Wipro eyes European buys despite weak economies
LONDON (Reuters) - Indian IT services provider Wipro Technologies (WIPR.BO) is keen on making acquisitions in continental Europe despite economic weakness there because outsourcing markets in the region are not yet mature.
"It's not a market-share game there yet. It's more about creating the demand and creating the market," Chief Financial Officer Manish Dugar told Reuters in an interview.
"Germany and France certainly are areas where we want to make investments and grow," he said. "We are certainly evaluating various target companies.
Continental Europe, with its many languages and cultures, has been slower to warm to outsourcing than Anglo-Saxon countries, who were a natural target for Indian IT service providers, with their huge pool of English speakers.
Wipro, India's third-biggest outsourcer after Tata Consultancy Services (TCS.BO) and Infosys (INFY.BO), reported its first decline in IT services revenue in at least five years for the January-March quarter.
The company, which is also listed in New York (WIT.N), counts Citigroup (C.N), Cisco (CSCO.O) and Credit Suisse (CSGN.VX) among its clients.
Dugar said he expected the gap between successful IT services companies and "also-rans" would widen this year due to tough economic conditions, and some consolidation would occur, but did not see mega-mergers between India's large outsourcers.
"Most of them are comfortable, both in terms of cash position and in terms of their business model, so ... I think the chances are low. Plus the strategic benefit of acquiring will not be too great," he said.
"But if you are talking about consolidation at a global level, I think there is certainly a lot in the offing."
India's HCL Technologies (HCLT.BO) recently bought Britain's Axon Group for 440 million pounds ($650 million), and Infosys said last month it expected to find acquisition opportunities in the United States during the current downturn.
Dugar said he did not see Wipro taking part in large acquisitions in any industry consolidation, partly because its aim is to buy into new countries, niches or particular customers like Citigroup, rather than acquire sheer numbers of clients.
"We have never had a philosophy of buying a same-size or a larger-size corporation, because aggregation of revenue has not been the intent," he said.
Dugar said Wipro's moves into nearshoring -- establishing centers near its customers -- stood it in good stead in the face of potential protectionism on the part of governments who might fear political backlash from outsourcing as locals lose jobs.
"We invested ahead of the curve in developing nearshore centers and onshore centers which we can now use to staff with onsite local people, so that we can continue with outsourcing and we need not necessarily offshore," he said.
He added that he did not expect the outcome of a general election in India, where a third round of voting is taking place, to affect Wipro one way or the other. Continued...
