WIPRO: Nimble Giant, Steady Growth

Wipro chairman Azim Premji: Managing growth, stability and amazing market value, despite big management exitsThere 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 impact of Wipro Net’s  merger into Wipro Infotech will have an impact on the bottomline only next yearThe 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. 

Leave a Reply

Your email address will not be published. Required fields are marked *