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Report 5 (of 5): Out of India
Introduction
Bangalore is India's answer to the
USA's Silicon Valley. It is home to two of the most
successful information technology companies in India,
Wipro and Infosys who have, over the last twenty years,
grown into billion dollar businesses, placing India
on the world business stage.
"Three years ago, during
my visit to India, the country was emerging as an
IT superpower. Today, the country is handling the
most sophisticated projects in the world... "
Bill Gates, Founder, Microsoft
See The
Digital Revolution - Information and Communication
Technologies for an overview on the global picture
on ICTs.
India is fast becoming the destination
of choice for companies seeking to fulfil their information
technology (IT) needs and outsourcing their business
processing. Indian companies have moved up the value
chain, graduating from voice based support services
to handling jobs such as remote technical call handling,
claims processing, etc. Increasingly, more and more
businesses in the west are outsourcing their business
processing to India and software exports have risen
exports have rose 40 to 50 per cent, to approximately
US $ 10 Billion in 2002-2003.
The success of both Wipro and Infosys
has meant that India is now able to compete on the
global stage in delivering IT services. They bring
huge revenue into India and have created thousands
of sought-after jobs.
Who is Infosys?
Infosys is the largest publicly traded
software services exporter in India, providing specialist
IT services to 315 corporations, such as General Electric
and Nortel, predominantly in the USA. It was the first
India Company to be listed on the NASDAQ exchange
in 1999 when their stock value soared.
| In 1991, the Indian government
loosened restrictions on overseas investment,
travel and telecommunications. Coupled with
advances in phone and satellite technologies
this made it possible for IT companies in India
to compete in the international market, and
to deliver service quickly and reliably from
a distance. Companies capitalised during the
IT boom in the 1990s and expanded their client
base during the huge demand to address the so-called
'Y2K bug' in the run up to 2000. |
Infosys offices Photographs
Copyright © Infosys |
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Infosys was founded by Narayana Murthy
with six other software engineers. Armed with an education
and experience of working overseas, but no capital or
direct knowledge of running a business, Narayana Murthy
borrowed $250 from his wife in 1981 and the seven founders
set about establishing Infosys in the front room of
Murthy's house in Mumbai. The company began by writing
codes, winning enough contracts to stay afloat for the
first ten years. The company re-located to Bangalore
to cut costs. They fought against Indian bureaucracy,
which stalled development, taking months and years to
grant permission for even the most basic of infrastructure
such as a phone line. Those were the old days which
were successfully overcome, eventually turning the company
into a billion dollar enterprise (the company's guidance
indicates that it will reach a billion dollars in revenue,
during this financial year).
Today, the campus style headquarters
of Infosys remain in Bangalore, and development centres
and sale centres have been established in about 30 locations
all over the world. The company employs more than 19,000
people and has a market value of $9.2 billion.
The company's services include business consulting,
custom software development, maintenance and re-engineering
services. It recently launched services in systems
integration, IT infrastructure management and business
process outsourcing.
Who is Wipro?
Wipro began life in 1947 as a small
vegetable oil company founded by Azim Premji's father.
Azim joined in 1966 and transformed it into one of
the largest product development and services outsourcing
companies in the world. In 1979, Azim began developing
his own computer and in 1981 started selling the finished
machine, going on to become India's top-selling computer
maker for two decades. In 1984, Wipro attempted to
break into packaged software by developing a spreadsheet
and word-processing package. This started the
ball rolling and Wipro expanded its research and development
initiatives for global clients.
Wipro Offices
Copyright © Wipro
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Wipro's 300-plus customers include
Microsoft, Sony, AMN Amro, Ericsson, General Motors
, National grid Transco, who are serviced from one
of the thirty offices worldwide. The company has grown
at an average rate of 42 per cent in the last twelve
years turning over $900 million (2002), employing
23,300 and making Azim one of the richest men in the
world.
Over twenty years Wipro has built
its services and expertise to deliver IT consulting
in product design services, embedded systems software,
control systems design and system integration. This
includes:
- Package implementation
- Application development and maintenance
- IT infrastructure outsourcing
- Remote processing applications
including customer interaction services, business
process outsourcing and knowledge services
- Total outsourcing
- Hardware and software.
Wipro still retains a light-bulb business,
a 12-year-old joint venture with GE Medical Systems
to make diagnostic equipment, and toilet soap and
cooking oil division. Together, they produce 35 per
cent of Wipro's sales and will continue to operate,
keeping the Wipro brand in the public eye.
It is expanding into areas such as
research, and helping customers design their IT systems.
It is also expanding its Business Process Outsourcing
services and building up software expertise in health
care, retail, and energy. Today, Wipro Spectramind
is the largest third party Business Process Outsourcing
outfit.
"When I look back, I realise
that Wipro was not blessed with the abundance of resources
that many multinational corporations have. What accounted
for its success was its integrity, unshakeable self-confidence,
determination and effort to better global competition,
relentless work towards achieving this and its ability
to acquire world-class processes, develop world-class
teams and attract world-class leadership," Azim
Premji.
Wipro has invested in attracting best
talent into Wipro, giving them best of the opportunities
and helping them develop into outstanding leaders.
At another level, Wipro has created an organisation
rooted in solid values, which generates a lot of trust
within and without the organisation. The third piece
of this organisation creation is articulating measurable
and achievable vision every 4-5 years, which keeps
Wiproites motivated and makes Wipro stretch to achieve
its Vision.
Elements to Success
Both companies attribute their success
to investing heavily in their staff, leading the market
by focusing on cutting edge technology, and applying
strict ethical corporate governance in a country notorious
for corrupt business practices. Both are able to gain
competitive advantage by employing educated Indian
staff, who is much cheaper than Western staff. Other
factors include:
| Infosys
|
Wipro
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- Replacing old technology
regularly to remain at the cutting edge
- Constant emphasis on quality
by benchmarking against the best processes
in the world
- Creating a campus in Bangalore
and other Infosys centres giving employees
a world-class environment to work and learn
- Being the first Indian
company to initiate an Employee Stock option
plan, thus giving many staff a high quality
of life and wealth creation opportunities
- Diversifying income sources
to minimise risk of revenue, i.e. setting
limit of contribution form one client, one
technology, once industry
- Looking at potential employees'
ability to learn, not their existing knowledge
- Complying with accounting
standards of eight countries and ensuring
strictest adherence to corporate governance
- On becoming a member of
the Infosys family, each employee pledges
to the Infosys Quality and Productivity
Charter - a statement of corporate values.
To recognise employees adhering to the highest
norms of values and personal integrity,
the company has instituted the Value
Systems Champions award under its annual
Awards for Excellence programme.
Infosys survived the global
downturn in IT spending in 2001, managing
to actually grow by focusing on providing
services to companies that maximised the effectiveness
of their existing systems, undertaking more
work for existing clients, launching an aggressive
marketing campaign overseas, adding new clients
and cutting costs wherever possible. The
key strategies are:
- Pursuing a world class
operating model
- Investing heavily in human
resources
- Focusing on technology-led
business solutions
- Capitalising on a well
established offshore development model
- Maintaining a disciplined
focus on business and client mix
- Pursuing growth opportunities.
(Source: Infosys Powered by
Intellect, driven by values) |
- Leading the market by focusing
on work at the cutting edge technology
- Maintaining commitment
to excellence.
- Pioneering the concept
of Six Sigma qualities in India and earned
significant savings from this initiative,
both through cycle time reduction and defect
reduction in its products and services.
See http://www.wipro.com/
for more info)
- Maintaining absolute transparency
in its accounts and business practices.
- Bringing in Human Values,
Integrity, Innovation and Value for Money,
as the four values on which the entire business
model is based.
- Attracting and investing
in, developing and nurturing the best talent
- Identifying customers as
the key and rearranging business divisions
to be more responsive to consumer needs.
The key initiatives are embodied
in Wipro's mission, quality mechanisms and
approach to innovation.
- Quality is assured by the
Six Sigma initiatives, which forms the basis
for a defect free environment across Wipro.
Wipro is the first company in India to receive
SEI-CMM Level 5, the highest global distinction
in quality from the Software Engineering
Institute of the USA, for its entire software
business.
- Innovation has been successful
in launching and sustaining a long term
initiative of building an IP portfolio,
which requires investments in people, Capex
and marketing for a long term gain. The
Wipro Innovation initiative is directly
under Azim Premji's office to address this
need. This initiative identifies themes
or areas that have potential and also marketability
and develop a suite of IP's and solutions
that help Wipro create a differentiation
with its competition.
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Corporate Social Responsibility
Both companies have used their wealth
and standing to contribute to improvements in the
community. A core value of Infosys is a strong sense
of social responsibility and commitment to help people
and communities. It is actively involved in various
community development programmes. Through the Infosys
Foundation set up to undertake initiatives for the
less privileged sections of the society. One percent
of Infosys' profit after tax is donated to the Foundation
every year. The Infosys Foundation focuses on enhancing
the living conditions of the rural population, healthcare
for the poor, education, and promotion of Indian arts
and culture.
Infosys also instituted, in 1999,
the Infosys Fellowship Program at five Indian Institutes
of Technology, three Indian Institutes of Management
for Ph.D. programmes in computer science, management,
law and accounting. This was part of Infosys' initiative
to foster excellence in education. Under this programme,
the company grants Rs 900,000 per fellowship for the
entire duration of the Ph.D. programme.
Wipro has set up 'Wipro Applying Thought
in Schools' and Wipro Cares. The former is an initiative
focused on improving quality of learning for the child
through systemic transformation of the education system.
This initiative provides teachers' training, conducts
workshop for school leaders and parents apart from
providing a forum for exchange of ideas among the
educationists in India. The initiative is also establishing
learning standards and developing curricular support
material. Today, over 2000 teachers and principals
in about 100 schools in 10 cities are covered under
the program. Wipro Cares focuses on improving quality
of life of the underprivileged people living in slums
and rural areas.
In addition, Azim personally funds
the Azim Premji Foundation, which aims at building
the future of India through transforming the lives
of millions of children by promoting development of
elementary education and bringing millions of poor
into school. The Foundation works in around 4000 villages
across India, covering 550,000 children.
Conclusion
Both Azim and Murthy are visionaries
of companies who exhibit leading models of innovation
and excellence in an industry that is rapidly evolving.
They are capitalising on growing opportunities in
a world that is increasing its reliance on e-commerce
and technology to form a vital part of business infrastructure.
Narayana Murthy's vision to harness technology and
the free market create jobs, helping to alleviate
poverty. Both companies have created thousands of
skilled, well paid jobs and further opportunity for
Indians to develop their expertise and skills. Their
enterprise demonstrates that it is possible to create
success and build prosperity among the poverty prevalent
within India.
Acknowledgements
ITDG would like to thank Tina George
at Infosys and Sandhya Ranjit at Wipro for providing
information and helping to produce this case study.
Further Information
Wipro
http://www.wipro.com/investors/boarddirectors.htm
Doddakannelli Sarjapur Road
Bangalore
560 039
India
Tel: + 91 80 8440111
Fax + 91 80 8440256
For all other offices please refer to website.
Infosys
http://www.infy.com/
Corporate Headquarters
Plot No. 44, Electronics City
Hosur Road, Bangalore
560 100
Tel: + 91 80 8520261
Fax + 91 080 8522390
For all other offices please refer to website.
Infosys Foundation
III Floor, Infosys Towers
Bannerghatta Road
Bangalore - 76, Karnataka, India
Ph: +91-80-6587422
Fax: +91-80-6588676
Email:mailto:foundation@infy.com
Azim Premji Foundation
http://www.azimpremjifoundation.org/
Head - Advocacy and Research,
Azim Premji Foundation
5, Papanna Street, St.Marks Road Cross,
Bangalore - 560 001
Tel : 91- 80 - 2272264 / 2273665
Fax : 91 - 80 - 2291869
Email us at: info@azimpremjifoundation.org
Indian Institute of technology
http://www.iitd.ernet.in/
Indian Institute of Technology Delhi
Hauz Khas New Delhi -110 016
India
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