Wipro considering acquisition in Germany to expand footprint

Company is planning to grow its presence organically apart from exploring inorganic growth opportunities to equip itself with large outsourcing deals

Wipro, India’s third largest IT services provider is looking at establishing a strong presence in Germany, one of the under-penetrated IT outsourcing services markets in the European region. The company is planning to grow its presence organically apart from exploring inorganic growth opportunities to equip itself to participate in large outsourcing deals in the country, Suresh Senapaty, CFO and board member of the Bangalore-based company told Business Standard.

 

“From geography standpoint, Germany is an area where though we have done quite decent, the growth there can be much. Therefore, we need to have some good orchestration in terms of having a stronger team and supporting that with inorganic growth avenues,” said Senapaty.

 

So far, Wipro has not made any acquisition in Germany for its IT services business even though its acquisitions of Austrian firm NewLogic and Portugal-based retail solution provider Enabler had given it small presence in Germany. In 2005, Wipro had acquired chip design services provider NewLogic in 2005 for Euro 47 million ($56 million). In 2006, it had acquired Enabler for about Euro 41 million ($52 million).

 

“I don’t think the size becomes a constraint because what we are looking for is what kind of revenues we can derive and what kind of footprint and services we can acquire through an acquisition in Germany. If it is $100 million or $500 million, that should not bother us,” Senapaty added.

 

Germany which houses many global automotive and engineering majors is one of the most promising IT outsourcing markets in the world. Within the European region, Germany, France and the UK put together accounts for around 70-80% of the overall spends in the region on information technology.

 

“While an acquisition in Germany can give is a strong geographical presence, the country is also quite strong in automotive and manufacturing. So it’s important that something you pick which enables you to get a lot of strong hold in these spaces,” he added. He also said that the captive R&D centres of German companies could be one of the areas the company would look at from acquisition point of view. 

 

Europe presently accounts for close to 29% of Wipro’s overall revenues in the IT services business. In the quarter ended September 30, 2013, Wipro reported 2.3% growth in Europe.