Wipro to buy UK consultancy Capco for $ 1.45 billion

Wipro Ltd said on Thursday that it would buy British consultancy Capco for $ 1.45 billion in cash, as the Indian software giant looks to boost its offerings for the financial services industry which accounts for the bulk of its revenue.

London-based Capco makes up 96% of its revenue from Europe and North America, from where Indian IT services companies have traditionally won the most lucrative contracts.

Wipro and its rivals have become major global players, including Infosys Ltd and Tata Consultancy Services Ltd, offering services related to back-office work for social media content moderation as well as traditional technical support for banks.

Capco will give Wipro access to 30 new large banking and financial clients and make the Indian firm one of the largest end-to-end consulting and technology service providers for that industry worldwide, Wipro said.

Banking and financial clients have about a third of the revenue of Bangalore-headquartered Wipro, the largest from any industry.

The deal also comes as businesses around the world spend more on digital and other back-end services to support remote operations during the epidemic.

Wipro said that the Capco acquisition in the first year had reduced the margin of interest and taxes (EBIT) by about 2%. Capco will start adding to Wipro’s earnings per share from the third year onwards.

Wipro said it expects the deal to close in the quarter ending in June.