The company, which has more than 40,000 employees, is now trying to
build up a business unit that will specialize in providing IBM-like
professional consulting services for companies trying to figure out
strategies for projects such as entering emerging markets.
Ramesh Emani,
senior exec, Wipro
As part of that effort, Wipro has opened an office in Boston to pitch project management consulting, Ramesh Emani, president of embedding and product engineering, said in an interview this week at the company's headquarters here.
Wipro's move into consulting is part of an effort to avoid inevitable competition in its current areas of expertise such as business process outsourcing and application development--markets that Chinese companies with even lower labor costs are entering.
Consulting is also an extension of the work currently performed at Wipro--which, along with Infosys and Tata Consultancy Services, is one of India's top outsourcing companies.
Humble beginnings
Wipro started as a vegetable oil distributor in the 1940s, and it moved
into high tech in the '70s when the Indian government exiled
multinationals. Emani, in fact, was one of the engineers who helped
developed Wipro's--and India's--first PCs in 1978.
Because of its roots, Wipro takes on both software and hardware projects. In its embedded systems group, for example, Wipro is currently building a prototype of a digital TV for a U.S. start-up, an MP3 player for the European market on behalf of an Asian customer, and several set-top boxes.
As in outsourcing, the push into consulting primarily comes out of the lower costs of doing business in India. Despite double-digit annual salary growth in India, a freshly minted college graduate in the country might earn US$8,000 to US$20,000, depending on the company, according to sources, far less than someone in the United States. As a result, several individuals can be put on a project.
"Profit per person is very low," Emani said.
Under the microscope
IT services came under the microscope earlier this month when IBM's stock dropped after a miss in earnings from its Global Services Group.
That reaction, however, is partly tinged by culture, Emani asserted.
"Services companies are not very glamorous in the U.S.," he said. "We are not apologetic about being a services company."
Wipro won't try to compete against broad-based consulting outfits such as the Boston Consulting Group. Instead, it will mostly confine itself to familiar niches.
And although Wipro and others in India are facing more competition these days, the companies are still growing rapidly. Wipro's net income grew 58 percent to US$363 million in the first quarter. Compound annual growth in revenue for the last five years has averaged 45 percent.
The growth rate translates into a lot of additional bodies. In 1999, the company had 8,000 employees. In 2003, it had 19,000. Now it has 42,000, with most of the growth coming through hiring, not acquisitions. Its number of development centers has grown from 14 in 1999 to 38.
"The biggest challenge is cultural continuity," Emani said. To that end, the company has focused the "bulk of the growth…at the entry level."
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