Wipro inks $1.1bn deal with ATCO; acquires IT arm for $195 mn

Jul 18 2014, 16:20 IST
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Wipro has entered into a multi- million dollar dual pact with Canada's ATCO. Wipro has entered into a multi- million dollar dual pact with Canada's ATCO.
SummaryATCO Group, a $16-bn enterprise, is one of Canada's premier corporations with 9,800 employees.

in part to increasing regulatory challenges faced by ATCO’s utility companies when applying to the Alberta Utilities Commission to include IT costs, provided by ATCO I-Tek, for recovery in customer rates."

By competitively outsourcing its IT services, ATCO is addressing the concerns expressed by the Alberta Utilities Commission, it said in a statement.

About 500 employees from Canada and 50 from Australia will be transferred to Wipro as part of the deal with ATCO.

Wipro will also acquire shares of ATCO I-Tek, including current contracts and employees, as well as the assets of ATCO I-Tek Australia as valuable resources to provide IT services ATCO requires and to serve as a launching point for Wipro's expansion in Canada and Australia, ATCO said.

ATCO I-Tek will continue to operate as a subsidiary under Wipro.

"The sale is expected to close in the third quarter of 2014 subject to customary closing conditions. Aggregate proceeds from the sale are expected to be approximately CAD 210 million," it added.

"ATCO I-Tek has over 700 employees. They will retain a few employees for BPO part of the business," he said.

Over the years, Indian IT firms have bought captive IT units of large customer organisations and gained access to large outsourcing contracts in the process.

In 2008, Wipro had bought the IT arm of Citigroup in India for USD 127 million, while TCS acquired the India-based captive unit of Citigroup Global Services Ltd for USD 505 million.

"The employees coming on board have extensive domain knowledge and will help us grow business," Padmanabhan said.

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