The $6-billion Wipro, the country's third largest software services exporter, is exploring the possibility of acquiring a firm in Germany, the world's second-largest IT market.
The Bangalore-headquartered firm said there is a sense of urgency for the company to go ahead with the inorganic route as Germany is currently generating only about $100 million in revenue for Wipro. The company's top management feels this is too miniscule a share given the size of the German IT market, only next to that of US.
The IT major is set to explore both the organic and inorganic route to expand its base in the German market. “We have to do something there desperately either organic or inorganic and cannot sit in the state we are in,” T K Kurien, CEO, IT business, Wipro told FE.
The software services firm has done numerous acquisitions in Europe but never in Germany. Some of the European companies acquired by Wipro in past were NewLogic, Saraware, Enabler, which were based out of countries like Austria, Finland and Portugal. For the second-quarter ending September, Wipro generated 28.2% of its revenue from Europe showing an yearly growth of 2.7%.
To penetrate the German market, Wipro plans to tap into the experience and understanding of its board member, Henning Kagermann, president, Acatech (German Academy of Science and Technology). Kagermann joined the Wipro board in 2009.
“Kagermann profile is impressive as he was the CEO of the enterprise software maker SAP AG till 2009 and is currently a member of the supervisory boards of Deutsche Bank AG, Munich Re, Deutsche Post in Germay and Nokia Corporation,” notes Kurien.
For majority of the Indian IT companies operating in Europe, close to 90% of the revenues come from the UK with the rest coming in from other geographies such as Germany, France and the Nordics. The key challenge for domestic software companies in making a headway into continental Europe has been the language and cultural barriers and it is no exception for Wipro. Kurien also admitted that language was a huge issue to get into the market.