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