Bangalore: Wipro Ltd, India’s third largest technology firm, confirmed on Sunday that it has delayed the opening of a new development centre in the US due to the current economic downturn that has forced firms to cut technology spending.
The US-based Atlanta Business Chronicle first reported the development on Saturday.
Cautious approach: The Wipro campus in Bangalore. Hemant Mishra / Mint
In August 2007, Wipro had said it would set up the so-called near-shore centre in Atlanta, Georgia, and hire 200 employees in the first year, taking the figure to 500 in three years.
As Americans feared that outsourcing to India would take away their jobs, such near-shore centres became a line of defence for many Indian companies who said they also were creating local jobs in the US.
Wipro had also said that it planned to set up a training centre in Atlanta to provide both technical and soft-skills training to its employees in Georgia, and sponsor higher education degrees for up to 40% of its employees for training and development.
“Since this (is) a new initiative, given the uncertainty in the environment, it takes more time to get customers’ attention,” Sridhar Ramasubbu, chief financial officer of the American unit of Wipro, said in a statement through a company spokesperson.
Wipro did not disclose the names of customers the Atlanta unit has, or was targeting.
Apart from the objective of mitigating a backlash, Indian technology vendors have, in recent years, set up development centres in the US and Europe to work on projects that cannot be moved offshore.
Wipro has seven development centres in the US, including one in Michigan that it opened last year. Around 8,500 of Wipro’s 97,552 workforce is employed in the US, including those who work onsite at customer locations. “We are not shying away from what we plan to do in Atlanta, but it is taking more time than expected given this scenario,” Ramasubbu said.
Analysts say that such delays are bound to happen due to the current economic downturn in the US, with the uncertainty forcing firms to postpone decisions.
“While the third quarter (July-September) is historically weak every year for outsourcing, this year it has been the weakest third quarter in 10 years. Generally, people revisit their decisions till some clarity emerges,” said Siddharth A. Pai, partner and managing director at the India offices of TPI Inc., the global outsourcing advisory firm.
He didn’t want to specifically comment on Wipro’s delay.