Wipro hopes to increase European revenues

BANGALORE: Wipro Technologies, which saw a 46 per cent year-on-year growth in its European revenues in Q4 2006, is planning to expand business in this geography.

Currently, Europe's contribution to the company's IT services business stands at 33 per cent while North America accounts for 62 per cent of overall sales.

While Wipro officials did not comment on the extent of revenues it expects from Europe, they said that they are looking to increase it since Europe is a less saturated market compared to the US with good growth potential.

“We are considering adding more business in Europe. Business is increasing in segments like BFSI, product engineering and BPO,” said Sudeep Nandy, chief strategy officer, Wipro.

To meet this goal, the company is planning both inorganic and organic growth strategies. Late last year, the company acquired Austrian R&D services provider NewLogic.

The company has also announced its plan to start a near-shore facility in Bucharest in Romania to service German and French customers.

Nandy termed Romania a good choice because cost of operations is lower there, since it is a non-European Union (EU) country. This center is expected to handle BPO operations.

Analysts believe this near-shoring trend in Europe is bound to prevail. Companies are finding that having a base in Eastern Europe provides advantages like the near-shore comfort factor, better language capabilities in German and French and a good cultural fit. Europe also seems a safe bet as a de-risking and hedging strategy as well.

“In case there is a slowdown in the US market, companies can leverage on the European market and also APAC, Japan and the Middle East,” said Sabyasachi Satpathy, research director, of offshore consultancy firm, neoIT.

Besides, Wipro, some other Indian IT services companies are also eyeing Europe. Infosys has a remote infrastructure management services center in Prague while TCS has a development facility in Budapest.

Business from Europe is also growing faster than any other geographies. Satpathy contends that this is because Europe is in the 'catch-up phase.'

“The European market is emerging strongly. Though they are late bloomers when it comes to offshoring, they are catching up since they fear the loss of competitiveness.”

Satpathy feels that Indian players can score better in offering IT services rather than BPO since companies are only now putting in those language capabilities in place in Eastern Europe.

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