Wipro's strategy for growth By S. Varadharajan CHENNAI, JULY 7.

Wipro, a leading India based provider of IT services, has drawn up its strategy to become a world leader in the field. The company has stated in its latest annual report that the markets addressed by it are undergoing rapid change due to the pace of technology development and change in business models. It believes that these trends provide significant growth opportunities. Wipro expects to significantly grow its global IT services business and the percentage of its total revenues and profits contributed by this business over the next few years. It hopes to achieve this objective by identifying and developing service offerings in emerging growth areas as separate business opportunities, such as infrastructure support services, business intelligence services and telecommunication, internet and application service providers. It is also planning to aggressively develop the research and development services by focussing on high growth markets such as telecommunication, mobile communication and the internet and high growth technologies such as embedded software. Also, the company will be leveraging its experience in providing IT services in the Indian market and its access to existing clients outside India to provide global support services. The intention is also to increase the number of clients through a dedicated sales team focussed on new client acquisitions and increasing its presence in Europe and Asia. The goal is to make every new client account earn over $1 million in annual revenues within twelve months. Also the company intends to increase its share of business with existing clients by expanding its range of IT solutions and by increasing its knowledge of industry segments and individual client businesses to allow it to better understand client requirements. The focus would be on improving operating margins by increasing the revenue per IT professional by providing higher value added services, increasing the number of productised services and increasing the proportion of the company's fixed price contracts. In India, the growth plan includes offering a full service technology solution including systems integration, support services, software and networking solutions along with branded hardware products which the company hopes would enhance profitability significantly. The company is also planning to pursue selective acquisitions of IT service companies that would allow it to expand service offerings and acquire additional skills. This would strengthen its relationships with clients and allow the company to realise higher revenues from them. In pursuing acquisitions, the focus would be on companies where a significant portion of their work can be moved offshore to India to leverage the company's low cost offshore delivery model and realise higher margins.

Infosys v/s Wipro: Their business strategy While doing comparative analysis of Infosys and Wipro, in the first article of the series, we talked about the revenue distribution of the two companies. We also talked about the difference or similarities in client focus. In this article, our discussion would be focused on different business strategies adopted by the companies. Business strategies change with time and they should. After all whole business environment keeps changing all the time. This is more evident in the field of technology. True that the Indian software companies are primarily service oriented. However, their ways of servicing the client have been changing in the past. Now this industry is witnessing the era of cloud computing and mobile computing. More clients are relying on services such as Infrastructure-as-a-Service and Software-as-a-Service (SaaS). Before going more into the current business environment and strategies, let us first peep into the history. In the past, there was a stark difference between the growth strategies followed by these companies. Acquisition strategy Companies look for acquisition for various reasons like achieving greater economy of scale, increasing market share, gaining taxation advantage, creating synergies between operations of two entities or for vertical integration. Sometime it is also done for diversification or to expand the business houses footprint. However, in case of an IT company, the acquisition works a little differently. The acquiring company gets very little tangible assets in the process of acquisition. Rather it gets a foothold in the form of an expanded client base or an entry into a new geographical market. The most important asset that the company acquires is the people asset. Till recently, IT bellwethers like Infosys and Tata Consultancy Services (TCS) mostly refrained from acquisitions. Lack of right-fit acquisition targets at attractive valuations was the rationale cited by their respective managements. On the other hand, Wipro followed the much talked about 'string of pearls' acquisition strategy, which is a fairly aggressive acquisition strategy. This was to make acquisitions to plug gaps in its client offerings and ramp up quickly in these areas. Wipro integrated the acquisitions of small companies such as mPower, New Logic, cMango, Saraware, Enabler, Quantech and Infocrossing during 2006-2008. However, the acquisition strategy changed to 'move the meter as a whole' by the new management. Recently, Wipro has acquired the IT related Oil & Gas business

of Science Applications International Corp (SAIC). This acquisition is very strategic to the company. It is expected to enhance Wipro's domain capabilities in the upstream area and make it an end-to-end service provider in the Oil & Gas space. As far as Infosys is concerned, the company has been and is still sitting on a huge cash pile. The management has stated that it is on the lookout for proper acquisition targets. But they have not really made any big ticket acquisitions as of now. The reason - the management has set very stringent criteria. While this is good to some extent as the company has not made any wasteful or value destructive acquisitions, however, it has also lost out on some attractive opportunities which its peers have capitalized upon. Recently, Infosys has said that it is eyeing opportunities in the emerging healthcare space. But then again from a shareholders perspective one does not know when this acquisition would happen. Focus on India Infosys has always focused on the high margin business. For this, it has concentrated on the business from the developed markets such as the North America and the Europe. And, it has definitely worked well for the company till now. But in the process Infosys has ended up ignoring the emerging market opportunities particularly those from India. On the other hand, Wipro has been catering to domestic market as well. And during the time of slowdown in the developed economies, this focus on India has worked in the favour of Wipro and has helped it in growing its business. Of late, though Infosys has started focusing on Indian market. But till now its name has not really featured in the big ticket contracts awarded by the Indian government or domestic companies. Its portion of revenues from India still remains quite low. Present Situation In the beginning of year 2011, Wipro decided to dismantle its traditional Joint-CEO model. The management has identified four industries as the core momentum verticals. On the other hand, Infosys has completed 30 years of its journey. It is now in the third phase of its growth. The management has set out new visions for the next 30 years. In the subsequent articles of the series, we would talk about their current business strategies in detail. In addition, we would also discuss the management quality, financial performance and valuations.

Full Interview with Azim H. Premji CIO: CIO: What role has IT played as Wipro changes and evolves as an organization? Azim H. Premji: Wipro has used IT strategically to address the rapid scaling-up of the organization. Five years ago, standardization on a single ERP platform was the first step towards this direction. The adoption of an Employee Self-Service portal around the same time was an important milestone for us. It enabled us to handle the issue of the rapid increase in the employee headcount: In one stroke, we were able to eliminate paper-based processes and to crash cycle-times of employee services. I would say that without the strategic deployment of IT, we would have struggled to cope with our pace of growth and to drive operational efficiencies. We have managed change by involving all key business stakeholders in both crucial IT decisions and their implementation. CIO: CIO : Did you face mindset is-sues while integrating IT into a brickand-mortar enterprise? Azim H. Premji: One factor that works in our favor is that we provide enterprise-scale IT services to our own clients. Hence the orientation to use IT is pretty high. We have not had any major issues of resistance to IT systems. CIO: CIO: How has Wipro used IT to build a strong foundation as you pursue excellence? Azim H. Premji: We use IT in all facets of our business and IT is a key enabler of our strategic objectives. The success of all our major initiatives in excellence like Six Sigma, SEICMM and PCMM have depended heavily on corresponding automation programs. Starting from 'Prospect Management' right down to 'Accounting and Reporting', we have IT systems driving all our business processes. Going forward, our strategies for growth cannot succeed fully without the parallel scaling-up of IT systems.

CIO: CIO: How do you then define the success of IT projects? Azim H. Premji: That is ultimately determined by the extent of usage of the application by the users. While formal measures like Schedule and Cost overruns measure projectmanagement skills, the value of an IT project is realized only over a period of time. I would say that if an IT application is used effectively by the majority of users for a minimum period of three years, it is a success. CIO: CIO: Wipro runs on IT. What is your personal level of excellence for CIOs? Azim H. Premji: CIOs must be as savvy about the key drivers of business as they are of IT issues. CIOs must combine long-sightedness and vision with a strong operational drive t that translates vision into concrete and effective solutions. CIOs must have the wherewithal to engage with key stakeholders in the organization and manage change over sustained periods of time. CIOs must have outstanding people skills. CIO: CIO: What is your involvement with CIOs at Wipro? Azim H. Premji: I personally review the annual plan of the CIO group and thereafter review the progress every quarter and sometimes more frequently. I ensure that all key business priorities get addressed by the CIO's group and step in for decisions related to funding. CIO: CIO: Do boards consider CIOs important? Do CIOs get adequately discussed at that level? Azim H. Premji: The strategic importance of IT has increased manifold in the last decade and has moved into the radar screen of most boards. While the dot com boom (and the subsequent bust) had its negatives, it also helped create a widespread awareness of the pervasiveness of IT. It brought IT to boards' attention and there has been no looking back. CIO: CIO: In your mind, is an Indian CIOs role driven by initiative or by the board? Azim H. Premji: As of today, the Indian CIO's role is still initiative-driven but it is just a question of time before it becomes board-driven. What will push this is the increased globalization of Indian companies, more ambitious growth targets and a need to comply with corporate governance norms like Sarbanes-Oxley. CIO: CIO: Do you see CTOs moving into a CIO role?

Azim H. Premji: CTOs can move into a CIO role provided they balance their strong technology capabilities with a robust understanding of business concerns. A CIO's impact is much larger as it affects all levels of the organization. A CIO's role requires very strong communication and people competencies. CTOs who measure up to this can definitely move in. CIO: CIO: Do you see CIOs ascending to the board? What skill-sets would they require for this? Azim H. Premji: The CIO's role by default requires him to have a horizontal view of the entire organization. He needs to combine technology-savvy with a robust perspective of how business is run and what its key drivers are. There are many examples of successful CIOs who have a track record in sales, operations or finance and vice versa. A CIO's role requires him or her to balance a strategic perspective with strong execution skills. This qualifies them to ascend to the board. CIO: CIO: Does the Indian industry gives credence to Business Intelligence? Is it the key to CIO ascendance? Azim H. Premji: The Indian industry has probably just woken up to the potential of Business Intelligence (BI), but we are already a few years late. We embarked on a major BI initiative last year and invested in world-class systems. Effective BI or the lack of it can be a crucial differentiator and the CIO has to play a central role. The automation of transaction systems is relatively easy and the real challenge is in doing BI well. This separates the boys from the men. CIO: CIO: Is there place for a supra-CIO in a multi-SBU organization like Wipro? Azim H. Premji: There is no standard formula and each organization has to work out its own best solution. A federated structure works well when there is a strong, central IS organization that sets policies, drives standards and runs the governance model but there have to be local execution teams to shorten implementation cycle-times and provide flexibility. A supraCIO is a good idea but he should be supported by strong SBU-level IS heads without which he may not be very effective. CIO: CIO: How do you choose, at an SBU-level, which technology initiative to fund? Azim H. Premji:

Several of our technology initiatives are common across SBUs - from the point of view of standardization, we try to keep things common across. However, a decision to fund an SBU-specific initiative is made based on a formal ROI or benefit analysis and on whether that initiative's footprint can be extended to other areas of the organization. We also fund initiatives for solutions that are unique to a particular industry-model.

Wipro revises strategies to enhance focus on telecom business 2012-07-15 19:05:59, India

Wipro Technologies (source: news.bbc.co.uk) Telecom Lead India: IT major Wipro Technologies has revised strategies to enhance focus on telecom business.

Wipro's telecom vertical will strengthen focus on areas like telecom analytics and mobile broadband, customer experience management, making hardware interoperable across platforms, system integration and optimizing network services.

The IT major is revising its strategies as the company is experiencing reduced spending from struggling telecom equipment vendors on R&D.

Focus on areas like telecom analytics and mobile broadband will enable Wipro to target telecom operators. Traditionally, Wipro has focused on product engineering for telecom equipment vendors.

Wipro 2011-12 revenue from media and telecom units down to 15.7%

Media and telecom business contribution to Wipro revenue in 2011-12 declined to 15.7 percent from 17 percent in 2010-11. Financial solutions market is the main contributor with 26.9 percent in both fiscals.

Wipro said its IT services revenue was $5.92 billion, up 13.4 percent y-o-y. Total revenues were $7.37 billion, an increase of 21 percent y-o-y. Net income was $1.1 billion, up 5 percent y-o-y. IT services revenue in Q4 was $1.53 billion, an increase of 9.7 percent. Total revenues in fourth quarter were $1.94 billion, an increase of 19 percent.

"Earlier 100 percent of our revenues came from products that are selling boxes. But a shift is now happening from product into services. Services now constitute about 25 percent part of our business," Jayanta Dey, global head of consulting, solution and practice unit, telecom equipment vendor vertical, Wipro Technologies, told Economic Times. According to Gartner, telecom equipment market is likely to grow slower at 6.9 percent this year from 7.2 percent last year to $472 billion.

Wipro Technologies has large telecom network clients such as Ericsson, Nokia Siemens Networks and Siemens. Globally telecom data traffic is expected to grow 18 times in five years, whereas revenues are expected to only double. Thus we will need more efficient telecom networks to cater to the traffic.

Wipro has about 10,000 employees working in its global media and telecom business. Revenues from Wipro's global media and telecom vertical grew about 4 percent in FY12 to $1.1 billion. But contribution of the telecom vertical fell marginally from 18 percent in 2011 to 16 percent in 2012 to Wipro's IT revenues, owing to a global slowdown. Telecom is third largest business vertical for Wipro after financial services which contributes about 25 percent and manufacturing which contributes about 20 percent. In India, Wipro has telecom clients such as Airtel, Vodafone and Aircel. Besides, Wipro other IT services providers are also seeing slowness in telecom as spends of global telecom operators are also under pressure. Infosys' revenues from telecom and utilities sector fell from 26 percent in FY2010 to 24 percent in FY2012. Tech Mahindra suffered a 2 percent drop in its revenues last quarter due to the shutdown of operations of its two Indian telecom clients Etisalat DB and STel, as their 2G licences were cancelled.