Wipro Expands U.S. Operations Through $600 Million Acquisition Of Infocrossing

The acquisition is part of an ongoing trend by offshore applications development outsourcers seeking to become full-service companies.

Marianne Kolbasuk McGee, Senior Writer, InformationWeek

August 7, 2007

2 Min Read

India-based outsourcer Wipro will expand its presence in the United States as well as its offering of services through a $600 million acquisition of Infocrossing, a U.S-based infrastructure management services provider.

Wipro expects its $18.75 per-share acquisition of Infocrossing, based in Leonia, N.J., to be completed by end of December, said Sridhar Ramasubbu, Wipro's CFO for Americas and Europe, in an interview.

Infocrossing, which posted revenue of $229.2 million last year, has five data centers in the United States, providing hosted and managed IT services. Wipro's acquisition of Infocrossing will help the Indian outsourcer grow its U.S. customer base by filling a gap, Ramasubbu said. That gap is created by U.S. customers that want to have their data centers physically located in the United States.

Indeed, while many U.S. businesses have gone the route of having their data centers managed offshore to save costs, many still aren't comfortable with having their data centers actually outside the United States, said Dean Davison, VP of research at offshore consulting firm NeoIT, in an interview.

With Wipro's acquisition of Infocrossing, Wipro expands its appeal as a full-service IT outsourcing firm for U.S. customers. Before, Wipro's services offerings might have been attractive to "two out of 10" U.S companies; now it goes to "seven out of 10," Davison said.

The acquisition, one of the largest by an Indian IT company in the United States, is part of an ongoing trend by offshore applications development outsourcers "wanting to expand to full-service" companies, he said. "It's not new, but it is big."

The acquisition of Infocrossing is just part of Wipro's plans to expand its presence in the United States, said Ramasubbu. In about three months, Wipro will open an Atlanta software development center, he said. The company also is building relationships with U.S. universities and colleges to attract U.S. workers, he said.

Wipro wants to recruit Americans with associate degrees in tech-related fields, hire them, train them, and pay for them to achieve bachelor's degrees in technology, as part of a Wipro plan to build up its American software development talent base, he said. Wipro also plans to recruit American ex-military personnel looking to start new careers, he said.

In addition to helping build up its staff of local talent in the United States, those moves could help Wipro deal with other talent and image problems.

For instance, Wipro, especially in recent months, has been criticized by members of Congress for its reliance on Indian employees with H-1B visas who come into the United States to train with American customers. Also, with the recent failure by Congress to pass comprehensive immigration reform, the cap on H-1B visas isn't likely to be raised anytime soon.

About the Author(s)

Marianne Kolbasuk McGee

Senior Writer, InformationWeek

Marianne Kolbasuk McGee is a former editor for InformationWeek.

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