Financial Daily from THE HINDU group of publications
Friday, Feb 03, 2006
Info-Tech - Alliances & Joint Ventures
Wipro signs deal with GM; eyes $300-million revenue
Bangalore , Feb. 2
WIPRO Ltd expects to realise revenues exceeding $300 million (over Rs 1,300 crore) from the five-year IT outsourcing contract signed with global auto giant General Motors (GM) on Thursday.
GM finalised its $15 billion mega outsourcing deal by signing up IT suppliers like incumbent vendor EDS, Hewlett Packard, Capgemini, IBM, Compuware Covisint and Wipro to source systems integration services for its extended global enterprise over five years.
While EDS will retain the most business at GM, HP and Capgemini were expected to increase their existing business.
Announcing the deal, Mr Sudip Banerjee, president, Enterprise Solutions, Wipro Technologies, said Wipro in partnership with EDS has won four RFPs (request for proposals) of the 43 floated by the automaker. The lone RFP won by Wipro on its own relates to the development of middleware systems for GM, Mr Banerjee said adding the company would also contribute to the development of GM's Onestar, a vehicle tracking system and a proprietary next-generation technology.
Wipro expects revenues from this deal to flow in from the second quarter of fiscal 2007, he said. "The pricing was along expected lines and the deal is unlikely to have any impact on margins," he said. GM is one of Wipro's existing large clients that translated into a quarterly revenue of $30 million, he said.
The current deal largely covers areas of application, development and maintenance with some element of testing services.
"We were the only Indian vendors to have won this deal," he said.
Mr Banerjee also estimated that about 40-60 per cent of the work would be offshored over the five-year period.
Wipro's current engagement with GM involves a team of about 500 engineers, which would be doubled to more than 1,000 over the next 18 months, he said. "We also plan to add more capacity to our near-shore centre in Canada, that's close to Detroit, the headquarters of GM," he said adding both Wipro and EDS would leverage their global presence to execute the deal.
Wipro plans to leverage EDS' facilities in South America.
On the other hand, EDS would leverage Wipro's presence in countries like China and Japan, he said.
GM's outsourcing contract comes close on the heels of the fourth quarter loss of $4.8 billion.
The new deal is expected to replace the 10-year split-off agreement with EDS that expires in June 2006.
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