Outsourcing: Interview with Roop Singh, VP and Head for North America, Europe and JAPAC at Wipro Consulting Services (Part 6)

Sramana Mitra: And the risk is also built into that, because I suppose you do that across a portfolio product so the risk is mitigated by working on multiple products like that and not just one. You mentioned there was an acquisition you made in New Jersey. Can you talk a little bit about that? What is happening in the industry in terms of acquisitions? What is your strategy? What is the industry thinking about it, and what are you thinking about it?

Roop Singh: Wipro has always looked at acquisitions as way to build capability that we don’t have in-house. We have never done acquisitions from an aggregation point of view. I think that is the wrong model, and that way the return diminishes very quickly.

Recently we have felt that there is a great need of skills, especially in the analytics space. We acquired an organization in Australia called Promax. Ww acquired it for trade promotions and analytics. Very recently we took an interest in an organization that provides handling of big data. It is an East Coast–based company that has 350 data scientists on the payroll, and they look at big data in a different form. We wanted that skill set, so we took an interest in that organization. In the past we have done some major acquisitions to expand our capabilities in the infrastructure space. This is another company we acquired on the East Coast.

We will continue to acquire based on what we feel is a capability we need to build in to the organization. What I have seen outside are the changes to a very similar tune. If I look at Google’s recent acquisition, they have acquired an organization primarily based on the capability which that company can bring to them. Similarly, if I look at other service-based organizations, they are all acquiring market leaders for their market presence, or they are thriving for a special skill presence. That is continuing. The acquisition for aggregation is coming toward an end. Most of the organizations in the service industry have learned that when you acquire for aggregation you tend to lose a lot of talent very quickly. As a result, most of the organizations are going off with specialized skills organizations that can be complimentary to the work they are providing.

SM: So your strategy is talent acquisition and acquisition to get into different market segments where you have interest. I imagine you do not have interest in buying a company that has a certain product line.

RS: No. What you will at the most is an IP-based framework. We do not actually go out and acquire for other companies.

SM: What are the dynamics of Europe right now?

RS: The economic crisis concerning the European Community has put a lot of pressure on organizations from both a market share perspective and a growth perspective. As a result, most of the organizations are now looking for a market outside Europe. Greece was a big shock to the European Community overall, followed by Cyprus very quickly. Now there is a lot of speculation on what the southern countries will do – Spain, Portugal, etc. Organizations that are involved in the European Community are starting to look for new markets, which are in the emerging fields – Asia, for example. That has done a lot of interest in the outcome of companies. They are starting to lose talent. This is also due to regulations. This has put a lot of pressure on talent. The brain drain, as we call it, is starting to happen. The entire European Community is now trying to find mechanisms as to retain those skills within the region.

That is one of the key pressures most of the services companies are going through. The second one is that organizations, as they are looking to go to markets outside Europe, are looking for organizations that can support them outside Europe. That again has put pressure on local service organizations that are providing service capabilities. The third is the ongoing crisis that we find ourselves in from an economic point of view. There is a lot indecision. Companies are still taking a lot of time to decide what their next strategy is going to be in terms of which markets to invest in. This has a direct implication on their technology platforms. Most of the services companies this year have a wait-and-watch approach – cautiously optimistic is the way I would phrase it. But there is some sort of cautiousness in terms of what the ongoing spending is going to be from a services point of view.

This segment is part 6 in the series : Outsourcing: Interview with Roop Singh, VP and Head for North America, Europe and JAPAC at Wipro Consulting Services
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