According to Vivek Paul, the uncertain economic environment and pricing pressures are going to be the challenges ahead

As India Software Inc. dreams of clocking software exports revenues worth $50 billion by 2008, Wipro Technologies is set to play an instrumental role in achieving this dream. With so many firsts attached to it, Wipro has made a fascinating transformation from a vegetable oil company into a global IT services giant. Pankaj Mishra traces Wipro Technologies’ evolution and discovers that it is competing effectively with the global consulting Big Five today

We are very excited about the road ahead, the Indian offshore model has become stronger and we are positioned to offer more comprehensive solutions

BPO is a key strategic initiative for Wipro and is expected to be a key growth driver

In his book, ‘The New, New Thing,’ Michael Lewis says that the “definitive smell inside a Silicon Valley start-up was that of curry.” Fact is, Indians were at the helm of 385 high technology start-ups in Silicon Valley between 1995 and 1998 alone. While many of them were busy scripting Indian success stories in the West, back home in India, a few progressive entrepreneurs like Azim Hashim Premji of Wipro were riding the crest of the wave they had created by plunging into the world of software services in the 80s.

Jack Welch’s ‘poster child’

Jack Welch, ex-CEO of General Electric, the world’s most respected company, in his autobiography ‘Straight From the Gut’, describes how he met Azim Premji for the first time in India. That was the time when GE was looking for strategic partners in India and Welch was perhaps one of the first to identify India as an outsourcing hub. “The quiet one, Azim Premji came in and gave a thoughtful presentation as to why his company, Wipro, was the right partner for GE,” he writes. Later Welch forged a joint venture with Wipro for medical systems and also became one of the largest outsourcers to the Indian software industry GE now accounts for more than 8 percent of software outsourced to India. Wipro benchmarked the ‘Six Sigma’ quality process of GE and became what Welch describes as ‘the poster child of the Indian hi-tech industry’.

According to Pratik Kumar, maintaining the look and feel of a small office and swift decision-making are some of Wipro’s HR objectives

Today, as Indian software firms leave their plain vanilla services hats behind and increasingly try to play in the lucrative consulting space, Wipro Technologies has drafted a clear strategy for taking on the global Big Five in consulting firms such as IBM Global Services, Cap-Gemini Ernst & Young, Deloitte and Accenture. The company has been striving hard to become an end-to-end solutions provider and with the acquisition of Spectramind, it has achieved that aim to a large extent. The company is also using its R&D services to position itself on the higher end of the value chain.

“We are very excited about the road ahead, the Indian offshore model has become stronger and we are positioned to offer more comprehensive solutions, having added package implementation, system integration and BPO,” says Vivek Paul, president, Wipro Technologies. Wipro has forayed into new verticals like telecom service providers, government, media and consumer electronics within R&D services.

The enterprise solutions division at Wipro Technologies accounts for around 35 percent of its revenues. “Today we have verticals like retail, energy, manufacturing, government and a few more in this division. Utilities is the largest vertical, accounting for 27 percent of revenues. Retail, manufacturing and government account for 23, 20 and 5 percent of revenues respectively,” says Sudip Banerjee, president, Enterprise Solutions, Wipro Technologies. There are 3,500 professionals in the division.

Technology@Wipro

Many people in the industry believe that like most of the Indian software services stories Wipro moved to high-end R&D offerings only during the late nineties. “Wipro’s R&D division is as old as the company’s enterprise offerings. We have been doing R&D services since our pure hardware days,” says Ramesh Emami, chief executive, Embedded and Access Solutions. The division now accounts for 17 percent of the company’s revenues. During the mid-eighties Wipro’s Global R&D division was doing high-end work for clients like Intel, Tandem, Sun Microsystems and AT&T. “After Ashok Soota left Wipro to set up his company, Mindtree, the telecom business was taken out of the division and we started focusing only on non-telecom businesses. The charter was to undertake any product design service,” says Emami.

Sudip nandy says that in order to localise offerings, Wipro has recruited 12 German nationals for the German centre

“Time and again we ask ourselves, are we creating IP? We have a dedicated team, which looks at ideas. The parameters are scalability and marketability of the ideas,” says M Divakaran, chief technology officer, Wipro Technologies. His responsibility is to monitor the horizontal groups such as e-business, data warehousing, technical infrastructure and collaborative knowledge management. Divakaran also spends time in building alliances with product vendors. In the area of Web services, Wipro is an active .Net partner. However, the company is also closely monitoring Sun Microsystems’ SunONE.

Wipro has now restructured its Embedded and Internet Access Solutions division under six verticals consumer electronics, semiconductor, IT product and peripherals, automotive electronics, industrial automation and access networks. Emami talks passionately about two horizontal groups focusing on IP creation and VLSI design across these verticals. “Wireless LAN, residential gateways, USB and Gigabit Ethernet are some of the IP creation areas. We have around 2,000 professionals in the division,” says Emami.

Wipro’s competitors in this space, who are giving a tough time to the company, include HCL Technologies, Mindtree, Sasken and several other niche players. “Our Indian competitors are strong but we fare better in terms of the depth of our offerings. We provide end-to-end solutions,” says Emami. Globally, the company faces stiff competition from the internal design houses of its clients and also from MNCs having offshore centres in India. Cadence and Synopsys are other competitors.

In order to compete effectively with local design houses abroad, Wipro has started setting up design centres in overseas markets. “We have recently launched a design centre in Germany and we are working closely with local vendors there. We want to launch a similar centre in Japan by next year,” Emami says. Wipro will not look at acquisitions in this segment. New business segments like consumer electronics are expected to be the growth engines for the company.

Telecom, thriving on chaos

According to Sangita singh, execution and delivery are the only differentiators when it comes to the ‘Wipro’ brand

The recent bloodbath in the telecom space has definitely scaled down business for Wipro from this segment. “Last year, the going was really tough. Most telecom clients were undertaking ruthless cost-cutting measures. While we witnessed growth in three accounts, business came down from two of our existing clients,” says Dr A L Rao, president, Telecom & Inter-Networking Solutions, Wipro Technologies. The division accounts for around 27 percent of the company’s revenues. With around 2,200 professionals, this division still gets 60 percent of its revenues from the US and 39 percent from Europe. Japan accounts for 1 percent. “Japan is a very tough market. We have three clients there and going forward Japan may account for 3 percent of our revenues,” says Rao.

Quality@Wipro
The first Indian company to embrace Six Sigma, Wipro has now started harvesting the benefits. Apart from improving its internal operational efficiency, Six Sigma also imparts it with a competitive edge in the global market where most IT services firms are scrambling for differentiators. “When Premji started Six Sigma in 1997, there was an air of scepticism in the organisation, but today we are realising the benefits. The urge for higher quality processes at Wipro comes from the top brass, therefore it drives the whole organisation,” says S Deb, chief quality officer, Wipro Technologies.

Business development

Most Indian IT companies lack a strong sales front-end when it comes to tapping overseas markets. Wipro though has an aggressive sales strategy in place, which also takes care of promotional and marketing activities in target markets. Sangita Singh, vice president, Strategic Marketing, Wipro Technologies says that execution and delivery are the only differentiators when it comes to the ‘Wipro’ brand. “Word-of-mouth is the only way to get your brand out. Our largest system integration project in Australia came through word-of-mouth when TransCo, one of our clients in the UK, referred us,” says Emami.

Wipro has a team of 85 professionals responsible for managing client relationships. The relationship managers are responsible for CEO-level interaction while account managers take care of technical demands and backroom operations. The company also invests heavily in branding through trade forums and seminars in target markets. One of the challenges faced by Wipro is that today’s outsourcers are not as mature as GE and it takes lot of efforts for achieving a comfort level with a client. “Earlier it was ‘build’ and ‘manage’, now the projects demand involvement right from designing the architecture. Singh talks about e-branding i.e. using the company website for reaching out to target customers. “We have recently started what we call as ‘e-branding’. We put out a lot of white papers and articles written by Wiproites. The white papers generate good response from potential clients.”

“In today’s market, adding value to what you offer to a customer counts for a lot. Things like offering reusable components in a project and always meeting deadlines results in a delighted customer,” she explains.

Banking on BFSI

Accounting for the highest IT spend, the banking and financial services industry (BFSI) has recently caught the attention of some Indian IT companies. Wipro however, realised the potential of this segment in the late nineties itself and established a dedicated group focusing on the vertical. There are over 1,200 professionals in this division, who according to Girish Paranjape, president, Finance Solutions, “think, breathe and eat financial services.” Growing at over 65 percent annually, the division accounts for around 15 percent of the company’s revenues. Within BFSI, Wipro offers application development, CRM and data warehousing.

“We started with around six clients, today we have over 35 active clients in the geographies of North America, Western Europe, Japan, Asia, Eastern Europe and Australia. Our team has now garnered substantial domain expertise,” he adds.

Cracking Japan
Looked upon as one of the most closed markets in the world, Japan is known for its demanding customers. Today, Wipro offers niche services to clients such as Matsushita, Japan’s consumer electronics giant. The Japanese IT services market is pegged by McKinsey at around $50 billion and the market is largely dominated by local players like Fujitsu and software arms of big players like NEC. The biggest exporter is Wipro, followed by Infosys and then Tata Consultancy Services.

“Japan is a tough nut to crack, there are lot of cultural issues involved. Their way of doing business is entirely different and it is very difficult to gain the trust of Japanese clients,” says Shreedhara Shetty, vice president, Japan Business Unit.

Wipro Technologies commenced its Japan operations in 1995, and today almost 8 percent of its revenues come from Japan, covering both enterprise applications as well as technology services. The projects undertaken by Wipro in Japan cover areas including Internet technologies, e-commerce, mobile commerce and embedded systems, ASIC design and telecom applications. “Going forward, I see a lot of potential in the market for embedded solutions, apart from enterprise solutions in telecom and BFSI,” says Shetty. Wipro has 30 active customers in Japan, which include big names like Sony, Matsushita and Toshiba. Presently more than 100 Wipro software consultants are providing NEC best-in-breed software solutions through ShoreGain, Wipro’s

offshore-onsite delivery model. Wipro established a dedicated ODC (offshore development centre) for NEC in 1999.

Europe

Wipro started tapping the European market as early as 1995. During those days, TCS was the dominant player. Today, Wipro offers the entire gamut of its services ranging from R&D services to IT services in the enterprise segment. “Europe accounts for 28-36 percent of our revenues and we are present in the UK, Ireland, France, Belgium, Germany and Switzerland,” says Sudip Nandy, VP of the company’s European operations. Alcatel, Nokia and the Scottish Parliament are some of the important clients for Wipro in Europe. The company has two proximity development centres in the region, employing around 200 professionals. “In order to localise our offerings, we have recruited 12 German nationals for our centre in Germany,” he says.

BPO foray
“The addition of the new services will enhance the value of our customer relationships as they can rely on our experience and processes for these services as well. Our initiatives such as Six Sigma and CMMi have helped raise the quality expectations of our clients, and we are happy that they will now derive the same quality standards for BPO as well, using Six Sigma, Kaizen and COPC,” says Paul. Globally, most IT services vendors like Accenture and Ernst & Young have already announced their BPO initiatives. This move will position Wipro Technologies in the same league.

With the addition of Spectramind eServices, Wipro Technologies will deliver value to its clients in three stages:

• The first stage is delivered by moving operations offshore. Wipro has a strong presence in the offshore outsourcing sector and has an established proven process for transitioning and sustaining operations.
• The second stage is achieved by using technology and Six Sigma tools to optimise process efficiencies and continuous process improvements.
• The third stage of value comes from process re-engineering. This is possible when a significant part of the ‘end-to-end’ process has been migrated offshore and is achieved at two levels, redesigning the process and by changing the IT solution that supports the process.

Focus on BPO quality

Spectramind has adopted the rigorous Six Sigma journey for quality with Kaizen and COPC certification. The Six Sigma approach at Spectramind focuses on constant measurements and continuous improvement utilising colour-coded dashboards to measure each client process, shift, agent and team performance. Dashboards utilise a simple ‘Red-Amber-Green’ scheme so that every employee and supervisor on the production floor can quickly see productivity and efficiency of the process without getting lost in the statistical tools and techniques that have been used for various analyses. Improvements are continuously pursued based on the findings, data from the production floor and results in process/productivity improvements using scientific methods and quality tools.

Spectramind has dedicated international private leased circuits (26 Mbps currently) over the Pacific and the Atlantic to route overseas voice calls, and for data access, directly to the facility, including built-in redundancies for both voice and data handling. In addition, three independent Internet leased circuits from three different ISPs are installed for data access and redundancy. An onsite dedicated satellite earth station provides backup for IPLC and provides a direct link to international satellites, bypassing domestic infrastructure.

BPO is a key strategic initiative for Wipro and is expected to be a key growth driver. Spectramind has seven clients till date, and the division is strong in the banking and financial services area. Backroom processing and customer contact services will enable Wipro Technologies to provide voice processes (technical help desks and customer service), outbound voice processes (telemarketing and collection calls), customer relationship management, accounting services, transaction processing and Web-based services.

Managing information

The post of chief information officer (CIO) is traditionally created in a non-IT company for taking care of IT-enablement. At Wipro, when the CIO was appointed, many eyebrows were raised. So, when Tamal Dasgupta, corporate VP, was appointed as the CIO on March 1, 2000 the charter was loud and clear “bring sanity to the existing information system at Wipro.” “When it comes to managing internal IT systems, we benchmark GE, Cisco and Intel. During the late nineties most IT companies were poor in internal systems. Wipro decided to implement SAP and went live on April 1, 2000 and automated the functions of HR, finance, project system, sales, distribution and asset management,” says Dasgupta. Today, the entire billing, tracking resources (resource automation), recruitment, allocation and other related functions have been automated and Web-enabled.

“One of the most interesting projects has been ‘Channel W’, a portal developed for our employees. The portal also helps in managing our internal resources efficiently. At present only our offshore employees can benefit from it, but by end-2002, even onsite professionals will be able to leverage this platform,” says Dasgupta. Buoyed by the success of Channel W, the company may productise it for offering it to external clients.

Financial Transparency
Disclosing adequate financial information to investors and the media has become crucial these days, especially in the wake of Enron and other accounting scandals that have paralysed US markets. Balakrishnan V, vice president, Finance, Wipro Technologies, says that the beauty of managing finance at Wipro lies in its online nature. “Almost every financial process and procedure is online and we close our books on the first of every month. We implemented SAP in 2000 and today it is turning out to be a real blessing,” he says. SAP helps the company in streamlining finance from across the globe. Billing and collections are done online. Last year, the company saved over Rs 90 crore within the finance function owing to Six Sigma.

Building a second line of leadership
Wipro has an internal mechanism in place that analyses the performances of all executives, from Vivek Paul down to a software developer. This helps the company in identifying the right person for the right job and also in developing a second line of leadership. “Maintaining the look and feel of a small office, career development, creating opportunities and swift decision making are some of the objectives before us,” says Pratik Kumar, corporate vice president, Human Resources, Wipro.

“We have different programmes for identifying and enhancing leadership qualities of an individual. The ‘New Leaders’ programme is meant for employees who are undertaking managerial responsibilities for the first time,” he says. The company also conducts a strategic leadership programme along with the Indian School of Business. Conducted every year during December to January, the programme invites eminent faculty from Kellogg’s Institute and Wharton.

The road ahead
When Wipro took a decision to get listed on NYSE and not NASDAQ, many eyebrows were raised. Even during the ongoing downturn, the company has shown modest growth. The road ahead is definitely going to be tough, as the company tries to outgrow some of its global competitors with a simultaneous effort to move up the value chain. “The uncertain economic environment and pricing pressures are going to be the challenges,” says Paul. But with the Spectramind acquisition and the addition of new service lines package implementation and system integration, Wipro Technologies is poised to take on the likes of Accenture and EDS.

An area where Wipro is still lagging behind the Big Five is business consulting. The company can either develop consulting expertise in-house, or acquire a consulting firm. “We continue to look at the potential targets and have been talking to many of them. However, we should not forget that cultural integration remains a dogging issue in any cross border acquisition,” Paul says. Wipro is also building its own consulting expertise by hiring professionals from reputed firms like McKinsey. For instance, Paul mentions that the company has recently hired a consultant from McKinsey to head the utilities practice.