Wipro Gets Serious About As-a-Service with the Acquisition of Viteos

As we have discussed in our recent research on the As-a-Service Economy, the business services world is in the midst of unprecedented change as services commoditize and providers have to find smart ways to delink revenue growth and profit from headcount addition.  In short, the smart service providers are already doubling down on investing in the As-a-Service model in order to deliver more profitable, scalable multi-tenant offerings that meet client outcomes, without the intense customization and cost of yesteryear’s outsourcing deals.

Against this background, Wipro has announced plans to acquire The Viteos Group, a provider of industry specific business process services to investment banks. Viteos provides a range of platform and BPaaS offerings in a number of process areas including: reconciliation, customer compliance (KYC), settlements, middle office, asset servicing syndicated loans and reference data solutions. It sells these services to a number of investment banks across the globe. Viteos will bring with it 400 employees as part of this acquisition.

Viteos will retain its current brand identity post acquisition and the current management will continue to operate the business within Wipro. It is understood that the service provider will leverage the scale and resources of the broader Wipro business to develop additional products and services. This will expand its set of offerings to new process areas and other sectors within the Capital markets industry. This will make it the focus for BPaaS and platform based business process outsourcing services innovation within Wipro.

This deal is important for Wipro for a number of reasons. It demonstrates to the market that Wipro is seriously committed to the As-a-Service Economy and is prepared to invest to bring this type of solution and service to its clients. Although the platform itself is important, giving Wipro the knowledge and skill to make a BPaaS offering that can be successful in the market is the most important part of this acquisition. This could auger the start of a major period of change for Wipro as it prepares itself for the new As-a-Service era of business services.  It also increases the competitive intensity in the KYC process market which has been very active since late 2014.

The test of success for this acquisition is two fold:

• Can Viteos continue its success and expand its offerings as part of Wipro? Scaling the Viteos platform, addressing a broader cross section of banking process areas and Capital market industry.
• Can Viteos business unit act a template for building BPaaS and platform based solutions for other industries and process areas within Wipro? Long term if Wipro is going to have continued success as a business service player it will need to develop a broader range of offerings that leverage its people and its technology.

However, it’s not all about “pure BPaaS”, it is about blending BPaaS with the traditional people model to scale these solutions with talent, but not in the manner where the only way to scale is simply by adding more people.  The way forward for firms like Wipro is to align talent with multiple clients to add real strategic value that promotes new experiences and creative ideas. 

In short, this Viteos acquisition a people-plus-technology play with BPaaS at the core.  We are not at a “pre BPaaS” model in this traditional BPO domain, but what Wipro can achieve here is a blend between traditional BPO and BPaaS initially, and as clients require less customization down the road, Wipro can further industrialize the model with common standards and solutions across all banking clients.

Furthermore, Wipro BPO CEO Nagendra Bandaru is very focused on making BPaaS the core of Wipro’s future BPO strategy – Viteos is a sound move in our view, at a reasonable investment level for the assets acquired.

At HfS, we see Wipro’s new corporate focus as very supporting of BPaaS/BPO investment, with the firm’s passion for process and the influence of CEO TK Kurien and COO Abid Neemuchwala, both coming from BPO backgrounds.  We expect to see Wipro make a stronger play into robotic process automation and cognitive computing next as they seek further industrialization of business process capability.