WIPRO LIMITED

Wipro has emerged as one of the major Indian

global brands in the area of IT consulting services.

Background
Wipro Limited (formerly Western India Vegetable
Products Limited) was incorporated in 1945 and it
commenced operations of vegetable oils business in
1946. In the mid-seventies, it diversified into newer
businesses, such as computer hardware, fluid
power, and finally into software/hardware products
and systems integration/ software solutions
provider, and eventually developed into a
comprehensive IT company from India, by the start
of the next century. The story of Wipro's
phenomenal and uncharacteristic journey of
unrelated, but successful diversification is a unique
case study in corporate wealth creation, which has
primarily, been through successful information
technology businesses being run on global scale.
In 1977 Wipro perceived a supply-constrained
market in computer hardware in India, and it set up
Wipro Infotech Ltd. to address this business by way
sourcing components and packaged software from
small US based firms.Wipro entered the nascent
mini computer market in India, and soon become
a market leader in rapidly expanding institutional
computing market.With the emergence of personal

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computing era in the early eighties it became

imperative for Wipro to address this need, and it
forged an alliance with Sun Micro Systems for
selling Sun workstations in India.The personal
computing segment was Wipros major business for
many years through various technical and
marketing tie-ups till it finally entered into joint
venture with Acer for manufacturing PCs in India.
In another somewhat unrelated diversification it
formed a joint venture with GE, for addressing the
medical diagnostics imaging market in 1989.
Having identified healthcare equipment segment as
an emerging business opportunity, Wipro set up a
group company called Wipro Biomed Ltd to
address the healthcare instruments market
outside the diagnostic segment. Wipro's forays
continued further in the field of technology and IT

Company

Products

Established

Founder

Distribution

Production plants

Wipro

Software, hardware,
systems integration,
enterprise solutions
& ITES

1945

Azim Premji

India, America,
Europe, Asia Pacific

India, USA, UK,

Europe, China

applications with tie-ups in packed software

products such as spreadsheet, and database
applications through another group company
called Wipro Systems. It also entered the field of
medical/healthcare software in association with
GE and eventually acquired the healthcare
software applications business GE Healthcare IT
Systems in India.
The company's promoters hold the majority stake
in Wipro (81.7 per cent).The next largest
shareholders are the Indian public (with 7.5 per
cent stake) followed by foreign institutional
investors (with 4.7 per cent stake). Foreign
companies, domestic financial institutions, private
corporate bodies, trusts and mutual funds hold the
residual shares.

Products
Wipro is a diversified conglomerate with a presence
in businesses as diverse as information technology,
vegetable oils & soaps, financial services, medical
systems, lighting and hydraulic cylinders.Wipro's
strategic classification of its businesses follows a
combination of product-market and geography on

typical transnational dimensions, which are Global

IT Services and Products, India and Asia-Pac IT
services, Consumer Care and Lighting and Fluid
Power.Wipro's businesses are run through divisions
and subsidiaries of Wipro Limited, and its corporate
organisation is structured along strategic business
lines such as Wipro Infotech,Wipro Technologies,
Wipro Fluid Power,Wipro GE Medical Systems
(now known as GE Healthcare) and Wipro
Consumer Care and Lighting.
Global IT Services and Products Segment
contributes to over 75 per cent of revenues,
followed by India and Asia-Pac IT services and
products with 16 per cent and the remaining by
Consumer Care and Lighting and Fluid Power.
While it has done fairly well in most of its
businesses, it is Wipro's IT business which has
made a significant impact on global dimensions.
Within the IT business of Wipro, it offers the entire
range of services, which includes software
products, an enterprise solution, system integration
and IT enabled services. In terms of vertical
distribution, the company operates in diverse areas
encompassing manufacturing, telecom, retail,
finance, and energy & utilities

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Financial Performance
Wipro's revenues have grown at a CAGR of
around 25 per cent between 1999 and 2005, while
net profit has grown at an impressive CAGR of 110
per cent in the same period. Most of this growth
has been driven by earnings from overseas markets,
the share of which in the total revenue has grown
from only 35 per cent in 1999 to nearly 75 per
cent in 2005.The company has consistently
maintained high profitability levels. It has managed
to earn handsome returns over equity and capital
employed, with its returns on capital employed and
on net worth at 30.6 per cent.The company has
been very conservative in its financial structure and
has continued to remain low on debt even though
it could have improved its return on equity through
gearing.

Wipro's contribution in making Made

in India' global

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Wipro, as a part of its growth strategy, had been

historically global, and had sought international tieups in businesses where partners brought
technology, access to global markets and process
know-how, while Wipro brought access to local
markets, management capability and in most cases
an existing presence. Whereas this worked well till
the mid-nineties it became imperative for Wipro to
allow alliances with greater controlling shares of
partners, as India went through economic reform
and liberalisation. One of the important milestones

in this respect was the partnership with Acer for

manufacturing personal computers and was
followed by alliance with Citrix Systems.
Having established domineering presence in Indian
IT space,Wipro approached the global software
solutions market with Indian talent pool and its
existing technology tie-ups which were gradually
made more comprehensive with virtually all
software solutions and IT services being offered.
Wipro's successive global forays over the years
2000 to 2005 is as follows:
2001 - Opens IT services office in Paris and
Frankfurt and enters the European market.
Launches West Asia and Australian operations
2002 - Acquires controlling stake in Wipro
Spectramind thus acquiring access to ITES clients
in US and UK, ties up with US-based content
management company, Interwoven, launches
Hong Kong operations, acquires GE's healthcare
software arm in India and global Energy practice
of American Management Systems, creating
vertical competencies in healthcare and energy
domains for software solutions business
2003 - Acquires Wipro Nervewire, a
Massachusetts-based IT consulting company
serving customers in the financial services sector
2004 - Signs agreements with UAE's leading
systems integrator, ITQAN, as business partner,
Gulf Insurance Company for IT consultancy;
eGain Communication Corp, a wholly owned
subsidiary of the California-based eGain to offer

system integration services. Establishes a

subsidiary company,Wipro Shanghai Ltd. In China
2005 - Opens up its third office in Munich,
Germany after those in Kiel and Dusseldorf.
Wipro has emerged as one of India's truly global
corporate houses with over 75 per cent of its
revenues originating from global clients for both IT
solutions and IT Enabled Services, and it operates
globally through both offices, and incorporated
entities in other countries. 40 global development
centres spread over 35 countries employing over
35,000 employees from 23 nationalities is a clear
testimony to Wipro being a true global
transnational company. Further Wipro has managed
to attain low regional concentration risk with over
20 per cent of revenues coming from European
markets and has also successfully ventured into
Asia Pacific Markets with its IT solutions. Significant
overseas incorporations include Wipro Holdings
Ltd. (UK),Wipro Technologies UK Ltd.,Wipro
Shanghai Ltd,Wipro Japan KK and Wipro Inc.
(USA).

Factors fuelling Wipro's global

initiatives
The key factors which have enabled Wipro to
globalise its operations are both intrinsic and
extrinsic.The growing need for customised IT
applications required skilled manpower at
competitive costs.With most product software
companies finding it difficult to provide
downstream support and installation and
maintenance services, an opportunity was created
for existing Indian IT companies. Availability of low
cost skilled manpower, early entry in the business
life cycle coupled with increasing demand for IT
services and solutions enabled Wipro capture a
significant market share of both the systems
integration and software solutions pieces.The
company also set high quality standards through
successive SEI-CMM levels, and created an

organisation-wide quality culture by adopting Six

Sigma tools and processes.
The key factors behind global success of Wipro are
as follows:
Comprehensive range of IT services: Wipro
provides a comprehensive and integrated suite of
IT solutions, ranging from consulting to
application development and maintenance and
end-to-end responsibility for project execution
and delivery.This is done through a combination
of offshore development centres in India and
several near shore development centres located
in countries closer to clients ' offices.This
integrated approach is primarily to take
advantage of key growth areas in enterprise
solutions, including IT services data warehousing,
implementation of enterprise package application
software such as enterprise resource planning,
supply chain management and customer
relationship management.
World-class quality as measured by SEICMM and Six Sigma initiatives: Wipro is the
first IT services provider in the world to achieve
this standard. SEI-CMM is widely accepted in the
software industry as a standard to measure the
maturity and effectiveness of software processes.
Service offerings in emerging growth
areas: Another important factor, which is driving
the performance of Wipro, is its ability to identify
the key value drivers. For example, it identified
technology infrastructure outsourcing as an
emerging growth area in 1998.
Broad range of research and development
services: Wipro is one of the few major IT
services companies in the world capable of
providing an entire range of research and
development services from concept to product
realisation.Wipro provides IT services for

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designing, enhancing and maintaining platform

technologies including servers and operating
systems, communication subsystems, local area
and wide area network protocols, optical
networking systems, Internet protocol based
switches, routers and embedded software,
including software used in mobile phones, home
or office appliances, industrial automation and
automobiles.
Global delivery model: Wipro is the first
India-based IT services companies to implement
the offshore development model as a method for
delivering high-quality services at a relatively low
cost to international clients.

Future plans

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Increasing need domain specialisation in software

solutions business, and a growing market for IT
enabled knowledge processing would require
change in existing strategies for information
technology majors. Service delivery models may
require a significant shift from a predominantly
onshore to a substantially off shored model in
areas where cost competitiveness is the key.
Emerging markets needs would increase and widen

as they evolve on the software/IT life cycle. New

technologies and solutions would have to be
developed in emerging business areas such as data
warehousing and business intelligence.
Wipro, with its mission of being in the top rung of
global IT solution providers has chalked out plans
to remain competitive and address all segments of
business along the value chain and cover wider
geographies. It has identified the following key
directions for its future growth and value creation
Significantly expand Global IT Services and
Products business
Focus on services-led growth in India and AsiaPac IT Services and Products segment
Focus on developing industry knowledge
Pursue selective acquisition of IT companies
Globalisation at a glance

Revenues from outside India constitute nearly

75 per cent of total sales
Subsidiaries in the US, UK, China and Japan to
assist global businesses
40 global development centres across 35 countries,
with employees of 23 different nationalities

www.wipro.com