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Wipro Technologies ltd


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This paper talks about Wipro technologies, and its position by External environmental analysis, internal environmental analysis, SWOT analysis.

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Wipro Technologies ltd

  1. 1. WIPRO TECHNOLOGIES LTD - Term Project STRATEGIC MANAGEMENT Submitted to Prof. Mr. Veeresh Sharma Submitted by N S Siva Shanmuga Priya 2011012Indus World School of Business Date:Greater Noida 12/03/2012 1
  2. 2. Table of ContentsContent Page NumberExecutive Summary 3Vision & Mission Statement 4External Audit 5 Demographic Forces 5 Economic Environment 5 Political and Legal Environment 6 Technical Environment 7 Social Environment 11 Industry Stage 11Internal Audit 15 Brief History 15 Financials 16 Wipro Technologies deals in following businesses: 16 Group Companies of Wipro 17 Wipro Infrastructure EngineeringSWOT Analysis 21Conclusion 24References 25 2
  3. 3. Executive SummaryWipro is headquartered in Bangalore and has 28 development centers across India, Europe and USA andalso has 21 offices in USA, Canada, Finland, Taiwan, France and United Kingdom. Wipro has set avision for itself to become a US$ 5 bn company in the next couple of years. It aims to be top 10 ITcompanies in the world top IT company in India, among top 10 most favored employers in the world andto be among the top 5 brands in India. Wipro is a global company with revenues of Rs 30922 MN for theyear 2001. The revenues for the company have been growing at an annual average rate of 23% and PATat an annual average rate of 50%. It employs total of 14000 employees out of which 11500 employees arein IT business. Wipro follows Six Sigma quality systems and is also a SEI-CMM level 5 companies withprincipal lines of businesses being information technology (IT) and consumer products. It also has otherbusinesses of fluid power, lighting, medical equipment products and financial services.IT, which includessoftware services as well as hardware products, makes up the largest chunk of business for Wipro. Itaccounts for 84% of total revenues of Wipro ltd. the Global IT services contributes 57% of total revenueswhereas Indian IT services contribute 27% of total revenues. The IT business makes up 84% of therevenues of Wipro Limited and around 93% of its PBIDT.Wipro has a very good client base with over 50 Fortune 500companies and over 100 leading Indiancorporates. In software Wipro is headquartered in Bangalore and has 28 development centers across India,Europe and USA and also has 21 offices in USA, Canada, Finland, Taiwan, France and United Kingdom.Wipro has set a vision for itself to become a US$ 5 bn company in the next couple of years. It aims to betop 10 IT companies in the world top IT company in India, among top 10 most favored employers in theworld and to be among the top 5 brands in India. Wipro is a global company with revenues of Rs 30922MN for the year 2001. The revenues for the company have been growing at an annual average rate of23% and PAT at an annual average rate of 50%. It employs total of 14000 employees out of which 11500employees are in IT business. Wipro follows Six Sigma quality systems and is also a SEI-CMM level 5companies with principal lines of businesses being information technology (IT) and consumer products. Italso has other businesses of fluid power, lighting, medical equipment products and financial services.IT,which includes software services as well as hardware products, makes up the largest chunk of business forWipro. It accounts for 84% of total revenues of Wipro ltd. the Global IT services contributes 57% of totalrevenues whereas Indian IT services contribute 27% of total revenues. The IT business makes up 84% ofthe revenues of Wipro Limited and around 93% of its PBIDT. Has emerged as the second largest player and is growing strongly and of toiletries has carved out a nichein the premium segment. Wipro also had an interest in the financial services industry through a subsidiary- Wipro Finance. This has proved to be a drain on the company for the last three years and this year thecompany has divested a significant portion of this company and it is no longer a subsidiary of Wipro.Wipro has a number of alliances with global leaders like Vignette, ATG (Art Technology Group), OpenMarket, iPlanet for e-business; with Anther systems, Age corporation for m-commerce; with Neon,STC,Vitria, Mercator, Seagull for Enterprise Application Integration; with SAP for ERP; with Siebel, Clarify,Pivotal for Customer Relationship Management; with Computer Associates, Cisco, Nortel, Sun forTechnology Infrastructure Services etc. 3
  4. 4. Wipros Mission and Vision:Having already achieved the pinnacles of process and quality credentials (through ISO 9000, SEI CMM,PCMM and Six Sigma), Wipros Vision is focused on attaining leadership in the areas of business,customer and people.Business Leadership: Among the top 10 Information Technology Services companies globally and theNo.1 Information Technology company in India.Customer Leadership : The No.1 choice of customers through innovative solutions and Six Sigmaprocesses.People Leadership: Among the top 10 most preferred employers globally by creating an environment ofempowerment, intellectual challenge and wealth sharing.Brand Leadership: Wipro to be among the 5 most admired brand in IndiaWipro enters into various industries for various businesses in a constant innovative manner. This showsthe firm’s strong approach of tapping new market with the spirit of achievement.External AuditDemographic Forces:Demographic forces are outcomes of changes in the characteristics of a population, such as age, gender,ethnic, origin, race, sexual orientation and social classes. Wipro in its milestone journey, understood verywell about the changing pattern of people, where it operates its businesses.Women Employees in Wipro Technologies:After India got freedom, the importance of women’s right and education gained more importance. Byaround 1980’s women’s literacy rate in India is 25.6%, and then it started moving upward in each year.Now it reached 65.4%, where the rate of increase is higher than male literacy increase rate. Even thenmost companies may be more gender sensitive now. But the IT sector, where nearly 30% of the entireworkforce is comprised of women, is way ahead of most other industries when it comes to genderneutrality and sensitivity. Wipro is one such company among those. The transition in the environment dueto IT industry in past two decades made a significant impact on women’s employment. Wipro gives equalemployment opportunity for women. It recently decided to increase its female work force rate from 13%to 20%. That’s how it enriches and keeps its employees in a competitive high attrition rated industry likeIT, ITES, BPO and health care.Three years ago, it conducted a study amongst its women employees, and came up with a Women ofWipro policy -- a policy that is designed to cater the needs of women.As part of that initiative, it has introduced several programs, including a unique nine-month mentoringprogram where senior managers mentor high performing women employees across levels, both onprofessional and personal fronts. 4
  5. 5. Economic Environment:In the economic front, when Wipro ltd had been taken over by Mr. Azim Premji, he analyzed theeconomic environment and found the opportunities for the expansion and diversification in variousindustries. Even when it was under his father’s administration he took that into a consumer marketsegment, where he had seen an opportunity to tap the consumer goods market, which was a main concernof government to cater to the needs of domestic demands first.The next opportunity seen by them was the boom of infrastructure industry in mid – 1970’s. The growthof country has its one of the bases as infrastructure development which should be in both private andgovernment sectors. They foresee it in a better way and decided to enter in to a market where they couldachieve the top level, which was engineering and manufacturing of hydraulic and pneumatic cylinders.This provides solutions by hydraulic and pneumatic cylinders, truck tipping systems for the trucks andheavy industry machines and for army tanks and vehicles.Wipro TechnologiesFrom 1970’s to 1990’s:At that time Indian economy was state-controlled and the state remained hostile to the software industrythrough the 1970s. Import tariffs were high and software was not considered as a separate industry, sothat exporters were considered as ineligible for bank loans. Government policy towards changed in 1984.Package of reduced import tariffs on hardware and software. This recognition of software exports asa "de-licensed industry", i.e., henceforth eligible for bank finance. This encouraged our Indian domesticplayers like Infosys , Wipro and TCS to concentrate in software industry very actively. The trend ofgrowth rate of Indias economy demonstrates an upward trend. During the period of 1960 to 1980 theeconomy saw a growth rate of 3.5% due to the roles of major industries in India GDP. In the years from1980 to 1990 the growth rate showed a marked improvement of 5.4%. It was slightly lower in the periodfrom 1990 to 2000 which was at 4.4%, and the reason behind this is those companies were already intothe industry, quickly utilized the opportunity, others were struggling to come up. Then the start of 21stcentury till 2008 the economic condition were favorable for this industry. The contribution towardscountry’s GDP was increasing year on year from 2000 to 2008. Then the world economic slowdown hitsoftware industry in India and melted so many companies in the market.The phase 2000 to 2008 saw a huge improvement and the growth rate of GDP were marked at 6.4%. TheIT/ITES industrys contribution to the countrys GDP has been steadily increasing from a share of 1.2percent in 1997-1998 to 5.2 percent in 2006-2007, according to NASSCOM-Deloitte study. The IndianSoftware Industry has grown from a mere US $ 150 million in 1991-92 to a staggering US $ 5.7 billion in1999-2000. No other Indian industry has performed so well against the global competition. According tostatistics, Indias software exports reached total revenues of Rs 46100 crores. The total share of Indiasexports in the global market rose form 4.9 per cent in 1997 to 20.4 percent in 2002-03. The Indiansoftware industry was considered to be the biggest employer expected four million jobs in 2008. Itaccounted for seven percent of India’s total GDP in the year 2008. 5
  6. 6. Today, the Software Industry in India exports software and services to nearly 95 countries around theworld. The share of North America (U.S. & Canada) in Indias software exports is about 61 per cent. In1999-2000, more than one third of Fortune 500 companies outsourced their software requirements toIndia. The software industry being the main component of the IT Industry in India has also helped the ITsector in India to grow at a good pace. As per the proceedings taking place in the software industry thefuture of the India Software Industry looks promising.Political and Legal Environment:From 1970’s to 1990’s:The IT industry started growing under unfavorable conditions initially. Domestic markets were notfavorable enough and the government policies toward private enterprise were completely unfavorable.The industry was begun by Bombay-based conglomerates which entered the business by supplyingprogrammers to global IT firms located overseas. At that time Indian economy was state-controlled andthe state remained hostile to the software industry through the 1970s.Import tariffs were high (135% on hardware and 100% on software) and software was not considered as aseparate "industry”, so that exporters were considered as ineligible for bank loans. Government policytowards changed in 1984. The Government has also played a vital role in the development of the IndiaSoftware Industry. In 1986, the Indian government announced a new software policy which was designedto serve as a catalyst for the software industry. This was followed in 1988 with the World Market Policyand the establishment of the Software Technology Parks of India (STP) scheme. Package of reducedimport tariffs on hardware and software (reduced to 60%). This recognition of software exports as a "de-licensed industry", i.e., henceforth eligible for bank finance. This encouraged our Indian domestic playerslike Infosys , Wipro and TCS to concentrate in software industry very actively. The trend of growth rateof Indias economy demonstrates an upward trend. In addition, to attract foreign direct investment, theIndian Government permitted foreign equity of up to 100 percent and duty free import on all inputs andproducts.After 1990’s:When the liberalization took place, India’s Information technology had a huge advantage over it. Thenonwards the boom started and the big players like Wipro, Infosys, TCS started being stable enough tosurvive in the industry. Liberalization gave them the opportunity to go global and to get their investmentto expand their businesses in various sub sectors like BPO and KPO and consulting. Those companieswere already into the industry, quickly utilized the opportunity, others were struggling to come up. Thenthe start of 21st century till 2008 the economic condition were really good for this industryWipro Technologies:The time line shows the consistent innovativeness of Wipro ltd throughout its journey. Wipro ltd was veryquick to react for governmental or legal environmental changes. Those immediate responses helped it tobuild and grow its businesses to extreme level in several industries, in which they achieved andcontinuing in top players list. 6
  7. 7. One of the best examples for this quick move or reaction towards legal or governmental environmentalchanges was to diversify in to IT hardware and later IT software industries. In 1977, IBM was in asituation, which it needed to leave from India, because of government regulatory rules, Wipro decided toenter Information Technology sector, by serving its domestic clients in IT Industry.They responded quickly and diversified into Information Technology Industry in 1979. Wipro begandeveloping its own computers. In 1981 the launched the Hardware company which provided the computerperipherals. This was the first in a string of products that would make Wipro one of Indias first computermakers. Simultaneously in 1980 Wipro moved into software development and started developingcustomized software packages for their hardware customers.Technical Environment:Technical environment is an important entity in this industry. The technological innovations drove thecompanies to get various dimensions across the industries. After 1990 in India all the industries startedrealizing the importance of technology support to their businesses to improve their efficiency to survive inthe competitive market. The competition mostly based on price and quality of the products. To handle theprice sensitive customers the companies need to be cost effective in their operations and to be innovativeenough to keep their customers happy in order to retain them.In all the industries new inventions started coming and the variety of products increased. The import ofgoods has been increased. Some technologies invented and improved during the 1990s:Software The World Wide Web and HTML are created by Tim Berners-Lee and eventually displace the Gopher protocol. Microsoft introduces Windows 95 and later Windows 98 to the market, which gain immediate popularity. The development of Web browsers such as Netscape Navigator and Internet Explorer makes surfing the World Wide Web easier and more user friendly. The Java programming language is developed by Sun Microsystems. Businesses start to build E-commerce websites; E-commerce-only companies such as, eBay, AOL, and Yahoo! grow rapidly. E-mail becomes popular; as a result Microsoft acquires the popular webmail service. Instant Messaging and the buddy list becomes popular. AIM and ICQ are two early protocols. The Year 2000 problem (commonly known as Y2K), the computer glitch disaster expected to happen on January 1, 2000. Microsoft Windows operating systems become virtually ubiquitous on IBM PCs. Development of the free Linux kernel is started by Linus Torvalds in Finland.These innovations are all related to software and hardware industry. Big players were able to changethemselves according to the technical changes happened. They started providing their goods in acompetitive price, so as to capture the market. In order to compete with the big players with the price andquality, everyone in the industry needs to change their technology. So the need of software and 7
  8. 8. technological advancement favored positively to the IT industry. In the early 1990’s concept likeBusiness Process Re-engineering (BPR) and in later 1990’s and 2000 the Enterprise Resource Planning(ERP) was new to the industry.Business Process Re-engineering (BPR):Business process re-engineering (BPR) began as a private sector technique tohelp organizations fundamentally rethink how they do their work in order to dramaticallyimprove customer service, cut operational costs, and become world-class competitors. A key stimulus forre-engineering has been the continuing development and deployment of sophisticated informationsystems and networks. Leading organizations are becoming bolder in using this technology to supportinnovative business processes, rather than refining current ways of doing workReengineering guidance and relationship of Mission and Work Processes to Information Technology.Business Process Re-engineering (BPR) is basically the fundamental re-thinking and radical re-design,made to an organizations existing resources. It is more than just business improvising. It is an approachfor redesigning the way work is done to better support the organizations mission and reduce costs.Reengineering starts with a high-level assessment of the organizations mission, strategic goals,and customer needs.The role of information technology:Information technology (IT) has historically played an important role in the reengineering concept. It isconsidered by some as a major enabler for new forms of working and collaborating within an organizationand across organizational border.Early BPR literature identified several so called disruptive technologies that were supposed to challengetraditional wisdom about how work should be performed. Shared databases, making information available at many places Expert systems, allowing generalists to perform specialist tasks Telecommunication networks, allowing organizations to be centralized and decentralized at the same time Decision-support tools, allowing decision-making to be a part of everybodys job Wireless data communication and portable computers, allowing field personnel to work office independent Interactive videodisk, to get in immediate contact with potential buyers 8
  9. 9.  Automatic identification and tracking, allowing things to tell where they are, instead of requiring to be found High performance computing, allowing on-the-fly planning and re-visioningIn the mid1990s, especially workflow management systems were considered as a significant contributorto improved process efficiency. Also ERP (Enterprise Resource Planning) vendors, such as SAP, JDEdwards, Oracle, PeopleSoft, positioned their solutions as vehicles for business process redesign andimprovement.Enterprise Resource Planning (ERP):ERP is an organization’s management system which uses a software application to incorporate all facetsof the business, and automate and facilitate the flow of data between critical back-office functions, whichmay include financing, distribution, accounting, inventory management, sales, marketing, planning,human resources, manufacturing, and other operating units. ERP software, in turn, is designed toimprove both external customer relationships and internal collaborations by automating tasks andactivities that streamline work processes, shorten business process cycles, and increase user productivity.A method for standardized processing, an ERP software application can both store and recall informationwhen it is required in a real-time environment. Companies often seek out ERP software systems topinpoint and mend inefficiencies in a business process or when a number of complex issues exist in thebusiness environment. ERP software systems are also implemented to enhance operational efficiencies,achieve financial goals, manage and streamline the company’s operational processes, replace an existingERP software system that is out of date or unable to handle a company’s daily activities; or improveinformation management through better data accessibility, decreased data duplication and optimalforecasting features.Many business owners see ERP software systems to be critical to their business functions, as they allowcompanies to achieve absolute business process automation. While most companies use countlessprocesses, activities and systems to run operations, workflows and procedures can go awry when it comesto today’s highly competitive marketplace, thus hindering productivity, growth and profitability. As aresult, the implementation of an ERP software application can result in increased productivity, reducedoperating expenses, improved data flow, and optimal performance management. ERP software comes inmany forms, including supply chain management, manufacturing, distribution, warehouse management,retail management, and point-of-sale software. So when these changes happened Wipro ltd provided allkind of software and did re- engineering processes. Then they diversified to consulting sector. In 2002Wipro ltd started its Wipro consulting Services and earned Rs 2 crores in the first quarter itself.Six Sigma Process:On the other hand they improved their efficiency by continuously following Six – Sigma Process. Theword is a statistical term that measures how far a given process deviates from perfection. Six Sigma isnamed after the process that has six standard deviations on each side of the specification window. It is adisciplined, data-driven approach and methodology for eliminating defects. The central idea behind SixSigma is that if you can measure how many “defects” you have in a process, you can systematicallyfigure out how to eliminate them and get as close to “zero defects” as possible.Six Sigma starts with the application of statistical methods for translating information from customersinto specifications for products or services being developed or produced. Six Sigma is the businessstrategy and a philosophy of one working smarter not harder. 9
  10. 10. One sigma gives a precision of 68.27%., two sigma, of 95.45% and three sigma of 99.73%, whereas SixSigma gives a precision of 99.9997%.Although 99.73% sounds very good, it slowly dawned oncompanies that there is a tremendous difference between 99.73% and 99.9997%. For example for everymillion articles of mail, the difference is between 66,738 lost items and 3.4 lost items.Evolution of Six Sigma at WiproWipro is the first Indian company to adopt Six Sigma. Today, Wipro has one of the most mature SixSigma programs in the industry ensuring that 91% of the projects are completed on schedule, mush abovethe industry average of 55%.As the pioneers of Six Sigma in India, Wipro has already put around ten years into process improvementthrough Six Sigma. Along the way, it has scaled Six Sigma ladder, while helping to roll out over 1000projects. The Six Sigma program spreads right across verticals and impacts multiple areas such as projectmanagement, market development and resource utilization.Six Sigma at Wipro simply means a measure of quality that strives for near perfection. It is an umbrellainitiative covering all business units and divisions so that it could transform itself in a world classorganization. At Wipro, it means:  Have products and services meet global benchmarks  Ensure robust processes within the organization  Consistently meet and exceed customer expectations  Make Quality a culture within.Six Sigma Consultancies at Wipro:Wipro’s Six Sigma consulting experience has peaked with the indigenous development of newmethodologies that it takes to its customers. As Wipro continues Six Sigma consulting journey, it buildson its expertise and experience- to provide enterprise-class coverage of topics in business processmanagement and information technology systems integration. The focus is on supporting the projectneeds and is also integrated with other methods to support process needs. Currently there are over 200PMI certified consultants at Wipro.The Wipro quality consulting group trains in achieving the precision of Six Sigma with Wipro’s ownmethodologies, training capabilities and global experience. Wipro also helps in institutionalizing SixSigma across the organization for transformation.Wipro provides consulting in institutionalizing an organization wide Six Sigma program that specializesin implementation across IT development, production support and core business operationsWipro offers the following Six Sigma consulting services  Six Sigma institutionalization  Problem solving using six Sigma  Six Sigma training 10
  11. 11. Towards this, Six Sigma concepts have played an important role:  Improving performance through a precise quantitative understanding of the customer’s requirements thereby bringing in customer focus  Improving the effectiveness in upstream processes of the software development life cycle by defect reduction (software defects reduced by 50%) and cycle time reduction (rework in software down from 12% to 5%).  Waste elimination and increased productivity up to 35%.  Cost of failure avoidance (installation failures down from 4.5% to 1% in hardware business).  Tangible cost savings due to lower application development cost for customer.Social Environment:As time ran, the threat of new entrant in this industry is high because of low investment needs. So theexisting companies need to come up with innovative solutions to attract and keep its customers and itsshareholders to be sustained in the market. Then they came with Green IT solutions, which is eco –friendly hardware components, reusable and made of low toxic materials. At the same time Wipro ltd wasvery clear about their path they had chosen and the position they wanted to maintain. They had financialservices and Wipro net. When other players came in Wipro wasn’t able to perform better, because theother players were having those businesses as their core, so they excelled in that. After all players came inWipro was not performing well. So the company decided to quit those two services in 2002.Industry Stage:INTRODUCTION TO IT INDUSTRY IN INDIAInformation Technology (IT) industry in India is one of the fastest growing Industries. Indian IT industryhas built up valuable brand equity for itself in the global markets. IT industry in India comprises ofsoftware industry and information technology enabled services (ITES), which also includes businessprocess outsourcing (BPO) industry and Knowledge process outsourcing Industry. Now a day’s companycombines consultancy services also with this industry to provide end to end services. India is consideredas a pioneer in software development and a favorite destination for IT enabled services. The origin of ITindustry in India can be identified from 1974, when the mainframe manufacturer Burroughs, asked itsIndia sales agent, Tata Consultancy Services (TCS), to export programmers for installing system softwarefor a U.S client. The IT industry was originated under unfavorable conditions. Local markets were notfavorable enough and the government policies toward private enterprise were hostile. The industry wasbegun by Bombay-based conglomerates which entered the business by supplying programmers to globalIT firms located overseas. During that time Indian economy was state-controlled and the state remainedhostile to the software industry through the 1970s. Import tariffs were high (135% on hardware and 100%on software) and software was not considered as a separate "industry”, so that exporters were ineligiblefor bank finance. Government policy towards IT Sector changed when Rajiv Gandhi became PrimeMinister in 1984. His New Computer Policy (NCP-1984) consisted of a package of reduced import tariffson hardware and software (reduced to 60%), recognition of software exports as a "de-licensed industry",i.e., henceforth eligible for bank finance and freed from license-permit raj, permission for foreign firms toset up wholly owned, export-dedicated units and a project to setup a chain of software parks that would 11
  12. 12. offer infrastructure at below-market costs. These policies laid the foundation for the development of aworld class IT industry in India. Today, Indian IT companies such as Tata Consultancy Services (TCS),Wipro, Infosys, and HCL etc… all are renowned in the global market for their IT prowess.Reason for Indias emergence as key global IT player:Indian Education System The Indian education system places strong emphasis on mathematics and science, resulting in a largenumber of science and engineering graduates. Mastery over quantitative concepts coupled with Englishproficiency has resulted in a skill set that has enabled India to reap the benefits of the current internationaldemand fort.High Quality Human ResourceIndian programmers are known for their strong technical and analytical skills and their willingness toaccommodate clients. India also has one of the largest pools of English-speaking professionals.Competitive CostsThe cost of software development and other services in India is very competitive as compared to theWest.Infrastructure ScenarioIndian IT industry has also gained immensely from the availability of a robust infrastructure (telecom,power and roads) in the country. In the last few years Indian IT industry has seen tremendous growth.Destinations such as Bangalore, Hyderabad and Gurgaon have evolved into global IT hubs. Several ITparks have come up at Bangalore, Hyderabad, Chennai, Pune, Gurgaon etc. These parks offer SiliconValley type infrastructure. In the light of all the factors that have added tithe strength of Indian ITindustry, it seems that Indian success story is all set to continue.Porters Five Force Model:Threat of new entrant: HighEconomies of scale: High Though there is a low capital investment needed but due to capabilities of resources pool and brandbuilding takes a long time to achieve economies of scale. New entrants will have to survive till theyachieve the economies of scale. In a dynamic industry, where each and every day a new software andtechnology coming up, it’s difficult for new entrants.Proprietary product differences: Medium It can bring the differences in individual’s brand and enable them to attract premium charge for theirproduct. As in Indian IT industry, we have enough number of big players like Wipro Technologies, 12
  13. 13. Infosys, TCS, Patni, CISCO, HCL, CTS etc…. So even Wipro is a well-known companies its power tocharge a premium price is not high, but medium.Brand Identity: High Plays vital role in IT industry to get a long term deals. The global presence of Wipro Technologies isan identity for it in domestic market.Switching Cost: Low As all the companies in the industry provides almost same kind of solution in their specialization area,the clients don’t have any switching cost or very low switching cost and they can have the same qualityservice from other players.Capital Requirement: Low So as to start an IT company in India it’s not difficult, but the difficulty lies with the investment inpeople’s training and development and brand building. As we are well known the fact of attrition rate inIndian IT industry, the cost required is quite high.Government Policies: Low Government has been favoring so far with IT industry. So there will not be intense problem other thansome decisions to make the stability, to prevent the industry form economic meltdown.Bargaining Power of suppliers: LowHere the suppliers are the consultants who provide the Human Resource for the company, other supplierslike hardware parts, software trained people etc….Differentiation of Inputs: High It’s a people oriented business and people as an input to the business or to the process can make a hugedifference.Supplier Concentration: Medium It is all about the talented and skilled people availability in India and the centers, where the companyoperates. It is high in India especially in urban and metro areas.Impact of inputs on cost or differentiation: High Again people as an input can create a dramatic difference on cost as well its impact on company’simage. The surveys like the top ten companies people wish to work, creates an impact on the talent poolthey have and that they are going to hire.Threat of forward integration: Low The forward integration is possible in this Industry, but requires skilled people. For Example a companyA provides an end to end solution like from Data storage to software and Hardware solutions to a client B, 13
  14. 14. but after some time company B can decide itself to acquire a IT department team instead of outsourcingit.Bargaining power of buyers: LowBuyer concentration: High As maximum customers of Wipro technologies has been from US, UK and Europe, the sustainability ofthem is very high. The they can rely on them to some extent.Buyer Volume: High Wipro has its large client base and it is providing integrated services. Each and every year it is addingto its customer base. So the buyer volume is high.Buyer switching cost: Medium Even though the switching cost is low in this, the contracts are revised quarterly. Wipro alwaysprovides a high quality service to its clients. So the satisfaction of customers is high.Ability to integrate backward: Low Most of the companies for integrating back ward, it needs investments. So small startup companies hasless capacity to that. At the same time large companies can do it if they feel their supplier’s bargainingpower goes up. So some of the MNC’s are setting up their own development center.Substitute product: High The number of substitute product or service is more easily available in the industry for low cost. Thequality and the reliability of those products are sometimes creates problem.Price / total purchase: High As the competition is getting tougher, the price is an important factor. Even then in this industry thecustomization and the full solution model of products having the control over price factor.Product difference: Low Basic products and services are more over same. There is hardly any difference among big players.Threat of substitutes: HighRelative price performance of substitutes: highHere the substitutes are other major player offering the same services at different price or small playersoffering the same with very low cost.Switching cost: Low 14
  15. 15. It’s low, because the services are of same kind with little brand differentiation. So as to get the servicefrom a cost effective company, customers will not think much to switch.Buyer’s propensity to substitute: Medium For the same quality substitute buyer’s propensity to substitute is high. At the same time for qualityreduced service or not a complete solution or for not having an end to end solution, clients show fewerpropensities to substitutes.Threat of rivals: HighIndustry growth: High Attracts more player in the industry, as the investment needed for a startup is comparatively less andmore profitable than other industry.Fixed cost / value added: High When an existing player is in industry, the firm can achieve the economies of scale over a short periodof time if we consider the industry as of now. So it depends upon the economies of scale.Capacity of Industry: High As the industry is growing in a fast pace. The client is also increasing with the need of developing theirbusiness with technological advancements. So the opportunity for new entrant is always there and theindustry can have the capacity to give a place to all incoming and existing players.Product difference: Low Basic products and services are more over same. There is hardly any difference among big players. Sothe product difference is very low.Brand identity: Medium Every company has its own identity in this industry in case of all factors like customer’s preferences,employee’s preferences to work in a particular company, other company’s preferences to create a jointventure.Diversity of Competitors: High There are lots of competitors providing variety of integrated services so as to retain their clients. Thereare global MNCs each year coming to India and captures and splits the market share of big players.Exit barriers: High Once the companies are entered in to contracts, it would be very difficult to terminate them. The reasonit has is the huge money involved in it in long term process. The contracts basically would be for morethan 5 to 10 years. The contracts having more credibility services, which should be provided by the 15
  16. 16. company like data management service for a bank includes all its data about customer accounts. SO acompany which signed for this contract can’t stop in middle.Internal AuditWipro Infotech is a part of INR 31763.9 crores Wipro Limited with INR 86504. 5 crores marketcapitalization. Wipro is known for its quality. It is the first global software company to attain Level 5 SEI-CMM as well as the first IT Company in the world to achieve Six Sigma and Level 5 PCMM. Wipro has13 regional offices across India. It also has offices in different places across the world including Egypt,UAE, KSA and Bahrain.Brief History:Wipro Ltd. started its journey in 1947 as a vegetable oil trading company (Western India Palm RefinedOils) in Amalner, Maharashtra, India. It was M. H. Premji, father of its current Chairman Azim Premji,who founded Wipro. After his sudden demise in 1966, his son, a Stanford University graduate inElectrical Engineering, took the onus of leadership at the age of 21. Azim Premji repositioned thecompany into a consumer goods company and started producing hydrogenated cooking oils, laundry soap,wax and tin containers. Later Wipro Fluid was set up, which started manufacturing hydraulic andpneumatic cylinders for the industrial trucks and heavy machines. In 1977, after IBM left Indian ITsector, Wipro entered into the market. It started developing its own computers within a couple of years.Wipro Ltd. started selling finished products. It licensed technology from Sentinel Computers in U.S.Wipro is also the manufacturer of Indias first mini computers.In 1980, Wipro Ltd. moved towards software development, when they started providing customizedsoftware to their hardware customers or clients. This was just a beginning of a new era for Wipro. Itspread its roots off shore in U.S. in 1992. By 2000, Wipro Ltd. managed to get enlisted on the New YorkStock Exchange.Wipro’s evolution from inception is given at the end of this project.Financials:Wipro Limited saw a stunning growth in terms of its revenue which soared up by 450% from 2002 to2007. In the quarter ended September 30, 2009, the IT Services business of Wipro Ltd. reported revenueof 49.96 billion with a growth rate of 5% year on year. It also recorded PBIT of 11.87 billion with agrowth rate of 19% year on year. During the quarter, the operating income to the revenue was 23.8%.During the quarter, Wipro Ltd. also added 37 new clients to its list. Currently as of 2011 December,Wipro has employee strength of 120,000.Innovation at Wipro Ltd:As we enter the second decade of the 21st Century, change seems to be the only constant. This dynamicmeans that businesses are facing challenges and opportunities which are very different to what they werea decade ago or even a year ago. The world of tomorrow is one where uncertainty and fierce global 16
  17. 17. micro-competition is going to be the norm. Rightly so, the world is looking up to innovation in thetriangle of technology, sociology and the environment to help them deal with these changes.This innovation is coming to the fore in various hues and has shifted from the core to the edge of theenterprise. This is being driven by the rise of trends like analytics, mobility, cloud and as-a-service, evenas the future will see newer technologies such as machine-to-machine (M2M) communication and naturaluser interface (NUI) fast becoming mainstream. In this fast changing world, Wipro believes it canleverage on its institutionalized innovation culture to push the boundaries for delivering solutions thatprovide enhanced value and direct impact for our customers.This culture has brought to the fore innovations like Indias most powerful supercomputer, a cost-effectiveBase Terminal Station designed for GSM networks in underserved markets, a mobile switching router foremerging markets, connected home concept and Wipro Energy Manager that uses M2M communication,among others. Taking forward our legacy in pioneering the ODC concept, Wipro has also developedapplication-based innovations like Flex and Cigma delivery models which are service-based as opposedto resource-based.Wipro is also partnering with European research institute IMEC to co-innovate and develop next-generation intelligent systems based on nano electronics and aimed at emerging markets through aninitiative called Applied Research in Intelligent Systems Engineering (ARISE).Wipro Technologies deals in following businesses:  IT Services: Wipro provides complete range of IT Services to the organization. The range of services extends from Enterprise Application Services (CRM, ERP, e-Procurement and SCM) to e-Business solutions. Wipros enterprise solutions serve a host of industries such as Energy and Utilities, Finance, Telecom, and Media and Entertainment.  Product Engineering Solutions: Wipro is the largest independent provider of R&D services in the world. Using "Extended Engineering" model for leveraging R&D investment and accessing new knowledge and experience across the globe, people and technical infrastructure, Wipro enables firms to introduce new products rapidly.  Technology Infrastructure Service: Wipros Technology Infrastructure Services (TIS) is the largest Indian IT infrastructure service provider in terms of revenue, people and customers with more than 200 customers in US, Europe, Japan and over 650 customers in India.  Business Process Outsourcing: Wipro provides business process outsourcing services in areas Finance & Accounting, Procurement, HR Services, Loyalty Services and Knowledge Services. In 2002, Wipro acquiring Spectramind and became one of the largest BPO service players. It currently has 22,000 employees as of December 2011.  Consulting Services: Wipro offers services in Business Consulting, Process Consulting, Quality Consulting, and Technology Consulting.Group Companies of Wipro: 17
  18. 18.  Wipro Infrastructure Engineering: Wipro Infrastructure engineering was Wipro Limited’s first diversification in 1975, which addressed the hydraulic equipment requirements of mobile original equipment manufacturers in India. Over the past 25 years, the Wipro Infrastructure Engineering business unit has become a leader in the Hydraulic Cylinders and Truck Tipping Systems markets in India, and intends growing its business to serve the global manufacturing requirements of Hydraulic Cylinders and Truck Tippers. It has emerged as the leader in the hydraulic cylinders and truck tipping systems market in India.   Wipro Infotech: Wipro Infotech is the leading strategic IT partner for companies across India, the Middle East and Asia-Pacific - offering integrated IT solutions. They plan, deploy, sustain and maintain your IT lifecycle through our total outsourcing, consulting services, business solutions and professional services. It is one of the leading manufacturers of computer hardware and a provider of systems integration services in India.   Wipro Technologies - Wipro Technologies is the global IT services business division of Wipro Limited. It is a global services provider delivering technology-driven business solutions that meet the strategic objectives of our clients. With over 46 offices around the world, Wipro Technologies is the No.1 provider of integrated business, technology and process solutions on a global delivery platform.  Wipro Consumer Care and Lighting: Wipro Consumer Care and Lighting, a business unit of Wipro Limited, has a profitable presence in the branded retail market of toilet soaps, hair care soaps, baby care products and lighting products. It is also a leader in institutional lighting in specified segments like software, pharma and retail. It manufactures and markets the Wipro brand of luminaries. Wipro Lighting offers lighting solutions across various application areas such as commercial lighting for modern work spaces, manufacturing and pharmaceutical companies, designer petrol pumps and outdoor architecture.  Wipro GE Medical Systems: Wipro GE Medical Systems is a joint venture between Wipro and General Electric Company. As a part of GE Medical Systems South Asia, it caters to customer and patient needs with a commitment to uncompromising quality. Wipro GE is India’s largest exporter of medical systems, with unmatched distribution and service reach in South Asia. Wipro GE pioneered the manufacture of Ultrasound and Computed Tomography systems in India and is a supplier for all GE Medical Systems products and services in South Asia.Wipro Technologies:Wipro Technologies is a global services provider delivering technology-driven business solutions. Wiprois the No.1 provider of integrated business, technology and process solutions on a global deliveryplatform. Azim Premji is the Chairman of Wipro Technologies. He took over the mantle of leadership ofWipro at the age of 21 in 1966. Under his leadership, the fledgling US$ 2 million hydrogenated cookingfat company has grown to a US$1.76 billion IT Services organization serving customers across the globe. 18
  19. 19. Wipro is presently ranked among the top 100 Technology companies in the world. It has 120,000employees, serves 592 clients, and has 46 development centers across globe.Alliances:Wipro works with alliance partners to offer compelling business propositions for the customers. Ouralignment with the technology leaders across various industries enables us to provide our customers withworld-class solutions that transform their business processes.Key benefits: • Creating competitive advantage by understanding the industry and bringing the right combination of products and services expertise to create a solution • Reduce IT costs by developing and implementing cost-effective solutions at scale • End-to-end solution thereby minimizing risk • Seamless solutions for the client • Reduced IT risksAchievements of Wipro Ltd:  First Indian IT Service Provider to be awarded Gold-Level Status in Microsofts Windows Embedded Partner Program.  Worlds largest independent R&D Services Provider.  Worlds 1st PCMM Level 5 software company.  Worlds 1st IT Services Company to use Six Sigma.  The first to get the BS15000 certification for its Global Command Centre.  Among the top 3 offshore BPO service providers in the world.  Only Indian company to be ranked among the Top 10 Global Outsourcing Providers in the IAOP-Fortune Global 100 listings.  First company in the world to be certified in BS 7799 (2002) security standards.  Ranked 23rd in the Top Companies for Leaders’ global list announced by Aon Hewitt, The RBL Group and Fortune.  ASTD BEST award for training and development.  IT Outsourcing Project of the Year 2011 award for innovation and achievement in outsourcing industry.  NASSCOM Corporate Award for Excellence in Diversity and Inclusion.  National Telecom Award for Excellence in Infrastructure for Application Services.  SAP ACE Award for Customer Excellence.  The Outsourcing Excellence Award for Best IT Enablement in BPO.  BPO Excellence Award for Outstanding Work in Utilities Company in UK.  Awarded with DL Shah National Quality Award. 19
  20. 20. Wipro Technologies: As of 2012, Wipro is the second largest IT services company by turnover in India, employing about 120,000 people worldwide as of December 2011. Provides outsourced research and development, infrastructure outsourcing, business process outsourcing (BPO) and business consulting services. This data is based on software and other IT application sales of respective companies. The survey was conducted by and Economic times in Dec 2011. Share of Software Industry Tata consultancy 8% services 10% 39% WIPRO 13% 30% INFOSYS HCL Technologies others 20
  21. 21. Wipro’s market share in BPO GENPACT 2% 7% 10% 30% WNS Global Services WIPRO 25% 26% HCL BPO ICICI OneSource othersSWOT ANALYSISIn this internal analysis usually SWOT analysis is used. It is an effective way to use this and will be easyto identify the company’s strengths and weaknesses. The opportunities and threats we found in theexternal analysis will be matched here and the company’s core competencies also considered and willwork on the improvement area.WIPRO Technologies:Strengths:Global R&D facility – Continuous Innovation: Wipro has global Research and development facility. Itkeeps on innovating new products and services in order it retain its customer and to attract new clientsand shareholders in the market. Its global R & D is a very strong strength for it.Vast clientele base: its large client base throughout the world gives strength for it. In its starting years itfirst headed into hardware business, then it started providing software solutions to them then diversified 21
  22. 22. as a company. The global clients of Wipro Technologies are always strength for it. The down turn in oneeconomy can be pacified by performing well in other economy.High skilled employees across industries: Wipro’s one of the main strength is its highly skilledemployees. The HR practices they follow are very much suitable and sustainable, where in IT industry theattrition rate is very high.Economies of scale - Low cost advantage: As they have already had their domestic as well as their globalclients, this is an advantage over all. The economies of scale can be achieved easily when compared tostart ups. For example when they started the Wipro Consulting Company, it earned 2 Crores within itsfirst quarter of operations, because the client base is huge and the economies of scale are also high for it.Strong brand value: As Wipro Technologies is the 2nd largest IT end to end service provider in the world;it has attained its brand value. So customers will prefer Wipro technologies for its quality.Client satisfaction - Quality products & Delivery capabilities: Wipro Ltd achieved all these because itscontinuous assured quality providing capacity and commitment. The clients are more satisfied withWipro.Alliances with top global companies – GE, Cisco, EMC, Microsoft, Oracle and SAP: To be a globalplayer, a company needs to have alliance with various other companies to provide on time service anddelivery. Certainly it’s one of its main strengths. The network strength is very high.Green thoughts - Eco friendly products: Where Wipro operates, the innovation keeps on gaining its ownvalue among people. Its green thoughts like Green IT that is reusable computer peripherals and less toxicmaterial usage for its production are their strength. The green office area – an innovative thought, whichbenefits its businesses.Customized products: It provides customized products for several industries like aerospace, EngineeringInfrastructure, Medical equipment’s; Lighting solutions etc… are its strengths.Weaknesses: Low operating margin of the other group companies: Even though IT sector creates huge profits for Wipro Ltd, the other group companies like customer care and Lighting is just accounting for only 9% for the total revenue. So a conglomerate company like Wipro will get affected if one of its main sectors fails. There are other players who are especially in those same sectors who already excelled in that sector like HUL, ITC etc…. Concentrating on mature markets: Domestic market is huge but is underdeveloped. If Wipro Technology considers capturing the remaining under developed rural areas like sub metros, it could have a very strong base in India and can improve its share and can be a No 1 player in IT sector. 22
  23. 23. Opportunities: In the consultancy area and BPO area: As Wipro Consultancy is in the list of top consultancies, it could achieve more with its vast client base. In BPO industry it is in 2nd top company in India. It could achieve to come to first place. Emerging technology: As it has skilled work force, it always have opportunity to come up with new technologies. Huge global market: As it is already a renowned global company, it has a huge scope in global market. The company has entered into the global market so now it’s the biggest opportunity available to the company. Huge potential in domestic market: It has potential to capture more market share in Indian It industry. So it has both global and domestic opportunity to expand.Threats: Increasing cost of human capital: As it is well known about IT and BPO industry, the attrition rate isalways high. So hiring new people is a huge cost incurring process every year. Then the Training andDevelopment cost is also highly cost counting part in IT industry. Intense rivalry in It Industry: The rivalry among Indian It industry is very high, because the entry Barrier is very low. It needs a low investment cost to start an IT company. Environmental change: Changing Environmental conditions like economic meltdown and Changing technology is a big threat to companies in IT industry. It will face fierce competition in the areas of e- business and ASP services. Slowdown in the banking, financial services and insurance (BFSI) sector. Other conglomerates like ITC, Reliance, Aditya Birla group may enter in to various industries and t Take over the benefits of WIPRO. Exchange rate: This can be a threat to the company as the company is making profits due to the high exchange rate and if this rate comes down in future it can lead to a major problem for the company. Changing Laws and Regulations: Government rules and regulation change may be a threat for IT industry companies, exactly for Wipro Technologies, which relies more on overseas projects.Strategy of Wipro Technologies:In this changing day to day technological environment the blurring of geographic boundaries and the needto expand in global emerging markets, business leaders at the world’s largest companies see strategicinnovation as crucial to their future growth plans, according to an exclusive Wipro-Forbes Insights 23
  24. 24. survey. The in-depth insight study examined and summarized the views of over 300 CEOs and other C-level executives at global enterprises.Suggestions: Adopt the Dynamic High Technology Strategy: Speed-to-market is necessary for successful innovation.Getting a product or service swiftly out to market is a critical business innovation tactic. Cost remains thebiggest hurdle to fostering innovation. It will be always barriers for R & D. Issues related to the regulatory environment, and finding and retaining top talent.Paying attention to best practices is the most effective way to foster innovation. Other innovation tacticsincluded technology, data-based decision making, and customer collaboration. Clear business case for using “green” practices. Green business practices as part of their corporateinnovation strategies. Green IT is a priority for more than three quarters of companies. Increase Global Presence: China holds the greatest opportunity, followed by India, Southeast Asia, andEastern Europe. More collaborations with other players; reduce dependence on only few playersConclusion:Till today Wipro has been known for being very process oriented with a focus on quality and costsavings. Wipro long term strategy should be to create a brand image and be known for innovation. Wiproshould invest in R&D and Market research, so that it is able to innovate new solutions for clients to cutcosts or reduce time to market or improve reliability.References: 24
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