With the IT services market as competitive as ever,\n every vendor is working hard to differentiate itself in the\n field of global competitors. With $3.4 billion in revenues and\n 72,000 employees, Bangalore-based Wipro is a known quantity in many\n circles. But a Wipro survey found that its brand recognition\n is just 50 percent among U.S. IT buyers, compared to 100\n percent for the likes of IBM and Accenture. So Jessie Paul, who was hired\n as Wipro\u2019s chief marketing officer in 2005, is hard at\n work on building a new global identity for the Indian\n giant.\n MORE ON CIO.COM\n \n Wipro Acquires U.S. Service Provider\n \n India Moving Down the Value Chain\n \n Inside Outsourcing in India\n \n IT Services Showdown: India Versus China\n Senior Editor Stephanie Overby recently talked to Paul, who\n for the past decade has been a marketing executive for Indian\n companies iGate and Infosys as well as Ogilvy and Mather\n Advertising. She spoke about Wipro\u2019s challenges\n presenting itself to the U.S. market, its recent expansion\n everywhere from Mexico to the Middle East, its efforts to hire\n and train American workers and its new mantra: \u201capplied\n innovation.\u201dStephanie Overby, CIO.com: What is the message\n you\u2019re trying to send to U.S. IT leaders about\n Wipro?Jessie Paul, Wipro CMO: We\u2019re working\n on building brand awareness in the U.S.It\u2019s driven by a need to differentiate ourselves. In\n the past, we could say we\u2019re an Indian offshore provider.\n Now everyone else has set up shop in India, so now we have to\n figure out what makes us different not only from Infosys and\n TCS, but also from Accenture and IBM.We did a study to figure out what we could use that others\n hadn\u2019t talked about and was relevant to us. One of the\n things that differentiates Wipro is that for the last nine\n years we\u2019ve had an innovation council. Any employee could\n say, \u201cI have a great idea,\u201d and we would fund it\n for three years. We had some real success with that initiative\n as a way to get ideas from the ground up.At the corporate level, we\u2019re one of the few service\n providers who has a target for revenues from innovation. We\n have a goal of 10 percent by 2009. At the end of [March 2007],\n we had 7.5 percent of our revenues generated by\n innovation, so we think we\u2019ll hit our goal.The other thing is that one-third of our IT services\n revenues comes from R&D outsourcing, which allows us to\n offer end-to-end IT service and gives us access to new\n technologies.Putting it all together, we came up with the message of\n \u201capplied innovation.\u201dIs that a hard sell? Historically, Indian IT\n services providers haven\u2019t been known for innovation.\n They\u2019ve been known for being very process oriented with a\n focus on quality and cost savings.Paul: You\u2019re right. In the past we\n were known for quality and repeatability. But quality and\n repeatability are no longer differentiators. They\u2019re\n hygiene factors. When you come to an Indian provider,\n you\u2019re going to get that quality and get it at a slightly\n lower cost. That\u2019s a given. So the question is, what are\n you doing beyond cost arbitrage and quality?It\u2019s a new area for us, and so we have to do a little\n bit of education on what we mean by applied innovation.So what do you mean by \u201capplied\n innovation\u201d?Paul: It\u2019s not pure innovation.\n It\u2019s not new technology or IT patents for their own sake.\n It\u2019s innovating for clients to cut costs or reduce time\n to market or improve reliability.For example, Wipro invests in building techniques for\n software quality such as lean software development [a\n translation of lean manufacturing principles and practices to\n the software development] and Six Sigma, but in the past you\n never really knew what the benefit was. Now we can say that\n we\u2019ve done it on 600 projects and seen an average cycle\n time reduction of 20 to 30 percent. So we\u2019re able to say\n when we share this innovation with you, this is how much\n you\u2019re going to save.We can talk about delivery model innovation. For one of our\n clients, we set up an outsourced CTO office to help them drive\n technology change. We work with the client to make sure the\n technology is best for their business, and we\u2019re able to\n do that because we have complete input.We invested early in a Linux operating system for cell\n phones, so when the market was ripe we were able to give that\n to the client with customization at a lower cost to market than\n if they had done it on their own.We\u2019ve started an applied innovation advisory council,\n limited to 10 of our client company CIOs. We\u2019ll provide\n them with content that they find relevant, and they\u2019ll\n also provide input on our innovation strategy.By most accounts, buyers of IT services are more\n disappointed in the level of innovation provided by their\n outsourcer than almost anything else (see \u201cOutsourcing\u2019s Innovation Crisis\u201d and\n \u201cMore Outsourcer Innovation Consternation\u201d).\n Why spotlight innovation?Paul: For a lot of tactical vendors, it\n doesn\u2019t make sense. And there is a little bit of\n disappointment among customers about the level of innovation\n they\u2019re getting, but this is also in its early stages.\n Not many people are getting what they expect, but that\u2019s\n true of the early stage of any technology offering. The\n potential is there to differentiate us from other India-based\n players who only talk about cost savings or quality.As we continue to grow at 30 percent a year on a very large\n base of revenues, the question starts to be, are you going to\n deliver services end to end? Why should I use you instead of my\n incumbent vendor? We\u2019re now competing not only on how\n well we do something, but how innovative we are and how well we\n can quantify those benefits for customers. That\u2019s why\n innovation makes sense.Three big concerns for IT leaders outsourcing to\n India right now are increasing salaries, attrition rates and\n the rising rupee. How do you address those\n worries?Paul: The rising costs of India are not\n that much of a factor. Costs have always been rising and\n we\u2019ve coped with that through productivity improvements.\n We have a lot of experience mitigating that risk. It also helps\n that we do a lot of automation. Once you automate something,\n you don\u2019t need as many engineers.We are constantly working on retention. We offer\n opportunities for higher education, allowing employees to join\n as non-engineers with basic degrees and paying for their\n engineering degree. We have a lot of comprehensive HR policies\n that include benefits like maternity leave. Wipro\u2019s\n attrition rate is between 13 and 17 percent, whereas our\n U.S.-based competition has attrition rates averaging 21\n percent.The rising rupee is something which is going to continue.\n The [Indian] economy is going up. We are looking to contain\n that, and one of our solutions is the global diversification of\n our business.Wipro does seem to be all over the\n map\u2014literally\u2014these days. In the past few months,\n you\u2019ve announced new development centers in Monterrey,\n Mexico and Atlanta, Ga. You created an outsourcing joint\n venture in Saudi Arabia and recently announced plans to enter\n Egypt. What drives Wipro\u2019s globalization\n strategy?Paul: There are three types of regions we\n want to be in. One is emerging markets, such as India and the\n Middle East. The Middle East is a huge growth area. In places\n like Dubai and Saudi Arabia, there are no players who hold a\n monopoly and we have long ties there, so it\u2019s a good\n market for us to target. We\u2019re also looking at developed\n countries where the outsourcing market has not matured yet,\n like Japan, Germany and France. And the third is new markets\n like Canada or Mexico.If you\u2019re looking at why we open specific development\n centers, sometimes it\u2019s purely to get access to certain\n skills in that particular market. We did some acquisitions in\n Austria and Finland because we do a lot of wireless work.Another reason we might open a specific center is for\n proximity reasons. We\u2019re looking for places where we can\n be close to clients\u2014places that have a good education\n system and are not terribly expensive. As our mix of business\n changes and we move up the value chain, we need more face time\n with the customer. That\u2019s why we\u2019re opening the\n center in Atlanta and we\u2019re looking for two other cities\n in the U.S. We\u2019re growing so much\u2014we already have\n over 8,000 employees in the U.S.\u2014it made sense to have a\n dedicated center there. Similarly, we have locations in\n Portugal because it\u2019s a lower cost center to serve the\n European Union market and it has a retail focus.A third reason we might go into a specific area is because\n clients want us to have operations there. We\u2019re opening a\n center in Mexico because one of our clients had a presence\n there. It\u2019s a client-centric strategy.How does your acquisition of U.S.-based\n infrastructure management company Infocrossing fit into your\n diversification strategy? (For more on this, see \u201cIndia\u2019s Wipro to Acquire U.S. Services Provider Infocrossing\u201d and \u201cIndia Moving Down the Value Chain?\u201d)Paul: It allows us to have hosted data\n centers in the U.S. A lot of our clients in verticals like\n health care have regulatory requirements that dictate that data\n stay in their home country. With our acquisition of\n Infocrossing, data can stay in the U.S. In the past,\n we\u2019ve [partnered] with U.S. vendors to accommodate such\n requirements, but it wasn\u2019t as good a solution.The sense is that most Indian vendors are unwilling\n to invest in major assets such as data centers or U.S.\n employees because it dilutes their profit margins. Why did you\n make this particular investment?Paul: Among Indian players, we are the\n largest provider of infrastructure management services.\n It\u2019s also a relatively asset-light acquisition.\n Infocrossing tends not to acquire the assets themselves.\n They\u2019ve taken them over and manage them from their data\n centers, but they don\u2019t own the assets. That\u2019s why\n we were interested in them.It also helps to build out our infrastructure outsourcing\n revenue, which is growing at 70 percent a year.Another capability we bought with Infocrossing is the\n mainframe capability, which is important for a lot of our U.S.\n and Indian clients. And about 20 percent of their revenue comes\n from healthcare BPO, another area of interest for us.In terms of Infocrossing employees, we intend to keep most\n of them because we feel we have enough growth to support\n it.As far as why we\u2019re buying and many of our competitors\n are not, we have gaps in our portfolio and we want to fill in\n those gaps. We bought a telecom provider last year. We bought a\n CAD\/CAM company because we work in the automotive vertical and\n GM is one of our customers. We\u2019re filling in gaps so we\n can become an end-to-end player. We want to be a global systems\n integrator.Most multinational outsourcing providers are putting\n a stake in the ground in China. What\u2019s Wipro\u2019s take\n on China\u2019s role in the outsourcing market?Paul: We\u2019re slightly more cautious in\n terms of China. We\u2019re opening a center in Chengdu, but we\n don\u2019t have that many people there today. If you look at\n the salary costs for India and China, they\u2019re about the\n same. But in terms of IT maturity, China is not as strong as\n India. They\u2019re catching up; they\u2019re teaching\n English in a big way. But we\u2019re going with a\n client-centric strategy in China. We\u2019re there for the\n clients that want us to be there.There was an article in BusinessWeek that\n stated that IBM had become the leader in serving the local\n Indian IT services market while India-based multinationals\n continued to focus on the export market.Paul: We didn\u2019t agree with the\n characterizations in the BusinessWeek article. Wipro\n has always been based out of India. Wipro entered the\n technology space as a hardware vendor serving the Indian\n market. It converted into an outsourcer serving the Indian\n market and then the global market. But we\u2019re still one of\n the largest players in the domestic market. This year,\n we\u2019ll have $800 [million] to $900 million in outsourcing\n revenue from India. Wipro does non-IT work in India in the\n consumer care area. Wipro is very committed to the Indian\n market and we\u2019re hugely present in infrastructure, IT\n services and consulting.How is Wipro dealing with the H-1B issue, practically in terms of\n getting visas, and politically?Paul: The visa situation has been an issue\n for many years. We\u2019re dealing with it now by doing more\n localization [i.e., hiring more domestic workers in their host\n countries]. We\u2019ve done some of that in Europe, where 25\n percent of the staff is local. In Japan and Finland, 90 percent\n of the staff is local. The trend is definitely toward more\n localization.Isn\u2019t it much more expensive for you to, say,\n hire a U.S. professional in Atlanta than bring someone over on\n a visa?Paul: It can be more expensive, but it\n depends on what work you\u2019re doing. Clients are willing to\n pay a higher rate for the kind of work that is done onsite.\n It\u2019s not just about salaries. If you add in relocation\n costs, it can even out. With most of our new centers, they will\n be primarily local staffs. Atlanta will be entirely localized.\n We\u2019re looking for seasoned professionals who have done\n consulting work. We\u2019re looking for defense industry\n veterans because they are highly qualified and have a great\n work ethic. We\u2019re also recruiting from local\n universities.Our goal is to increase the talent pool we can hire from.\n We\u2019re working with colleges [in the U.S.] to change their\n [syllabi] and make their graduates more industry ready.\n We\u2019ve teamed up with educational institutions in Atlanta\n the same way we have in India because there\u2019s a\n difference between what students are being taught and what we\n need. Our employees need to be able to work in a team\n environment. So we offer a program where they can do a project\n for us in their final year of school and that decreases the\n amount of training they have to do when we hire them.\n It\u2019s important to make the university programs more\n relevant for industry. We\u2019re hiring 15,000 new employees\n this year.Do you see Wipro\u2019s corporate culture changing\n at all as it becomes more global?Paul: Our biggest space continues to be\n India. Most [about 60,000] of our 72,000 employees continue to\n be in India. We want to be a global system integrator, so in\n that sense nationality is not a big consideration. But our\n culture is still based in India. By and large, we\u2019re\n still a very techie-oriented firm. Engineering is in our genes\n from the chairman downward. We are also very committed to\n learning. We\u2019re investing in training and assimilation,\n so our culture will continue on as we go global. We\u2019ve\n also introduced a training program where we take global hires\n to India for six weeks. We find that the orientation is much\n easier to do than in the past when training was done in the\n local geography.