Know Your Company : Strategic Moves

For the kinds of strategies adopted and efforts on innovation by Wipro

Infotech, it should not be surprising that the company has assumed a significant

place in offering a balanced portfolio of product R&D services, solutions, and

IT infrastructure to telecom service providers and the networking industry.

Leveraging the opportunities available in the Indian market, in the last five

years Wipro Infotech's business has grown multifold-more than 40% y-o-y. It has

made inroads into different industry segments like telecom, enterprise, BFSI,

and SMBes. The company has also executed projects on technologies like carrier

Ethernet, unified communications, WiMesh, unified infrastructure, and green data

centers.

Wipro Infotech pursued various models to retain the integration costs at same

levels, in spite of an increase in input costs, and offer best bit solutions

that meet varying customer needs. The company's ability to provide E2E solutions

across the industry and technology segments armored with its 360-degree services

portfolio to support all initiatives of clients is a strong reason for its

achievements.

Says Sanjesh Gupta, vice president, system integration, Wipro Infotech, "As

part of our business strategy, we have built strong competencies in the area of

system integration, project management and remote management services, to give

peace of mind to our customers and help in their business growth and

transformation."

The requirement for improved network and advanced IT infrastructure in the

booming telecom industry and other verticals, IT adoption in the retail sector,

government's initiatives to end the digital divide, e-governance in government

offices, etc, are making the market ripe for companies like Wipro Infotech.

Strategic Presence



Wipro's significant presence in important technology areas like OSS/BSS
solutions for wireline and wireless operators, IP core networking, and optical

networking across verticals in India and across geographies is a strategic

advantage in order to provide E2E solutions. In the service providers segment,

it provides services related to IT transformation, and most OSS/BSS solutions.

Its first big contract in providing OSS/BSS solutions was from Aircel. The

nine-year outsourcing contract worth $660 mn in January this year was for

running Aircel's IT operations as well as transforming it.

Padmanabha TK, GM, telecom networking integration practice, Wipro Infotech,

says, "IP has overtaken voice network and voice traffic from overall bandwidth

perspective, and the industry is looking at IP as one core network to run all

services." So, leveraging the opportunity, Wipro offers services and solutions

for the IP core network, which has been the telecom industry's migration plan

for the past couple of years.

It's large presence across geographies helps the company's strategic business

plans. Headquartered at Bangalore, Wipro Infotech serves customers in India

through a network of 22 offices and 170 service locations across the country.

Apart from its presence in the Middle East and ASEAN, Wipro has also expanded to

Africa and Australia recently. Though it does not directly go to the market in

Africa, it works with local partners there. In the Middle East, including Dubai

and Saudi Arabia, it has a large, direct presence with a joint venture called

Wipro Arabia in Saudi Arabia. The company also has offices coming up in

Ethiopia, Kenya, among others. Along with its local expertise and capabilities

in these countries, Wipro will now be in a position to leverage its global

structure in order to offer its customers cost-efficient support, development

and delivery in a competitive environment.

Expanding Footprint



The company has made some strategic acquisitions to add more strength to its

products and services portfolio, primarily in the intellectual property space.

In August 2007, Wipro made a very significant move by acquiring Infocrossing, in

order to provide end-to-end IT infrastructure management solutions like managed

services and data centers for the US. Suresh Vaswani, joint CEO of Wipro's IT

business, says, "Total outsourcing services, which include our IT infrastructure

services, grew 75% in the past year (FY 2006), proving that global clients are

increasingly realizing the value of these services." It was a move to broaden

the data center and mainframe capabilities and deepen its presence in the US.

This was the biggest ever acquisition to date made by Wipro which restructured

the IT infrastructure outsourcing environment.

An independent research report published by Julie Giera with Eric G Brown,

Stephanie Moore and Robert Muhlhausen of Forrester Research, in November 2007

observes: "With the acquisition of Infocrossing's data centers and

infrastructure outsourcing business, Wipro has gained instant credibility and a

strong US presence from which to continue its expansion of services beyond

applications development and maintenance."

IP has overtaken voice network and voice traffic from overall bandwidth perspective, and the industry is looking at IP as one core network to run all services Padmanabha TK, GH, Telecom networking integration practice	The company has organization-wide initiatives on the innovation part. Each of the line of business heads has his specific budgets allocated from a group perspective, Vivek Sharma, general manager, networking	As part of our business strategy, we have built strong competencies in the area of system integration, project management and remote management services Sanjesh Gupta, vice president, system integration

The report also brought out the risks associated with the acquisition: "Wipro

still has a lot to learn about managing data centers, servers, and storage-and

will have to deal with all of the complexities and risks associated with owning

IT assets. This deal, however, should be a wake-up call for Wipro's

competitors."

In early 2006, Wipro acquired 100% stakes of cMango, a Sunnyvale,

California-headquartered company in line with Wipro's strategy to invest in

areas where it can establish leadership through differentiated service lines and

domain knowledge. Sudip Nandy, the then chief strategy officer, Wipro

Technologies said, "This acquisition is a significant milestone in our strategy

toward creating a strong value proposition in emerging areas in a growth

business like technology infrastructure services."

In 2006, Wipro Technologies acquired a Finnish company called Saraware Oy,

which is a provider of design and engineering services to telecom companies.

This acquisition along with 200 specialists of the company has added strength to

Wipro in the radio networks and secure mobile platforms domain. It was a

strategic move to expand Wipro's presence in the Nordic region, which gulps

close to 50% global market share in the total wireless infrastructure market.

At the end of 2005, Wipro Technologies acquired Austrian firm NewLogic, a

semiconductor design services company with intellectual property (IP) cores for

complex wireless applications like wireless LAN and bluetooth. It added strength

to Wipro's own portfolio of IP cores and patents in wireless and wireline

technologies areas. The acquisition also brought 25 patent filings and over 20

customers in the product-engineering domain to Wipro.

When it comes to strengthening its capabilities to offer best-fit services,

Wipro doesn't shy away from making more acquisitions and alliances, expanding

its footprint across geographies. Sanjesh Gupta, vice president, system

integration, Wipro Infotech, says, "We are open to acquisitions. We are also

aggressively pursuing new alliances in the area of IBMS, high speed broadband

(through Fiber to the Home FTTH) and voice NGN."

As part of its new initiatives in the last one year, Wipro has identified

certain key emerging technologies like IPTV, TelePresence, new generation data

centers, unified communications, open source (grid computing), and security,

which are fueling demands of the industry. Wipro has made substantial investment

in setting up CoEs (center of excellence) around these technologies. The

connected environment enables demonstrating the concept to customers and

partners. It is also used for training and development of our engineers across

the country.

Innovation Exercise



Padmanabha TK says, "Now IP migration wave is going on, and to help service
providers in this migration, our innovation team is substantially investing with

Rs 30 mn in the current year alone. And on Ethernet-based optical solutions, Rs

20 mn is being pumped for innovation. On the IMS part, we have CoE in Electronic

City Bangalore, where more than Rs 50 mn has been invested overall."



"These are only project-specific investments. Actually, the company has
organization-wide initiatives on the innovation part. Each of the LoB (line of

business) heads has his specific budgets allocated from a group perspective,"

adds Vivek Sharma, general manager, networking, Wipro Infotech.

Its innovations exercises are aligned with a lot of growth opportunities

available in India. Ericsson is soon expected to announce in this quarter that

India is the biggest contributor to their global revenues. BSNL has recently

launched its $9 bn tender for 3G and GSM requirements. These are all clear

indicators of the opportunities waiting to be tapped in India.

Padmanabha TK of says, "The money that the telecom industry is talking about

could be anywhere near $25 bn in the next three years. You cannot see that kind

of number possibly anywhere in the world, except probably China. But China did

not go through the same GSM standard as the world has gone through. They will

require a lot of specialized services. India will go the same way as the

European countries went for 3G. It will be straightforward."

Coupled with its innovation exercises, its go-to-market strategy also helps

further its agenda. It is closely working with its partnerships, whether it is

Cisco Systems for core IP network or ADVA for optical network-related

businesses. Similarly, it intends to enter partnerships in the future, for eg,

Oracle for OSS/BSS solutions or HP for network management systems. Padmanabha TK

says, "We have a lot of strategic partnerships and are building applications and

specialized solutions for customers to differentiate between themselves."

On the other side of the go-to-market strategy, from an enterprise point of

view, Wipro is also helping its customers like Aircel and Bharti Airtel who want

to get into the enterprise business. "They want to sell their bandwidth to

enterprise customers. Legally we can't resell bandwidth; we work on a tripartite

go-to-market partnership. So we worked with Bharti Airtel in their business to

Toyota Kirloskar Bank, HDFC bank, etc. We also help them with our solution for

example for disaster recovery and network expansion," adds Padmanabha TK.

Future Plans



Wipro has big growth plans in India. Padmanabha TK says, "I think we would be
blind if we ignore that India is the hottest place as far as telecom spending is

concerned. Nowhere else in the world so many new licenses have been issued. The

market will continue to buy telecom and integration services for the next three

years at least." Wipro understands that the market in India is now matured.

Apart from India, the Middle East is another business focus. He further says,

"At present we are strongly focusing on wireless and wireline business wherein a

lot investment is taking place and subscriber growth is huge."

Apart from this, Wipro has big plans for investing in new technology areas to

stay ahead in its competency and capabilities. Sanjesh Gupta, of Wipro says, "We

are planning to invest in new technology areas like IPNGN, eco-friendly (green)

data centers, optical network, and speech recognition and speech bio-matrix."

Further, it is exploring new geographies for business expansion and investing

significantly in building system integration expertise in emerging markets.

Wipro's wireline business is BSNL-centric which has got 50 mn copper lines.

Other customers like Bharti and Reliance don't have wireline, network on the

same scale and are trying to work on wireless technologies. Hence, going

forward, Wipro will continue to focus on both wireline- and wireless-based

broadband solutions, which will come after rollout of 3G.

Hiccups



Despite all its achievements, Wipro has challenges in its telecom and

networking business. But the challenges are not unique to the company alone.

Though it wants to have a very strong presence in high technology areas such as

telepresence, and videoconferencing, it is faced with certain challenges. "As

bandwidth prices continue to be high in India compared to other countries like

the US, China, and Australia, it is having a negative impact on enterprises

making investments on high technology areas like telepresence,

videoconferencing, among others," says Padmanabha.

According to the Forrester Research report in November 2007, "In the next

seven to ten years, the entire IT industry will evolve to a new set of business

models that center on IT services and service delivery. Wipro has an

opportunity-if it chooses to seize it-to become one of the more innovative

market leaders in the next five years."

Despite the hiccups common to all high technology areas, Wipro doesn't have

the problem of years of legacy operating processes in IT infrastructure

outsourcing services, as the company has newly entered the infrastructure

outsourcing market. So the company should utilize this opportunity to build

strategically advantageous service and delivery models to best meet emerging

complexities in the IT infrastructure outsourcing services for various verticals

including the telecom industry.

Kannan K



kannan@cybermedia.co.in