Wal-Mart plans tech unit in Bangalore

Wal-Mart plans tech unit in Bangalore
Retail Giant Undertakes Recce For Captive Shared Services Centre
Boby Kurian & PP Thimmaya BANGALORE


ANEW address may soon be added to Bangalore’s crowded IT landscape: Wal-Mart, the world’s biggest retailer, is mulling over setting up a captive IT/ITES unit in India’s tech capital, with the potential to create several hundred jobs, sources said.
The $388-billion giant, based in Bentonville, US, has outsourcing ties with vendors like Infosys and has done a recce on developing the captive shared services centre to cater to multiple functions in its worldwide operations.
Besides IT development and maintenance, a shared services centre also supports different parts of a global enterprise such as HR, finance and accounting.
Sources said Wal-Mart’s recce covered a few potential locations before more or less zeroing in on Bangalore. While a definite call on the captive unit is still pending, Wal-Mart is believed to be planning to hire senior technical people to take the idea forward.
“Wal-Mart is expanding its IT resources globally, including in India, to support its growing international business and its operations in India. However, we have made no further announcements to that growth. We currently have no plans for a captive development centre in India,” a Wal-Mart spokesperson said.
Wal-Mart Information Systems Division is centralised at Bentonville at present, with a large pool on Indian techies on board. But going forward, the retail behemoth may be looking at developing IT hubs globally to bolster its round-the-clock support services.
In February this year, the retailer said it was expanding IT staffing in India through outsourcing deals with unidentified vendors.
The press statement at the time made a specific mention that Wal-Mart was expanding outsourcing even as it created several hundred new jobs in Northwest Arkansas in the US.
Some observers said Wal-Mart may firm up plans only after the US Presidential elections later this year, as the flight of jobs abroad continues to be a sensitive in US. Local IT cos spruce up retail verticals
INTERESTINGLY, the development comes when there’s a raging but inconclusive debate about the long-term viability of captive IT units on concerns of escalating costs. Still, several global retailers like Tesco, Target and Supervalu have set up captive support centres in Bangalore in the last four years.
One source said Wal-Mart may kick off the captive with a small operation, and may even rope in a dedicated third-party vendor to start with a small basket of offerings. But Wal-Mart’s global peers have set up their own captives due to the fact that no large Indian IT/ ITES player has the capability to provide end-to-end services in the dynamic and complex world of retailing.
UK’s Tesco, the world’s third-largest retailer behind Wal-Mart and Carrefour, established a captive centre nearly four years ago, and currently employs over 2,700 people. Tesco Hindustan Service Centre (HSC) caters to the entire IT lifecycle management of the parent’s global retail operations, besides support businesses and finance services like payroll and pension management as well as store design support. In fact, HSC played a crucial supportive role in Tesco’s recent high-profile foray into the US market pitting it against Wal-Mart on the latter’s home turf.
At the same time, India’s outsourcing majors have been deepening their retail vertical offerings, with Infosys counting Wal-Mart and Tesco among its clients, while TCS does work for Home Depot.
Most frontline IT companies have projected a substantial ramp-up in their retail vertical, with the rapidly expanding domestic retail sector itself offering a big potential opportunity.
Wal-Mart has entered into a joint venture with Sunil Mittal-led Bharti Group for cash & carry operations, while Carrefour and Tesco are rumoured to be in advanced discussions with local suitors for a similar tie-up.