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Giants: Wipro - Purchase Mode

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DQI Bureau
New Update

Ask three Wipro execs about their structure, and you could get three

different diagrams. But they'll tell you one thing: Wipro is flatter now.

Earlier, SBU heads reported in to vice-chairman Vivek Paul, who in turn reported

to Premji. With Paul moving on, one of the layers is now eliminated, and the SBU

presidents directly report to Premji.

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The structure has horizontals and verticals. Finance, telecom, and enterprise

solutions are the 'verticals'. The horizontals are TIS (technology

infrastructure services), testing, EAS (enterprise application services) and BPO.

Suresh Vaswani, once responsible for only the domestic side (Wipro Infotech),

now also heads all the horizontals except for BPO (T K Kurien heads that). There

is also a product-engineering group.

Azim Premji

Chairman, Wipro Ltd

Acquisitions,

plus big 'total outsourcing' wins in the domestic market against

global competition

Employee

strength in global IT business



crossed 50,000

A

key differentiator, the product engineering



services business, crossed a half-billion dollars, as did revenues from
Europe

Launch

of 'Bharat PC', for adverse environments in semi-urban and rural

geographies

Kurien was a key member of the BPO team under Raman Roy, when he drove the

transaction processing business initiative. The unit grew 17% in FY 2005-06 and

is now more focused on the non-voice part, drawing on synergies between BPO and

IT services and the end-to-end selling proposition. It exited the outbound voice

business last year and now has a more process approach, which is integrated with

IT services. The unit does voice work like technical helpdesks, and, on the

banking side, support for credit cards.

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Global Strokes



In the exports market, Wipro has also come out strong in testing. Good

growth, besides the financial front, was reported from energy, utilities and

R&D. Europe saw good momentum, its contribution to Wipro's kitty going up

from 27% to 33% last year. Innovation initiatives, which constitute 5% of Wipro

Technologies' revenue, are 'strategic', as they could help make business

growth non-linear. The traditional services model of people equaling revenue

limit future growth. That's why the company is investing in innovation

dollars; in terms of delivery models, in areas it had not looked at before, or

in simply launching new service lines.

The conservative Indian IT industry is tasting inorganic growth. Wipro, like

TCS, has realized that acquisitions can fill in the blanks-in service lines,

geography or verticals-and boost growth. Wipro went all out with a Rs 347

crore shopping bag in 2005-06, picking up three targets.

The first purchase was New Logic, an Austria-based company in the

semiconductor space. While Wipro is the largest third party R&D service

provider in the world with a strong presence in the embedded space in US and

Japan, its European footprint was limited. New Logic, with centers in Austria,

Germany and France, fitted the bill, and also brought along 15 patents.

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The other two buys were US-based firms, mPower and cMango. The financial

services vertical has been going well for Wipro. The company had an insurance

practice, a security practice and a banking practice, but none in the payment

services area, where mPower fitted in. cMango, in the Business Service

Management (BSM) area, provides impact analysis to customers. Wipro's

infrastructure services business is growing over 50% annually and now forms 9%

of its IT services: this, with the BSM add-on, are a significant value

proposition.

Source: Company data and DQ estimates

CyberMedia Research

Total Gains



In the domestic business, which grew 22%, the game changer for the company

was total outsourcing services. In these long-term deals, clients outsource most

IT requirements: infrastructure, apps, assets, even people.

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Wipro Infotech, the group accountable for Middle East and APAC countries

besides India, has managed to outplay multinationals in the domestic market, in

at least four major deals in the last 12 months-Sunmar, Optimix, a global

energy major, and HDFC Bank. The HDFC deal was Wipro's top IT outsourcing

deal, worth Rs 360 crore over 10 years.

Other differentiators were its investment in a software template approach for

SAP where it now pre-configures and gets the standard vertical-based best

practices into the software before offering it to customers. It had 11 wins on

that offering.

Overall, these efforts are part of the transformation from Wipro's old

hardware position of six years ago to an integrated IT solutions provider now.

In India, the group does a lot of infrastructure business-and product sales:

65% of its revenue is enterprise products; the rest, services. Software is a

significant part of the former; consulting, of the latter. About 200 consultants

bill at two to three times the rate of 'applications' people.

While Wipro looks  at SI and TOS

for the exports market, it also aims to bring home some global experience.

Indian customers tend to buy onsite services. The Infotech division has now

launched an integrated service delivery facility for remote apps and

infrastructure management in Mysore, a center that now services 20 local

clients.

Goutam Das



goutamd@cybermedia.co.in

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