Wipro Loses Nike SAP Maintenance Project

Wipro has lost a SAP maintenance project from Nike after it delayed implementing the business software for the sports shoe and apparel maker, two people familiar with the matter said, with one analyst pegging the deal size at between “$10 million and $40 million”.

This development comes at a time when IT services companies are increasingly pushing for annuity contracts from clients amid growth challenges in the traditional services business.

“There has been almost a year’s delay in implementation of SAP software for Nike and post-completion, the company (Wipro) has lost the maintenance part for the same software to a rival,” one of the persons told ET.

“Nike decided to discontinue the SAP maintenance work a few months ago,” he said, adding the Bengaluru-headquartered software services major will, however, continue servicing other technology projects for Nike.

“Wipro Limited does not comment on specific client engagements,” said the company in response to a detailed email sent by ET. An email to Nike seeking details went unanswered.

Clients have been pushing software services providers to cut costs on maintenance projects, often expecting vendors to use automation tools to improve productivity.

SAP or Oracle implementation projects at times see changes in business requirement from clients that could result in different scope of work, analysts said.

“That change does not go through negotiations between both the parties and that typically causes a time lag,” said Sanchit Vir Gogia, chief executive, Greyhound Research.

Analysts said there could be several reasons for discontinuation of the maintenance work — from quality of implementation to change of scope resulting in a time lag.

Wipro, which will announce its fourth quarter results this month, declined to comment on specific client contracts.

“I would guess that the SAP practice runs somewhere between $10 million and $40 million a year. With regard to its impact on ongoing work, clearly this is a setback and Wipro will have to work hard to grow this relationship over the long run,” said a global IT outsourcing sector analyst, who declined to be named.

“All is not lost as both Wipro and other service providers have overcome similar setbacks, but it does give Wipro an uphill task as it fights for wallet share at Nike.”―Gadgets Now