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At a time when most Indian information technology (IT) services players are looking to tap opportunities in emerging markets amid slower growth in key geographies, Bangalore-based Wipro has decided to go slow on investing into the region.
The company, whose clients include Cisco Sytems and Citigroup, has instead chosen Continental Europe as its focus region, along with the US, the UK and India, Wipro's Chief Executive Officer TK Kurien told Business Standard.
"The reason (for moving focus from emerging markets) is that when you have investment dollars, you focus like crazy on areas that you can make an impact. Where ever you cannot make your impact, you don't waste time," Kurien said. "We will keep our current clients in emerging markets happy; we are not exiting the market; but we are going after very specific opportunities."
In the emerging markets, which include Asia Pacific (APAC), Wipro will mainly focus on three industry segments-telecom, natural resources and retail banking, Kurien added.
On the back of this reduced focus on the APAC and emerging markets, Wipro saw a 4.1% quarter-on-quarter decline in revenue from the region, which makes for around 12% of its revenue currently. The company expects revenue from the region to remain flat-to-negative in the coming quarters as well.
"In the coming quarters also the performance there would be flat to negative," Kurien said. "APAC by itself is too dispersed. We will look at specific opportunities in those areas but we won't go out there and start canvassing the business."
According to a report released by professional services firm PricewaterhouseCoopers in 2013, as many as 16 Indian companies are in the list of top 100 software vendors in emerging markets. These 16 together command combined revenues of $797 million, the report had said. According to the report, India's largest IT services company TCS, is ranked 29 in the region, while Infosys is ranked 27,
For Wipro, the increased focus on Continental Europe has, however, started reaping benefits for the company, Kurien said.
In 2013, Wipro, had bolstered its local leadership in Continental Europe to drive growth in the geography. The company had appointed Ulrich Meister as the head of its Continental Europe business. Meister is focused on charting a strategy for each of the markets within Continental Europe and grow Wipro's business exponentially over the coming years, Wipro had said at the time of his appointment.
"He will continue to build on Wipro's localisation approach, drive marketing and brand investments in the geographies, and explore potential inorganic growth opportunities," Wipro had said.
Wipro has made strategic investments in Continental Europe, both organically and inorganically, over the past 10 years. Nearly 50% of the company's employees in the region have been hired locally, including region heads. Wipro is also engaging with local universities and business schools in the region for its graduate training program.
"We have decided that in Asia Pacific we won't de-focused, but we will go only after specific deals because we have to move to Continental Europe in terms of investments," Kurien said. "Some of our recent deal wins have been in Continental Europe and to that extent we see that the region is firing up for us much more. The UK, the US and Continental Europe are going to be our primary three growth engines, and we think there is enough headspace there."
