Wipro in billion-dollar deal with Germany’s Metro AG

IT and outsourcing major Wipro said it will take over the IT division of Germany-based wholesaler Metro AG in a deal that is expected to generate revenue of over Rs 1,000 cr per year for the Indian company.

A total of more than 1,300 IT staff from Germany, Romania and India belonging to the wholesaler will join the Indian company as part of the takeover.

Wipro said it will provide them with “new opportunities to advance their careers, access innovation, work with leading digital technologies and adopt new ways of working that enable agility, speed and scale in engineering”.

The estimated deal value for the duration of the first 5 years is approximately $700 million.

“With the intention to extend up to 4 additional years, it can be a potential spend of up to $1 billion,” it added.

Wipro will deliver a “complete technology, engineering and solutions transformation program” for METRO as it positions itself as a 360-degree provider in the hotel, restaurant and catering food industry, the Indian company said.

The move is similar to what many non-IT companies are adopting as they realize the importance of digital technologies in ensuring competitiveness and relevance in the market.

New technologies such as artificial intelligence and automation are transforming most industries, and companies that used to create their own IT solutions are rapidly finding out that such advanced technologies require the assistance of others that specialize in them.

Indian IT companies such as TCS, Wipro, HCL Tech and Infosys are among the leaders in research and development in the area of automation and AI.

Unlike individual companies like Metro, these specialized players can spread their research budgets over a large number of clients, thus making it more cost-effective to come up with such digital solutions.

Wipro said its transformation program for Metro will encompass cloud, data center services, workplace and network services, along with application development and operations.

“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. Partnering with Wipro allows us to simplify and streamline our IT landscape, and critically gives us access to innovation and the best digital practices,” said Timo Salzsieder, CIO, METRO AG.

“The Metronomians who are transferring across to Wipro are going to have access to leading edge innovations that will accelerate their careers. I look forward to the continued close collaboration and partnership with the Metronomians who will continue to support our IT needs in 25 METRO countries.”

The companies will create a “joint Transformation Office and Innovation Council” that will guide the businesses through the transformation and ensure collaborative innovation throughout the partnership.

Thierry Delaporte, Chief Executive Officer and Managing Director, Wipro Limited said Wipro and METRO share a great deal in terms of culture and values.

As previously announced, Wipro also plans to launch a Digital Innovation Hub in Düsseldorf, Germany to support METRO and other clients in the region.

The company said the proposed Digital Innovation Hub will serve as Wipro’s flagship centre in Europe and enable organisations to cross skill and upskill, besides supporting talent development in local communities.

“The Digital Innovation Hub will aim to galvanise adoption of new skills and technologies by companies to innovate and re-imagine their products and services, improve operational efficiencies, and drive customer and employee delight,” it said.

The takeover is expected to be complete on or before April 30, 2021.