Mumbai, May 15: Wipro Technologies today said it has signed a definitive agreement to acquire US-based Quantech Global Services Llc and its Indian arm in an all-cash deal.

According to sources, the deal is estimated to be around $10 million. The consideration includes upfront cash payment on closure of the transaction and earn-outs on achieving agreed financial targets over a three-year period, the company informed the Bombay Stock Exchange.

The entire transaction is expected to be closed during the next one month.

“We are paying Quantech some amount in cash and a large part of the money will be paid to the company over a three-year period. The payout will be linked to three factors ? the company’s revenue, margins and the growth it achieves,” said Sudip Nandy, chief strategy officer, Wipro Technologies.

The acquisition is expected to strengthen Wipro’s engineering services portfolio in mechanical engineering.

As part of the deal, Wipro will acquire Quantech’s 100 per cent subsidiary in India, Quantech Global Services Ltd.

Last year, close to 64 per cent of Wipro Technologies’s revenue came from IT services and 36 per cent from engineering and mechanical design services.

In the past few years, there has been a tremendous growth in mechanical design services outsourcing. It is believed that in the next 5-10 years, this vertical will contribute close to $20 billion to the IT industry.

Quantech has over 500 employees located in India and the US. The company has earned a revenue of $12.7 million for the year ended December 2005.

Close to 72 per cent of its revenue comes from the US market, 16 per cent from Japan and 8 per cent from Europe.

“Our clients include GM, Ford and Nissan among others. We provide them with mechanical design services,” said Mukesh Gandhi, chief executive of Quantech.

In a car, some functions are based on electronic engineering while others on mechanical engineering. Quantech provides clients with the mechanical design service, Gandhi added. He will take over as the head of Wipro’s mechanical design services division.

Wipro is looking at a higher growth in Japan and Europe through Quantech.

A.L. Rao, chief operating officer of Wipro Technologies, said, “Our customers are increasingly seeking complete product engineering services. Quantech’s strength in mechanical design services complements Wipro’s core strength in embedded software and system design capabilities.”