Wipro eyes double digit revenue growth
Wipro expects to boost revenues in Japan by 40% in the next 5 years, Azim Premji said on the sidelines of WEF.india Updated: Jan 28, 2006 11:38 IST
Wipro, India's third-largest software exporter, expects to boost revenues in Japan by 40 per cent a year in the next 5 years, the chairman of the company said.
In a rare interview, Azim Premji, chairman of the Bangalore-based company and India's richest man, alsosaid Wipro planned to buy European firms with focus on the retail software market as its business in the region grows 1.5 times faster than in the United States.
He said New York-listed Wipro has been in Japan for more than 7 years with 850 engineers worldwide servicing 30 clients, including Toshiba, Fujitsu and NEC, posting revenues of just under $100 million a year.
"We are investing more in our development centres, we are expanding, we may open a development centre outside Tokyo. It's really a growth strategy and it's a growth area," Premji said on Friday on the sidelines of the World Economic Forum in Davos.
Premji, who has an 83 per cent stake in the $15 billion company, said he faced challenges in doing business in China.
"For us Japan is a much higher priority. We find there are challenges in China -- the stability of people, intellectual property, uncertain cash flows," he said.
"They are hard-working people but they don't have democracy. When they have a transition to democracy there are going to be huge challenges."
As for Europe, Premji said it was a key area as a third of Wipro's revenues are coming from the region.
"It's growing 50 per cent compounded. It's a very strong market," he said.
"We have many more acquisition plans in Europe. We are looking at companies in areas including retail -- companies specialised in giving software services with deep understanding of the retail sector."
Wipro's consolidated revenue was Rs 27.7 billion Indian in the third quarter.
Wipro is a front-runner in India's technology and back-office service sector, emerging as a contender against big players like Electronic Data Systems, IBM and Accenture, which are now hiring in India by the thousands to catch up and stay competitive.
Diversified Wipro, which counts telecoms gear makers Cisco
And Nortel as customers, is a big player in Asian IT infrastructure contracts. It has minor interests in consumer goods, such as soap.
Wipro is eyeing big deals in 2006, including a big chunk from General Motors, which is set to renew a 10-year contract now worth $2 billion a year to EDS.
GM posted a fourth-quarter net loss of 4.8 billion dollars on Thursday, a sea of red ink deeper than the most pessimistic Wall Street estimate, as costs for layoffs and plant closures soared.
It was the fifth straight quarterly loss for the world's largest automaker and was its first annual loss since 1992.
Premji, who declined to comment on the detail of the GM deal due to disclosure reasons, said the US company was recovering.
"I think they are getting their act together now. Fundamentally GM is a very strong company. I think it will pull out of it faster than people expect them to."
STEEL NOT SOFTWARE
India's rising economic importance has been widely promoted at this year's summit in Davos, where chief executives and politicians gather to discuss global trends and network.
Participants were grabbed by the news yesterday that Mittal Steel launched a $23 billion hostile bid for main rival Arcelor to strengthen its grip on the global steel industry.