India's No 3 software services exporter, Wipro Ltd, has not yet seen a slowdown in US spending because of the subprime mortgage crisis, but it will take time for a clear picture to emerge, an official said on Wednesday.
The squeeze in global credit markets could lower prices of take-over targets, a welcome development for Wipro which planned another one or two acquisitions before the end of its financial year in March, Chief Strategy Officer Sudip Nandy told Reuters.
"I don't see a slowdown in the customer tech spend at this point of time," Nandy said in an interview. "We have not seen a significant downturn in new projects," he said, but added the fallout would only be known in coming months.
New York-listed Wipro, which offers IT solutions such as system integration, software development and back-office services to companies looking to cut costs, received 65 percent of its revenue from the United States in the quarter ended June.
"This quarter will be very crucial because at the end of this quarter and in the next three months time, the budgeting for the next year starts happening. That's when we are going to get the real feel of it," Nandy said. India-based outsourcing company WNS (Holdings) Ltd last week lowered its fiscal 2008 outlook after it stopped receiving work from a US mortgage lender.
Shares in Wipro have fallen 8.5 percent this month so far, in line with the decline in the main Mumbai market, on worries that the export-driven software sector may lose business if the US subprime woes squeeze corporate spending.
Nandy said Bangalore-based Wipro, whose financial clients include Zurich Financial Services and Credit Suisse, did not have as high an exposure to the banking and financial services sector as some of its local peers.
Wipro, which has made a string of acquisitions in the last couple of years to boost growth, plans to buy one or two firms by the end of March, Nandy said, adding tightening global credit markets had made valuations manageable.
"There are many companies in the BPO sector that we can't touch because every venture capital and private equity wants to acquire them at ridiculous multiples. That may become more manageable and we may look at some of those hot sectors also."
Earlier this month, Wipro, which has a market value of $16 billion, said it would buy US technology firm Infocrossing Inc for an enterprise value of about $600 million.
Nandy said Wipro, which has 38 overseas software facilities, will set up three more in the United States, in Georgia, Texas and Virginia. The first centre will become operational this year, while the other two would be launched next year.