Decision made in part due to regulatory pressure, company says
Calgary’s ATCO Group, a utilities and manufacturing company, has struck a 10-year multi-million deal to outsource its IT services to India’s Wipro Ltd. The deal includes Wipro buying ATCO’s I-Tek IT services division for $195 million.
“This alliance ensures ATCO can focus on growing our core businesses of structures and logistics, utilities, and energy while partnering with Wipro for strategic, innovative IT solutions required to support our global operations,” Brian Bale, ATCO’s senior vice-president and CFO said in a statement Friday. “Wipro’s deep domain capability and technology-leadership will also ensure we continue to deliver cost-effective services to our customers.”
The decision to outsource IT services was due 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, the company said in the statement. By competitively outsourcing its IT services, ATCO is addressing the concerns expressed by the commission, it said.
ATCO is a conglomerate in a number of fields including manufacturing portable buildings used on construction sites, natural gas gathering and processing facilities, power generator plants and — until the sale — an IT solutions division.
Under the deal, Wipro — one of India’s largest IT outsourcing companies — and ATCO signed a series of master services agreements under which Wipro will provide the complete suite of IT services to ATCO, which could result in Wipro getting over $120 million a year for the next decade.
“We have traditionally had a strong position in the utilities space in Europe, and this engagement provides momentum to our business in Canada and Australia,” Anand Padmanabhan, who heads Wipro’s energy, natural resources and utilities division, said in a statement. “The alliance with ATCO enhances our capability to create, nurture and tap local talent to power our growth journey in Canada.”
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