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Wipro: shooting ahead of the duck
John Lively
Wipro: shooting ahead of the duck
ICT services company Wipro shared its corporate strategy and key business initiatives at its recent analyst event. In addition to helping its customers prepare for the post-recession business environment, Wipro is also implementing changes internally. Recent financial results have been impressive, but differentiating itself remains a key challenge. Successful 21st century businesses must have flexible cost structures and partners willing to share investment risks, according to Wipro executives
Just as duck hunters must lead their target to score a hit, businesses must prepare now for success in the post-recession businesses environment, Wipro senior managers told industry analysts. Citing seven mega-trends causing a permanent shift in the global economy, they described the attributes needed to be a successful “21st century corporation”:
- variable and flexible cost structures
- rationalized and virtualized non-core processes
- business objectives shared with partners.
They went on to tell how Wipro's portfolio of services allows it to engage customers throughout the value chain, identifying systemic improvements instead of sub-optimal bolt-on solutions. One executive summed up the value proposition as “optimizing what the company [i.e. customer] does best, and partnering for the rest”. Other companies can take a lesson from Wipro
Wipro is “taking its own medicine” and investing to transform itself into a 21st century company. Some of its notable actions are:
- hiring additional consulting talent to better leverage the knowledge that already exists in its vertical domains
- hiring a new global sales manager and expanding its Customer Engagement Manager program, where top accounts are managed by an executive with both sales and solution delivery responsibility
- “productizing” some common business solutions while allowing for some customization (typically 30% custom, 70% standard), to enable fast and flexible service delivery
- offering a variety of pricing options, including outcome-based pricing, subscription, and transaction-based pricing
- gaining experience in cloud computing by building its own facility and putting some of its own internal processes into operation on it.
Wipro's strategic investments are paying off
Wipro's recent financial results are impressive. Revenues grew to 202.2 billion rupees in the nine months to 31 December 2009, from 191.6 billion rupees in the prior period, and net profit before taxes increased to 19.9%, versus 17.4% previously. Wipro's strategy for 2010 should lead to continued good results. One area to watch is Wipro's cloud computing services, which cover the entire “solutions stack”, from business process as a service, software as a service, platform as a service, infrastructure as a service, to information as a service. Wipro expects to have 20 or more customers for each by the end of 2010, which would be a real success if the accounts are sufficiently large. Wipro is also counting on new lines of business to contribute to improved financial results. Cost transformation has been Wipro's bread and butter, but it now expects business transformation and variabilization to grow faster. (Variabilization is the transformation of fixed costs to variable costs through the adoption of flexible processes.) It is also planning to expand geographically, into Latin America, assisted by new solution delivery centers in Mexico and Brazil. Wipro must clearly differentiate itself in order to gain ground on its nearest competitors
Despite its well-articulated strategic vision and investments, and its respectable 2009 financial results, Wipro was not able to improve its market share rank in 2009 versus its two closest rivals. Comparing full-year 2009 and 2008 share of top 25 revenues, Wipro remained 15th largest, while Infosys remained 14th and TCS was 13th. Many of Wipro's competitors are implementing similar changes internally, and have similar approaches to delivering customer value. Wipro's ability to differentiate itself from competitors is essential if it wants to grow faster than the market. One area that may play a big role is Wipro's large product engineering group, since it is an asset that its competitors do not have. It might allow Wipro work a bit more intimately with some of its top clients, forging the kind of partnerships that 21st century companies require to be successful.
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