Mumbai: India’s third largest information technology (IT) services exporter Wipro Ltd is preparing to get more business from the US government, which has spent at least $70 billion (Rs3.23 trillion) on IT this year.
Expansion mode: The Wipro campus in Bangalore. The firm will set up a new unit that will focus on government contracts across geographies. Hemant Mishra / Mint
“Government sector will be a significant focus for us going forward, especially the government business in the US and Australia,” Wipro’s joint chief executive (CEO) Suresh Vaswani told analysts in Mumbai on Thursday.
The company, which already has some business from the Australian government, will pay particular attention to getting it from the US government, he added.
To that end, Wipro will set up a new business unit that will focus on government business across geographies. Wipro currently has six business units that look at financial services, healthcare, manufacturing, retail and transportation, energy and utilities, and media and telecom.
At about $33 billion, the US department of defence accounted for the lion’s share of US federal IT spending in 2009, while the department of homeland security and the department of health and human services spent about $6 billion each in the same year.
Wipro is also increasing its presence in that country, and hiring key personnel at senior levels. The company is scaling up its development centre in Atlanta to accommodate 1,000 employees, up from the current 350, and of which at least 80% will be hired locally.
Also, apart from hiring entry-level software engineers from local universities, Wipro is looking at hiring senior managers who have “deep domain expertise” and can win business for the company, Vaswani said.
“US government spends a lot of money on IT, but long-term relationships are the key to winning such contracts,” said an analyst with an international investment advisory firm, who requested not to be identified as he is not authorized to speak to the media.
One of the primary hurdles that Indian companies have to overcome when competing for US government contracts is the argument that taxpayers’ money should not be used to send jobs abroad, especially at a time when local unemployment is in double digits.
However, Wipro chairman Azim Premji said that American CEOs are now “willing to take some political flak” for gaining the benefits of offshoring. “Sensitivity to global sourcing is much less than expected,” said Premji
Indian IT firms have so far been struggling to get business of note from the US government as domestic IT and consulting companies such as International Business Machines Corp. and Accenture Plc have dominated that segment.
Infosys Technologies Ltd, Wipro’s Bangalore-based peer and India’s second largest IT services exporter, has already set up a subsidiary to service the US public sector, and has hired a CEO to head the unit.
Raghu Krishnan in Bangalore contributed to this story.