WIPRO: Nimble Giant, Steady Growth

There is a time for consolidation and there is a time for change. Somehow,

Azim Premji, chairman of Wipro, has always managed to do both together. Even as

he continued to build on the company’s core strengths–quality processes,

price competitiveness and relationship management–he led the group through yet

another reorganization, the sixth in five years, and ventured farther afield

into Europe. In the process, Wipro posted a 47.7% growth in gross revenues to

cross Rs 3,000 crores.

Wipro was the first software services company in the world to attain SEI-CMM

Level 5 certification and last year saw it well on its way to Six Sigma. It’s

price competitiveness ensured that despite the severe downturn in the US

economy, it was one of the few companies, if not the only one, to significantly

increase its margins. And most importantly, last year also saw Wipro being

listed at the New York Stock Exchange. As Premji said after the October listing,

"We realized that any organization wanting to go global must have its face

to the customer, because it is only the customer who has the right to grant us

our future." The listing ensured that everything that referred to Wipro

landed right on the customer’s desktop.

The listing was important, as was the timing. Wipro’s global software

services arm–Wipro Technologies–brings in close to 60% of its revenues and

over 80% of its net profit. Last year saw Wipro Tech increasing its presence in

the European and Japanese market, where branding is a major issue. Premji hopes

that the NYSE listing will go a long way in adding to the group’s brand value.

Wipro Technologies has been trying to target the Japanese market for a couple

of years now and the efforts seem to be paying off–this was the geography that

brought in the maximum growth in revenues. In July, the company set up a

dedicated offshore development center (ODC) in Hyderabad for Bussan Systems

Integration Co, a Japanese telecom firm, for work in telecom, Internet services

and wireless application areas. In return, BSI agreed to market Wipro’s

telecom solutions in Japan.

In Europe, the company set up offices in Germany and France and its first

European development center at Reading, UK, with 50 application specialists.

This center will provide application development, support and maintenance of IS

apps to UK customers. Its real purpose, though, is to grow to cover the entire

European market in a couple of years.

Most importantly, however, Wipro Tech increased its revenues from high-value

R&D services in verticals like telecom and internetworking, embedded systems

and Internet access devices and telecom and Internet service providers. Vivek

Paul, head, Wipro Tech, says "We do a lot of ASIC design, even though no

one really thinks of us as a chip design company at the moment." Almost

half of Wipro Technology’s revenue came from this horizontal. In the

enterprise area, it significantly reduced exposure in the healthcare and media

verticals while marginally improving its performance in the financial services

sector, which remained the most insulated from the slowdown.

Closer home, Wipro Infotech, the domestic products and services company,

underwent yet another series of changes. Over the past few years, the only thing

that has been constant at Wipro has been change. An unending saga of

reorganizations, of entire divisions being shunted around, hived off or merged

together. After having successfully taken the company past the break-up of the

Acer joint venture, Arun Thiagarajan retired last December and Suresh Vaswani, a

campus recruit and CEO of Wipro01markets, moved in as president of Wipro

Infotech. Around this time, Infotech’s peripherals division was hived off into

a separate entity called Wipro e-peripherals, while its global support division

got taken over by Wipro Technologies. By the end of the year, the board had also

recommended the merger of Wipro Net into Wipro Infotech. This, however, will

come into affect only in the ongoing financial year. The company also decided to

get into the solutions business and move to new geographies in the West Asia and

APAC regions.

Wipro has had a reputation for being a giant that moves slowly but steadily

and surely. No 100% growth rates for this company, just a slow and steady

increase from 20% growth in 1997-98 to over 47% this year. But then that’s the

thing with stolid giants–no big high in good years and no big lows in bad

years, as this one is turning out to be. Azim Premji hasn’t promised much–just

that Wipro will continue to grow fast–looks like he will keep his promise in

the coming year as well.