Wipro eyes buyouts of specialised firms in energy, resources

Written by P P Thimmaya | Bangalore | Updated: Mar 14 2013, 07:12am hrs
Wipro, Indias third-largest software services exporter, is actively scouting for acquisitions to beef up the specialisation in its energy, natural resources and utilities (ENU) business unit.

The ENU unit had acquired the global oil and gas information technology practice of Science Application International Corporation (SAIC) for a consideration of $150 million in April 2011.

In an interaction with FE, Anand Padmanabhan, senior vice-president and global head, ENU, strategic business unit (SBU), Wipro Technologies, said that they are looking at companies that would add to their capabilities in specialised domains in the energy, natural resources and utilities segments.

He said that it would be prudent for them to acquire these capabilities rather than building it on their own as the market demands a faster response for specialised technologies.

The 2011 acquisition had given the company a significant lift as it brought in capabilities in areas such as digital oil field, petro-technical data management and petroleum application services, which are key requirements for addressing the upstream segment in the energy sector.

Padmanabhan said that their focus of acquiring such companies would largely be present in the developed economies like North America, Europe and size could be bigger or smaller than SAIC.

Such planned acquisitions would be one of the key factors for Wipro to enlarge its scope of business activity in these sectors at a time when they are witnessing a major shift in their business models.

The oil and natural gas sector, for example, is now seeing newer discoveries of energy resources like shale gas or hydrocarbon hydrates, which has forced the companies to invest further in technology to tap into this fuel. According to Padmanabhan, Wipro has got certain advantages in these sectors as they can use their expertise both at the operations and IT levels.

Buoyancy in the IT adoption is reflected in the revenue growth rates of Wipros ENU unit. It accounts for 15% of the companys total revenues at $900 million and growing much faster than the overall average over the last couple of years. For the quarter ended December 31, 2012, this SBU grew by 18.1% on a year-on-year basis.