Wipro keen on Citi-like captives to accelerate banking unit growth

BANGALORE: Wipro is keen to repeat the success of its Citibank captive acquisition, a senior official said, as the company accelerates efforts to close the gap between itself and rivals Tata Consultancy Services and Infosys in winning financial clients.

India’s No. 3 software company gets about 26 per cent of its revenue from financial clients. That compares with about 34 per cent for Infosys and 43 per cent for TCS, Wipro’s two larger Indian rivals.

“If there are banks that want to get out of their captives, either fully or partially, we believe that is a good model for both the banks as well as for us,” said Rajan Kohli, Wipro’s head of banking and financial services in an interview on Monday.


“We did in the past a couple of them that were very successful; Citibank was one of them,” said Kohli, 42, a 19-year Wipro veteran who has also served as the company’s chief marketing officer.

In December 2008, Wipro agreed to purchase Citibank Technology Services, the in-house IT outsourcing unit of Citibank, for $127 million. The deal, concluded in 2009, brought Wipro $500 million in orders over a six-year period. The Citi unit had some 1,650 staff in Mumbai and Chennai, most of whom moved to Wipro.

Over the last two years, Wipro has stepped up efforts to get more business from existing large financial clients and win the socalled “must-have” marquee clients that its rivals possess, capable of handing out contracts worth hundreds of millions of dollars a year.

For instance, Bank of America Merrill Lynch is widely believed to be one of Infosys’s largest customers. Similarly, TCS is seen as handling a lot of technology work for Deutsche Bank.

Wipro has made significant strides in winning must-have customers, Kohli said, citing Britain’s top four banks as its clients. In the last two quarters, the company has added two important customers each in Europe (including Britain) and the US with the potential to ramp up to $50 million in annual revenue in under three years, Kohli said.

Wipro also has set itself an internal time-bound target to achieve industry-leading growth in banking and financial services, he said, without giving further spe-cifics. Adding captives accelerates the process.

“We are deeply interested in captives, but normally these are touchy subjects, so we don’t proactively go and talk about these with our buyers unless it is a CEO-level discussion on the other side,” he said. Typically, these deals happen with banks that are already looking to “optimise” their captives, meaning they are looking to get additional value out of the units, and options include having an existing or new vendor take over the unit.

“It makes big sense because you and the risks are much lower in comparison with taking over independent targets, Kohli said.

Further, acquiring a largish captive immediately gives the vendor a substantial base from which to operate. That often gets the IT provider “a seat at the table” and influence over the customers’ technology strategy. For the bank, having a vendor take over the captive unit is one way of making the corresponding operations more cost effective.