The Asian technology firm's purchase of a U.S.-based outsourcing provider is consistent with its expanding worldwide presence, according to one industry analyst.
Posted Aug 8, 2007
Wipro Technologies, the global technology-services and business-process arm of Indian giant Wipro Ltd., has announced that it will acquire U.S. outsourcing provider Infocrossing, in a deal worth around $600 million. The move will give Wipro an expanded presence in the U.S. market, and will also give the company increased expertise in infrastructure management, enterprise application, and business processing outsourcing, particularly for the healthcare market.
The all-cash deal, which is subject to regulatory approval, is the largest such deal by an Indian services company, according to industry pundits. The addition of Infocrossing's five data centers and approximately 900 employees significantly deepens its presence in the United States. "Wipro Technologies has identified global infrastructure services as an important driver of growth for the company, and is pleased to add Infocrossing, which provides integrated managed infrastructure services to premier global clients," said Suresh Vaswani, president of Wipro's Global I.T. Services Lines, during a press conference yesterday.
Specifically, Infocrossing provides a full portfolio of infrastructure management solutions, including server and data management, mainframe outsourcing, network management, and security services. Infocrossing's strength lies in the healthcare segment, where it provides contracted services to more than 90 managed healthcare organizations. According to Wipro, the acquisition will fill in a number of gaps in the company's infrastructure services portfolio. The company's infrastructure operation has been experiencing strong demand over the last year, Vaswani said during the press conference.
Overall, the deal is representative of India's largest technology-service providers continuing to make inroads into markets outside of Asia via a more aggressive strategy of mergers and acquisitions:
"They're moving more of their resources onshore into the U.S. and parts of Latin and South America," says Matthew Goldman, Gartner research vice president at Gartner. "It's offshoring, but in reverse, so to speak."
- In May, Tata Consultancy Services, the largest of the Indian firms, launched a new business unit called TCS Financial Solutions to further consolidate its comprehensive suite of financial products and services into a single, market-facing business unit, according to the company. The new unit will have offices in Beijing, London, New York, and Zurich, among others.
- In June, Wipro partnered with U.S.-based IDeas to tap consulting opportunities in the hospitality industry by offering loyalty management, customer experience, and Sarbanes-Oxley compliance expertise, and began scouting U.S. locations and employees for two big software-writing centers.
- In recent months, Infosys, one of the largest Indian firms, has been linked with a move for European consultancy Capgemini.
- Wipro itself has dropped strong hints that it would make a significant move in Germany.
This tactic is playing out well in the market, since implementation services are usually the most expensive component of a CRM initiative. To help mitigate these costs, buyers continue to leverage global delivery models when shopping and purchasing consulting services, the report says--blending onsite, nearshore, and offshore capabilities. A recent Gartner study of 149 CRM initiatives in North America revealed that 46 percent of projects involve the use of offshore resources, up from 33 percent from a similar study in 2006. "They're playing their cards right," Goldman says, "and having a proven track record doesn't hurt either. The more at-bats you have, the bigger the customer you'll attract."
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