With oil and gas accounts like Shell, BP, ExxonMobil, Saudi Aramco and Petrobras, why did Wipro need to buy SAIC?
We have around seven years of activity in oil and gas and there are now around 2,300 in the practice. Our work for NOC and IOC clients has led to us becoming a leading IT outsourcing service provider. We already develop and implement solutions, but we felt that we were lacking thought leadership and a deep understanding of our customer’s requirements. We really lacked the capacity to advise on major IT programs as compared to companies like SAIC, Booz or Accenture. So when the opportunity came along to acquire SAIC’s oil and gas practice, with its strong ‘digital oilfield’ involvement we jumped at the chance to move up the value chain and into complex, multi-year engagements.
Can you give an example?
Yes. We have a Russian customer who is working on exploration and greenfield development. We already have people advising on a point solution for a collaborative work environment (leveraging previous experience with RTOS for other clients). But we are now looking to take on a complete instrumentation project—along with advice on strategy. The SAIC/Wipro combo will provide an end to end solution for such projects.
A kind of EPC1 for IT?
Absolutely. We now can offer strong engineering, global R&D, good domain expertise around telecoms and collaboration and data visualization deployment—and we can pull it all together with program management—which was previously lacking.
Why did SAIC sell?
SAIC’s main business is government and defense. Some capabilities, like visualization, have been successfully transferred from to the upstream. SAIC has been working notably with BP for over 20 years and has gradually increased its footprint from the upstream. But the reality is that SAIC’s DNA is in the US. Its clients wanted a multi geography support with more offshore operations—things that the company was struggling to provide. The government/defense work meant less investment in oil and gas. Wipro is already strong in downstream and corporate functions—so everything is very complementary. There is a wide geographic spread and capabilities—SAIC upstream, Wipro downstream. Customer wise, there are a couple of overlaps but in general we are very complementary and I expect this to generate significant growth opportunities.
What direction is the knowledge/information flow? From up to downstream or vice versa?
The two domains really are very different. Upstream is about finding new fields and investing significant amounts. Downstream is more about cost optimization and getting the most out of existing investments. Upstream spends more on collaboration technology and has significant new investment in challenging geographies. There is more technical innovation in upstream than in mature downstream.
There is a different IT culture too—IT on a plant/facility is rather special…
The technology is not so different—but the culture, yes. Upstream, IT is embedded in the business. Downstream it is much more in the IT organization. Upstream continues to invest through the business.
Is that good or bad?
It depends. The upstream has more regional business differences, a global approach to IT is challenging. Government involvement may mandate local investment. On the other hand, optimization possibilities may have been missed from this piecemeal approach. We need more globalization and optimization.
Do you see a Wipro-branded solution for the upstream?
We are aiming at thought leadership, and will be aggressively presenting our capability in forums and with white papers and articles. By this we hope to accelerate take-up of our templates and framework. But we will not be productizing a ‘solution.’
So this is an eclectic offering?
We call it agnostic. Our strength is as a strong independent expert. We are very good at testing software and we are the largest 3rd party provider of R&D for our customers. Elsewhere Wipro is strong in infrastructure design and R&D for telecoms and utilities. In fact 10% of our revenue comes from energy and utilities. We consolidate IT and subject matter expertise. A customer comes with a problem, we find a solution.
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1Engineering prime contractor.
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