Wipro Hunts Deals With a Good Fit
Source: Wall Street Journal
DATE: Sept 4th, 2008
Mohit Soapbox:
Well looking for a deal with a good fit! Wonder if anyone is looking for a deal which does not fit good! For Indian vendors though a strong cultural fit is important. That is not just a requirement for the acquiree but the acquirer. For Indian vendors to do larger acquisitions and integrate those in the company is still a tough task , as most of these firms despite their global footprint are very entrenched in India and Indian management style. So far large acquisitions by Indian vendors have been few and far inbetween. Wipro bought Infocrossing but has kept that as a separate working unit. Smaller deals are easier to integrate. Indian vendors which Gartner predicts will be the mega three vendors by year 2010 ( and I disagree) have a long way to go to create a true non-India centric global companies. In a number of these firms they are still run by a smaller group of old timers which have to change guard and open up to management principles for global organization to be successful. A centralized model for global growth has limited growth abilities and the Indian vendors I believe will make smaller acquisition but are not set to do and integrate larger acquisitions without changing how they manage today.
After one of its rivals made a sizable U.K. acquisition, Indian technology-outsourcing giant Wipro Ltd. has acknowledged it is also on the hunt for deals.
In an interview, Girish Paranjpe, Wipro’s joint chief executive, said that the company is looking for an acquisition with a strong cultural fit. That consideration, at least to some degree, overrides the price tag — which is “not a big issue,” he said. “To me, if you pay 20% to 25% of a premium, that doesn’t matter as much as the fit.”
Flush with cash from years of economic expansion but facing slowing growth at home, India’s globally minded companies increasingly are snapping up businesses overseas. Technology companies are no exception; they are striving to expand their reach with new business lines and new geographical markets.
Last week, in the largest overseas acquisition by an Indian tech company, Infosys Technologies Ltd., a competitor to Bangalore-based Wipro, agreed to buy U.K.-based consulting firm Axon Group PLC for $753.1 million in cash.
Wipro’s Mr. Paranjpe said that the deal came as a surprise because Infosys doesn’t have as long a track record of making acquisitions as other tech companies, but “the logic is not hard to understand.”
He noted that in any services acquisition, the hard part really begins after the deal. “The goal is retaining clients and the people,” Mr. Paranjpe said. “It can be a tough act to pull off.”
Axon Group specializes in providing consulting for customers of business-software maker SAP AG, which is based in Walldorf, Germany. Its enterprise software helps large corporations keep track of their business processes.
Any acquisitions by Wipro could likely bolster its technology consulting division, which employs 1,000 people. The company’s strategy has been to build some in-house capability before it goes shopping for “plug-in acquisitions” that can fulfill specialized needs, Mr. Paranjpe said.
Wipro ended its past fiscal year March 31 with about $984 million in cash reserves.
Related Posts
You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.
