Acquisitions in little penetrated points, without looking at small objectives: Jatin Dalal, CFO of Wipro

Bangalore: IT services providers Wipro will continue to acquire companies in little-known “points” and will only look at large objectives that can be broadened, chief financial officer Jatin Dalal told ET.

Bengaluru-based firm aggressively pursued its inorganic strategy, with CEO and CEO Thierry Delaporte undertaking 12 acquisitions since taking over in July 2020.

India’s fourth largest software services company will look at acquisitions that have scalability, help achieve market leadership and their own critical mass, Dalal said in an interview.

“We will never make very small acquisitions because it makes no sense in the service sector,” he added.

Wipro said last month that it would buy two companies: consulting firm SAP Rizing for $ 540 million and program management and consulting firm Convergence Acceleration Solutions for $ 80 million.

The software services exporter also acquired cybersecurity consulting provider Edgile for $ 230 million in December.

Discover the stories of your interest

As of December 2021, the company had made 23 acquisitions and 20 investments worth $ 4.3 billion, according to data from industry tracker Tracxn.

Last year the company outlined its strategy to focus on winning big business in the $ 200 to $ 300 million range.

“These are unique assets in unique spaces. These are points that have little penetrated from our point of view and we have always wanted to acquire them “, said Dalal, describing the acquisitions of Edgile, CAS Group and Rizing.

While acquisitions are a key part of its growth strategy, Wipro balances it evenly with organic growth. “We have made it clear that there are two parallel tracks and not (replaced) by each other. Organic growth must remain very concentrated, “he said.

Impact on margins

The company said its operating margins could fluctuate slightly below the medium-term target of 17-17.5% for the next two to three quarters due to the organic and inorganic investments made to date.

“We have seen the increase in personnel costs plus subcontracting. We have invested in the use and in an inorganic way in two excellent companies: Edgile and LeanSwift. They reduced the margin a bit, “Dalal said.

Interest on a $ 750 million loan raised by Wipro to finance the Capco acquisition last year was set for five years and will not be affected by the U.S. Federal Reserve’s rate hike, he said.

As the industry has created a significant supply over the past four quarters with strong freshman hiring, Wipro expects to overcome some of the talent shortages, although dropout rates will remain high throughout the year. The company has also expanded its loyalty strategies into more areas.

“It’s a myriad of things. Not just a compensation or the opportunity to go overseas on your own that will keep the best talent, but because the whole package is good in terms of quality of work, convenience of continuous retraining etc. “Dalal said.

The company announced plans to promote nearly 70% of its staff on a quarterly basis as part of its loyalty measures.

Stay on top technology Other startup news what matters. subscribe to our daily newsletter for the latest and greatest tech news, delivered straight to your inbox.