Wipro-Infocrossing Deal Changes The Competitive Landscape In Outsourcing

Wipro's latest acquisition of Infocrossing will accelerate the sweeping changes already affecting the IT services industry. It's just one more example of the consolidation of the midtier services market. The move separates Wipro from its offshore competitors like Satyam and Infosys Technologies and, more importantly, represents a new threat to the incumbents, such as IBM, Hewlett-Packard, EDS, Computer Sciences Corporation (CSC), and Dell. With the acquisition of Infocrossing's data centers and infrastructure outsourcing business, Wipro has gained instant credibility and a strong US presence from which to continue its expansion of services beyond applications development and maintenance. This deal also marks a striking departure from Wipro's services-only business model, which has been the bedrock of Wipro's success in the past seven years. Wipro still has a lot to learn about managing data centers, servers, and storage — and will have to deal with all of the complexities and risks associated with owning IT assets. This deal, however, should be a wake-up call for Wipro's competitors.