business since 2002, was closed for an all cash deal of AUD 35 million. The product firm was valued at more than two times its topline - on an annual basis, PAG has revenues of AUD 15-16 million. Details about PAG's profitability were not available but Wipro Technologies' chief strategy officer Rishad Premji said that PAG's margins were in line with the IT services business of Wipro.

In the year ending March 2012, Wipro's IT business raked in revenues of $5.9 billion with operating margins of 20.8 per cent.   

PAG, although based in Australia, has implementations in the US and Europe. The firm plays in the consumer packaged goods industry where its dishes out trade promotion planning, management, and optimisation analytics products to food and beverage, wine and beer companies among others.

Wipro's management said that there was room for cross-play - the analytics solutions can be taken to other verticals while Wipro's tech services could be sold to PAG's 45 global customers. PAG licenses its products but Wipro now plans to customize it for a platform and cloud environment where revenues can be accrued on an annuity basis rather than just licensing. This is a good idea considering that customers are wary of capex investments in this economic climate - an opex model, which in the case of IT resembles a monthly rental kind of a model, is resonating well.  

The buy is expected to be closed in the June quarter itself.

PAG is Rishad's - chairman Azim Premji 's elder son - second feather in the cap. In April 2011, he had spearheaded the $150 million acquisition of the global oil and gas IT practice of Science Applications International Corporation (SAIC), which plugged a domain gap in Wipro's Energy and Utilities vertical.   

"We will continue to remain active on M&As," Rishad told scribes during a press briefing. Besides acquisitions for domain and tech capability around analytics, mobility and cloud, the firm would be scouting for acquisitions in geographies like Europe, he added.

Most large tier IT companies have now identified analytics as the next big growth area, besides mobility and cloud - the benefits of analysing Big Data, or large pools of data, are becoming clearer. Industry pioneers such as Mu Sigma and Fractal Analytics have emerged in India, and majors such as IBM have built large analytics teams. Walmart, Tesco, Jet Blue, and Marriott have used analytics well to compete.

The outsourcing opportunity for analytics services appear to be huge as well. According to the McKinsey Global Institute, the US will face a shortage of 190,000 people with deep analytical skills by 2018. That could be a $20 billion outsourcing opportunity.

Wipro's Analytics and Information management practice currently employs 8,000 people and generates revenues of over $600 million. Besides analytics services, the practice includes package implementation services for business intelligence software. The group is growing at north of 25 per cent, Senior Vice President and Global Head of Analytics and Information Management at Wipro KR Sanjiv said.   

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