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Wipro will take over the IT units and 1,300 employees at German wholesaler Metro, as part of an IT outsourcing deal worth up to $1bn (£745m) over nine years.
The Indian supplier will pay £36m for the unit, according to a disclosure to the Indian Securities and Exchange Board, and the acquisition will see IT staff in Germany, Romania and India transfer to Wipro.
The outsourcing deal is for an initial five years, worth £522m, with a potential extension of four years and a total possible value of £745m. It will see Wipro deliver a technology transformation at Metro, including cloud, datacenter services, workplace, network services and application development.
“We are at a stage where we want to focus on the activities that are going to give us the strongest possible competitive advantage, and to do that we need to be confident in the digital infrastructure that underpins our growth,” said Timo Salzsieder, CIO at Metro. “Partnering with Wipro allows us to simplify and streamline our IT landscape, and critically gives us access to innovation and the best digital practices.”
He added that staff being transferred to Wipro will “have access to leading edge innovations that will accelerate their careers”.
Peter Schumacher, CEO of management consultancy The Value Leadership Group, questioned Metro’s strategy.
“While other German businesses are following other global giants by shifting more importance to their captive centres in India to boost their innovation capacity, Metro is pursuing the opposite strategy by selling its Indian captive along with Metronome, a digital unit focused on merchandise management systems with operations in Germany and Romania.”
Read more about outsourcing to India from Germany
- Deutsche Bank has agreed to sell its retail banking IT operation to one of its main IT suppliers for a token €1.
- France is racing ahead of Germany when it comes to making the most of service companies in India.
- Daimler is planning to make savings of €150m a year by bringing IT services in-house and expanding its IT operations in India and Turkey.
Just last month, Deutsche Bank agreed to sell its internal retail banking IT operation to Tata Consultancy services for a token €1. This saw 1,500 staff, with extensive SAP banking skills, transfer to the Indian supplier.
Meanwhile, also in Germany, automotive manufacturer Daimler has signed an IT outsourcing deal with Infosys to transform its operations.
Through Infosys, Daimler will transform its IT operating model and infrastructure, with the aim of creating an IT infrastructure with is available on-demand from any location. As a part of this partnership, automotive IT infrastructure experts based in Germany, wider Europe, the US and the APAC region will transition from Daimler to Infosys.
Planned IT development includes the creation of a smart hybrid cloud using Infosys Cobalt and leading cloud providers, which is part of its multi-cloud plans. Daimler will also standardise technology through an ecosystem of suppliers.
Schumacher added that the German companies in these latest deals have all been trying to transform themselves for years with mixed results.
“The deals with these Indian firms will give these large companies an opportunity to accelerate their transformation initiatives, and not only reduce their cost base, but gain a world-class level of IT and process sophistication,” he said.
Schumacher added that the latest deals lend weight to the view that most global companies see Indian suppliers as much more than being about cost savings.