WIPRO Three Cheers for Wipro!

No. This is not even remotely about the quarterly results of the company.

This is about a seemingly small news–that Wipro has decided to invest $10

million in Spectramind, one of the better performing remote services companies.

This has given the Bangalore-based IT services giant a 20 percent stake in the

company. But anyway, I am not going into whether the valuation was right or not.

My first cheer for Wipro is due to its bold step. Remote services (popularly

known as somewhat less appropriate IT-enabled services) are a big opportunity

for India and very complementary to the IT services that the Indian majors like

Wipro, Infosys, and TCS are known for, globally. Yet, many of the so-called IT

pundits in India have frowned at this opportunity, labeling it as low in the

value-chain. Wipro’s direct investment in this area, at the time of a global

slowdown, is one of the best decisions taken by the company in its history.

My second cheer for Wipro is louder. It is for the wise–and pioneering–decision

to invest into an existing company and not trying to set up one on its own.

Incidentally, of late quite a few bigger software services companies are trying

to set up their own remote services facilities for services like call center,

back office, and the like. TCS, iflex, Mphasis, and Hiranandani Software, are

just a few examples. In a recession-trodden market, when big companies in the US

are looking at cutting cost, without compromising on the quality, time to market

has become extremely important. None of the Indian companies started by the

existing software companies have been able to rollout in less than a year. Wipro

has taken a very intelligent short-cut.

My third cheer for Wipro is for not falling into a trap that Indian companies

are quite used to fall into. Even after deciding to invest into an existing

company, Wipro could have decided to just buy out an existing sick company with

good infrastructure, good technical people, and good workforce at a much lower

rate. It could have put its own managers to turn around that company. It seems

very simple when I write it here. But that probably would have taken much more

time and would have taken months before integrating it into its service

offering. Instead, Wipro has decided to repose its faith on a company whose

management has proven a track record and the company is in excellent health. The

only thing it does not give Wipro is direct control. My third cheer is, in

short, specifically, for that. For the fact that it is quite comfortable without

that total control. Again a pioneering thought.

For Spectramind, it was the second round funding. While Wipro put in $10

million, another $4 million was put by Chrysalis Capital, the VC which had

started the company with the promoters. It holds 40 percent. HDFC holds six

percent while the rest of the equity is held by Raman Roy, the CEO and his

management team.

Shyamanuja Das