Appirio, the cloud services consultancy that last year raised $60 million from General Atlantic and Sequoia, is putting some of that investment into acquisitions to build out its business competing against legacy systems integrators like Accenture and Deloitte. Today, Appirio is announcing that it has bought TopCoder, a platform currently used by some 500,000 developers, engineers and designers to collaborate on, and find, development assignments, ranging from apps and websites, to backend billing systems and more. It will be merged with CloudSpokes, Appirio’s competing platform with 75,000 users.
TopCoder has been in business for around a decade and has built a reputation as a partner of companies like Google and Facebook, both as a place to recruit talent and to help build projects. “All enterprises may not have the pull to hire the same coders as Facebook and Google, but using Appirio with TopCoder now can give them the same access to that kind of expertise,” Singh told me. The acquisition will add skills in AngularJS, Heroku, HTML5 and Java to CloudSpokes’ list.
Appirio co-founder Narinder Singh tells me he will be running the combined operation as its president, while TopCoder founder Jack Hughes is joining Appirio’s crowdsourcing advisory board, and David Messinger, VP of community at CloudSpokes, becomes Chief Community Officer of the combined operation.
Financial terms of the deal were not disclosed, and Singh wouldn’t comment on whether TopCoder was in the process of fundraising when the deal happened. But he did note that Appirio had approached TopCoder several times before; and that it makes business sense to integrate a platform like TopCoder’s with that of a service like Appirio’s, which helps enterprises find cloud-based solutions to problems, but not necessarily all the people needed to implement them. It also builds on other acquisitions that Appirio has made to expand its portfolio of enterprise services. Most recently, that included buying Knowledge Infusion to add HR, talent management and change management expertise.
TopCoder had raised at least $15 million, according to filings with the SEC.
The idea behind adding TopCoder to CloudSpokes, Singh says, is to continue disrupting the traditional systems integrator business as it exists today in the form of companies like Ernst & Young, Deloitte, Accenture and so on. These companies charge a premium price not only to advise large enterprises on how build out new IT services, but also then often provide the manpower to implement this. Singh believes it is a costly and inefficient system. “These systems integrators are recruiting hundreds of thousands of people just to stay flat,” he told me. And that cost gets passed on to customers.
In contrast, the crowdsourced model as envisioned by Appirio and TopCoder presupposes that for most problems there will be people who have the expertise to solve it faster and cheaper than if a top-down consultancy performed more targeted searches itself to implement a solution. (The figure Appirio claims is that costs can be reduced by some 62% in crowdsourced development environments.)
And, as Singh points out in a <a target="_blank" href=" — as as Singh points out in a blog post about the acquisition, there is a consumerization element here as play, too: just as Uber and Airbnb have taken to new tech-led models for sourcing the ‘nodes’ to power its networks (respectively, drivers and rooms that are not owned by either company), so, too, is Appirio looking to a similar model for sourcing IT knowledge workers.
In terms of both costs and basic efficiency and effectiveness, the thinking goes, too, that by offering this disruptive route to solving IT problems and building IT services, Appirio’s business will grow as well, thereby giving that bigger developer community of 600,000 people access to more work.
“Today, I’d say that among enterprises, 90% of their IT business goes to tradition consulting houses like Accenture, and 10% to companies like Appirio,” Singh said. With the further push into cloud computing, the emphasis on cost savings, and offerings that present greater parity with traditional solutions, the hope is that “the balance changes over time.”