Wipro to acquire US BPO company for $75 million

India's fourth largest IT services exporter Wipro Ltd on Monday said it would acquire Opus Capital Markets Consultants LLC (Opus CMC), a US-based BPO provider of mortgage due diligence and risk management services for $75 million - the company's 20th acquisition since the year 2000.

The purchase tag, however, includes a deferred earn-out component.

Opus CMC is expected to close 2013 with revenues of $43.4 million - the acquisition will be completed during the fourth quarter of 2013/2014 and will provide the struggling Wipro a much needed inorganic revenue boost.

In the September quarter, Wipro's revenues increased 2.7 per cent over the June quarter to $1.63 billion. In contrast, rival TCS's revenues jumped 5.4 per cent sequentially while Infosys grew 3.8 per cent.

Wipro said Opus CMC had been growing at over 30 per cent for the last three years.  Headquartered in Lincolnshire, Illinois, the company has over 490 employees, which includes 315 loan underwriters. The company has five centres in the United States.

The purchase will strengthen Wipro's mortgage solutions and outsourcing business while complementing its existing offerings in mortgage origination, servicing and secondary market.

Manoj Punja, Senior Vice President and Head of BPO at Wipro noted that the acquisition would bring differentiated capability with a platform-based risk management offering.

"We believe Opus CMC will continue to lead with their innovative offerings and extend these capabilities to Wipro's banking and financial services customers as well. Our vision is to leverage Wipro's offerings with Opus CMC's capabilities and knowledge base to create an end-to-end offering for all mortgage players, with a greater degree of automation and application of analytics," Punja noted in a press statement.

Most IT/BPO companies are building platforms, which typically bundle business process outsourcing with a technology layer.

More automation is also finding its way into their business models as companies try to de-link revenue growth from people growth. Platform-based BPO is not really new to the Indian IT industry, however - rival Infosys, for instance, acquired McCamish Systems in 2009 to gain a platform edge in the insurance and financial services sector. Wipro's BPO unit has some platform capabilities too.

"There is a non-linear value proposition. Most of the pricing is on a per loan basis," Keyur Maniar, Vice President and Global Head of BFSI BPO at Wipro told Business Today about the Opus CMC acquisition. Wipro can also take this platform solution to other geographies, going ahead.

Wipro's last acquisition was in 2012 when it acquired Australian company Promax Applications Group (PAG) for AUD 35 Million.

The Wipro stock ended 2.24 per cent up on the BSE at Rs 481.50 on Monday. The BSE Sensex was up marginally at 0.51 per cent to 20,898.01.