Wipro Enters Bank Of America's IT Vendor League
India’s third biggest IT services company Wipro has reportedly become an IT vendor to compete for Bank of America (BofA) future requests for proposal (RFPs). With this the Azim Premji-promoted company will join the league of TCS, Cognizant and Infosys have been major vendors to the Bank, known for some of its biggest outsourcing deal.
TOI who reported the news citing anonymous sources said that among its peers, Wipro has the lowest revenues coming from the banking, financial services and insurance (BFSI) vertical — it’s 27% compared to TCS and Cognizant’s 42%.
However, in recent times Wipro is trying to expand its BFSI exposure. The company has won a $500-million IT deal from Citibank last year. The $89-billion Bank of America is the second largest bank holding company in the US by assets. Its 2008 acquisition of Merrill Lynch reportedly made it the world’s largest wealth management corporation and a major player in the investment banking market.
Wipro’s entry will contribute to increased pricing pressure for incumbents such as Infosys. “BofA, like other large banks, is looking to drive further cost savings out of its global services portfolio,” Peter Bendor-Samuel, CEO of US-based research firm Everest Group, told the news site. Sources also told TOI that Wipro’s hunting team has been tirelessly pursuing the marquee US bank for the last 20-odd months.
Analysts believe Wipro can also gain an edge owing to its latest initiative in banking especially in the Bank of America Merrill Lynch (BAML) strategy. Pareekh Jain, principal analyst in US-based research firm HfS Research pointed out that the company has hired experienced talent from competitors at all levels.
The company has also enhanced its BFSI capabilities over the last two-year period. The company has acquired Opus (a platform-based mortgage solutions provider), and invested in Opera Solutions (a data analytics firm in BFSI), and partnered with SOA Software. “Some of these companies were already working for Bank of America,” he said.
A recent Reuters report also noted that Wipro is eyeing more lucrative BFSI contracts from Europe and the US as it looks to grow its sales by up to 4-5 percent in this quarter. This clearly signifies that Wipro, like its contenders are looking for big banking deals as the Western economies show improvement.
“BFSI (Banking, financial services and insurance) is a large piece for everybody and that’s where the bulk of the IT services spends are and you need that to really drive growth and meet industry growth. So they are in the right direction,” Nitin Padmanabhan, an analyst with Espirito Santo brokerage told Reuters.
Wipro expects to add new clients and is looking for acquisition opportunities in the financial sector to boost growth, its Chief Executive T.K. Kurien also mentioned at a recent interview. On a separate press note Wipro has announced its plans to expand its workforce in Muscat to meet increasing business requirements, especially in banking sector, apart from aviation, engineering and government sectors within the Sultanate of Oman.
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