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In an effort to offer full services to its customers in German-speaking countries, Indian service provider Wipro will pay €73.5m for Cellent, the 14 year old information technology, consulting and business process services company.
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Through the acquisition, Wipo gains a team of 800 consultants across Germany, Switzerland and Austria (Dach).
Wipro said the Dach market is a strategic growth and investment region for it. “This acquisition will provide Wipro with significant scale and prime customer relationships, especially in the manufacturing and automotive domains, said Wipro.
"Cellent will significantly boost our footprint in the Dach region, especially in the manufacturing and automotive domains," said NS Bala, CEO of manufacturing and hi-tech at Wipro.
The acquisition is expected to be closed in March 2016.
European outsourcing is growing fast and suppliers with heritage in other regions, such as Wipro, are trying to widen their European footprints.
According to sourcing advisor ISG, in the three-month period to the end of June 2015, Europe saw a record number of contracts awarded. In its latest index of IT and business process outsourcing contracts, ISG recorded 169 deals valued at €4m or more, with a total value of €2.2m.
This is welcome news for the outsourcing sector in Europe, which suffered a 25% fall in spending in the first three months of 2015.
Growing Dach market
The number of contracts for the second quarter of 2015 was the highest ever, but the total value was 12% lower than the same period a year ago, with only two mega-deals worth €80m or more signed.
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- Global businesses are spending on IT again after three quarters of reduced IT outsourcing investments with the scope of contracts and discretionary spending increasing.
- Almost three-quarters of global businesses will increase their investment in outsourced services, according to research by KPMG.
- A lull in UK outsourcing activity in the run-up to the election caused a 25% drop in spending across the Emea region in Q1 2015, claims ISG.
Peter Schumacher, CEO at business consultancy The Value leadership Group, said this is further evidence that the Indian IT services firms are serious about growing their continental European sales.
He said the Dach region will not outsource to the level of the UK, but will increase. “The German market is different to the UK, which has many large banks that spend lots of money on IT. Germany has more manufacturers and SMEs.”
But he does expect more acquisitions like Wipro’s latest across continental Europe.