In many cases, smart modernization efforts can transform cost structure from capital expenditures to variable expenditures. When workloads start moving on cloud and capabilities are sourced using a crowd rather than large permanent teams, everything changes. For example, leveraging crowd sourcing platform Topcoder can move application development, testing, design, and data science talent acquisition to variable cost structures.
Giving your portfolio companies the ability to ramp up and ramp down quickly on an as-needed basis boosts agility and improves financial performance.
WHAT TECHNOLOGY MODERNIZATION CAN DO FOR PE
A leading PE firm bought the Baking, Cooking, and Spreads business from one of the largest CPG companies in the world. Wipro worked closely with the PE firm and its portfolio company on the greenfield IT set up, which resulted in a right-sized retained global organization predicated on a highly outsourced operating model, focused around HQ and shared services in India.
Wipro leveraged its deep IT and business transformation capabilities to deliver value across Applications, Infrastructure (including hosting a new SAP S4/Hana system in the cloud), Integration of overall landscape, Operational data services layer and Analytics.
As a direct result, the PE firm and its portfolio company enjoyed the business benefits of an Intelligent Enterprise with improved agility and an early exit from the TSA (Transition Services Agreement).
IMPACTS: Improved agility | Intelligent Enterprise | Improved Customer Data for Marketing, Personalization, and CRM
Sale & leaseback of non-core assets
Sale & leaseback of Information Technology and Business process services is a way to offload a portfolio company’s IT and business process assets (and teams) from their books and consume it back as a service.
This may be a captive center, data center, or a department/team within the shared services organization of the portfolio company.
Every modern PE firm we know looks at key levers like global talent (right-shoring), process simplification, the movement to the cloud, and hyper-automation. But obviously, these must be applied at scale to gain maximum benefits — which may not be possible within the technology and operations landscape of a single enterprise.
The answer? Consume what would be considered non-core to the business as a service, instead.
For example, why hold on to a Data Center as an asset when it can be converted to the monetary value in return for best-in-class scalable technology? Azure, AWS, and Google Cloud can all enable powerful growth with rock-solid stability.
If you’re looking into shedding assets, Wipro will work with you before you acquire the company, at no cost to you. We will not only help you identify assets to shed in advance, but will sometimes agree to buy that asset, creating upfront monetized value for you.
We know you’re competing hard against other PE firms. Our mission is to help the firms that work with us win.
WHAT SALE AND LEASEBACK OF NON-CORE ASSETS CAN DO FOR PE
A leading PE company took an entirely innovative approach to partnering with Wipro with its portfolio company, a leader in technology-enabled health, wealth and Human Capital Management (HCM) solutions. Rather than a typical client-vendor approach the relationship explores strategic opportunities and portfolio alignment spanning both organizations. For example, Wipro acquired the India captive center of the client and transferred 9,000 staff onto its books. Wipro also assumed responsibility for the services delivered from the firm’s India locations, while the PE portfolio company acquired Wipro's Workday and Cornerstone OnDemand businesses for a combination of cash and deferred consideration payable at the end of 12 months based on Wipro’s ability to hit performance targets.
IMPACTS: Unmatched Technology Agility | Asset Monetization & Hyper Automation | Core Product Improvements |
Step III: Work with partners who know PE
Wipro works with 7 of the top 10 PE firms in the world, including Alight (Blackstone) and Magneti Marelli (KKR/Calsonic). We work with about 80 companies world-wide that are part or wholly owned by PE companies.
Most of this work is based on structured contracts to provide both support and digital transformation services in order to help accelerate their exit from the investment with desired multiples.