Wipro on acquisition spree

By agencies   |   Tuesday, 07 June 2005, 19:30 IST
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LONDON: Wipro is looking to make new acquisitions as it seeks to deepen its specialist expertise and move into offering more complex services to its customers. “We have a number of acquisitions in the pipeline,” Azim Premji, chief executive said. “At this point in time, some acquisitions in India and some in the U.S. are our priority. We are looking at one acquisition in Europe, but that is not as advanced,” he said. It is two years since Wipro’s last series of acquisitions two small U.S. based consultancies, the Spectramind call center business in India and two Indian research and development centers. These businesses have now been integrated, and the company is ready to look for new targets. Premji said new acquisitions were likely to be smaller firms with annual revenues of between $25 million to $100 million. This was in part because the type of specialist consultancies Wipro was interested in tended to fall into this range. Also Premji believed smaller acquisitions tended to be less risky. The company is looking to expand in telecoms services, retail, embedded systems and engineering. Widening the scope of what it can offer customers is becoming increasingly important for Wipro. U.S. and European competitors such as IBM and LogicaCMG are moving more of their operations to India, and are starting to be able to compete with the Indian IT companies on price. “We are starting to see deals where IBM is offering a similar service from India, at similar price points, so we have to provide value that is beyond just cost arbitrage,” said Premji. “Our challenge is how to be constantly two or three years ahead of them in this model.” So far, Wipro appears to have no trouble maintaining its edge revenues at the company rose 39 percent last year, compared with about 8 percent at IBM. Despite some market concerns about sluggish IT spending by companies Premji believes there is a lot of potential in Europe. Though the region only accounts for 32 percent of Wipro sales, compared with about 63 percent for the U.S., it is the fastest-growing of the company’s markets. “It is still difficult to convince more conservative customers like you would find in France and Germany. There is concern among the politicians and communities that if jobs go offshore they get lost,” he said. However, consumers, even in these markets, were starting to demand the cost savings and efficiencies that could be gained from the Indian outsourcing model. “We are starting to find traction in France and Germany, you can see the difference over the past four years. We see them as major growth markets for us.” Wipro is planning to open a software center in Eastern Europe, possibly in Hungary or Romania.