Wipro to sell part of its Appirio business to Alight for $110 million

Workday and Cornerstone OnDemand were part of Wipro's $500 million acquisition of Appirio in 2016.

Wipro on Wednesday said it will divest two of its cloud-based HR solutions—Workday and Cornerstone OnDemand—to US-based Alight Solutions for about $110 million.

The divestment of the two businesses, which came to Wipro when it acquired Indianapolis-headquartered cloud services company Appirio for $500 million in 2016, will also lead to rebadging of around 350 employees by Alight.

While $100 million of payout will come to Wipro with the closure of the deal, rest $10 million will be paid after one year based on various performance parameters.

"This agreement will enable Wipro to sharpen its focus on key offerings where it has a leadership position in the market. We will continue to make significant investments to grow our cloud applications and platforms business," said Abidali Neemuchwala, CEO and Executive Director at Wipro. The company would also expand its Salesforce business under the Appirio brand post this divestment, he added.

Workday and Cornerstone OnDemand, with dedicated HR services solutions, have multiple clients in the US, Europe, Middle East and Africa, and will supplement Alight’s capabilities in HR and financial solutions space, Wipro said.

In July 2018, the Bengaluru-headquartered firm had won its largest ever IT outsourcing contract worth around $1.6 billion from Alight Solutions with a tenure of 10 years. As part of the deal, the Azim Premji-owned company had also acquired Alight's India unit for $117 million apart from absorbing around 9,000 people of the latter.

"Following the closing of the 10-year agreement, previously announced in September 2018, Alight and Wipro continue to explore additional strategic opportunities and possible alignment of portfolios based on their respective strengths," Wipro said.

With the current deal between Wipro and Alight, analysts said that while this is a sign of growing strategic relationship between the two companies, it also indicates portfolio realignment in case of Wipro.

"In a way, this indicates 360 degree partnership between these two companies. Also, as most Indian IT and BPM firms don't have strong HR practices, Wipro could have done portfolio realignment by divesting these two businesses," said Pareekh Jain of Pareekh Consulting.