Financial Daily from THE HINDU group of publications
Monday, Apr 14, 2003
`AMS Energy buy boost to Wipro's consulting thrust' -- Mr Rohit Kumar, COO, Power and Utilities, and V-P,Wipro
V. Rishi Kumar
Mr Rohit Kumar
HYDERABAD, April 13
WIRPO Technologies Ltd, the end-to-end technology solutions provider having a significant presence in energy and utilities vertical in the global marketplace, has broadened its spectrum of technology solution offerings and is now eyeing the consulting solutions space.
The Chief Operating Officer for Power and Utilities and Vice-President of Wipro Technologies Ltd, Mr Rohit Kumar, spoke to Business Line about the company's growing presence in the European market and a fresh thrust towards consulting business following a major strategic acquisition.
Mr Kumar, who also heads the Wipro's Hyderabad development centre, says that the company, which has a major part of its business coming from Europe, that is about 80-85 per cent now, expects to leverage the US market. With the strategic acquisition of AMS Energy, the company is set to tap new opportunities. Excerpts:
How is the power and utilities segment doing globally?
The world of energy retailing in North America has been radically transformed into a highly unpredictable marketplace. It is a market in a state of flux, caught in the throes of uncertainty thanks largely due to the California power development and the Enron fiasco and the string of damning revelations that shook the foundations of corporate America. The global utilities arena now resembles a war zone where the battle lines have been drawn and every player worth his penny is arming himself for the coming war of power.
In spite of this turmoil, open markets continue to develop. Energy retailing is not just a new buzzword doing the rounds, but a whole new way of doing business and what's more, it is here to stay. Because of its potential, it will be an increasingly vital strategic value driver of energy companies around the world. The dynamic environment forces have dictated a change in the old utility model. For those that get it right, the very uncertainty of the new energy landscape will create opportunities for enhanced shareholder value.
How is Wipro's Energy SBU shaping up?
Wipro's unparalleled business consulting expertise allied with cutting edge technology helps it address the needs of major utilities players in North America like New Power, Vectran and Pepco.
Our Energy and Utilities strategic business group that handles enterprise solutions is about 1,250-1,300-people strong with its headquarters at Hyderabad and global support centre in Bangalore and Reading, UK. This has grown to about 1,400-plus following the strategic acquisition of AMS Energy. We also have dedicated centres for Thames Water and National Grid Transco and about a dozen other clients.
This practice encompasses power, natural gas, hydroelectric, T&D (transmission and distribution) and more importantly, the growing business of retailing in this sector. We are also broadening the spectrum to handle logistics space while providing consulting services.
About 15-16 per cent of Wipro Technologies' business is from energy and utilities segment and significantly about 75 per cent of the total business from this sector has been from the UK and European marketplace. We have grown rapidly in Europe and have offices in the Netherlands, France and Germany.
On the other hand, AMS Energy has 70 per cent of its business from the US and 30 per cent from the UK. This makes it a logical acquisition for us. The growth in the Europe was mainly due to faster deregulation where there are more UK companies that are ready for new initiatives.
What are your plans for India and the Asia-Pacific market?
The business has thrown up exciting opportunities not just in consulting and services, but also in the area of business process outsourcing covering transaction processing. While we don't see utilities companies outsourcing call centre applications, they may provide opportunities in transaction processing-related business.
Following the acquisition of AMS Energy, we have added a significant presence in the US market and have also enhanced the consulting solutions business. This development will provide us with opportunities to enhance our business in the US. While we have not taken any decision as yet on addressing the Indian market, the Asia-Pacific market is about 18 months to two years behind the European market in terms of deregulation and related issues. As and when there is opportunity, we will address this.
But are utility companies investing in IT following the general slowdown?
While the IT spend itself has come down in the recent past, a lot of utilities and energy corporations globally are looking at ways and means to bring in efficiencies.
While the opportunity itself is huge, the effectiveness of outsourcing will provide huge opportunities. We are also in consultations with regard to business process outsourcing (BPO) opportunities with some companies.
About 25 per cent of the IT spend is generally on the opex or operational expenditure side and the rest on the capex or capital expenditure side and this will continue to grow.
We expect our US business to grow faster than the rest of the European business.
With a renewed thrust backed by the consulting front-end and offshore development and support services, we see a great business opportunity.
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