Wipro Technologies Ltd

Wipro Technologies Ltd. Company Overview Wipro Limited (Wipro), incorporated in 1945, is a global information technology (IT) services company. The Company is organized in segments, which include Global IT Services and Products (GBITP) (comprising of IT Services and BPO Services segments), India and AsiaPac IT Services and Products; Consumer Care and Lighting, and Others. The business is segmented into 5 areas IT Services (Max. Business), Product Engineering solutions, Technology Infrastructure Services (Picking up), BPO and Consulting

Global IT Services and Products: Customers in Americas, Europe and Japan. (GBITP) The range of its services includes IT consulting, custom application design, development, reengineering and maintenance, systems integration, package implementation, technology infrastructure outsourcing, BPO services and research and development services in the areas of hardware and software design. Its services extend from enterprise application services to eBusiness solutions. Wipro's research and development services division accounted for 35% of its IT Services and Products revenue in fiscal 2007. Wipro's research and development services are organized into three areas of focus: telecommunications and inter-networking, embedded systems and Internet access devices, and telecommunications and service providers. India and AsiaPac IT Services and Products The India and AsiaPac IT Services and Products segment accounted for 16% of Wipro's revenue in fiscal 2007. The Company's suite of services and products consists of technology products; integration, IT management and infrastructure outsourcing services; custom application development, application integration, package implementation and maintenance, and consulting. In India, the Company offers a portfolio of international brands in desktops, servers, notebooks, storage products, networking solutions and packaged software to meet its clients' requirements. The Company offers availability services, such as hardware and software maintenance, and network availability services. These services are typically bundled with sales of the Company's technology products. Wipro also provides consulting services in the areas of business continuity and risk management, technology, process and strategy. The Company competes with IBM, Hewlett Packard, EDS, Dell, TCS, HCL Infosystems and Infosys. Consumer Care and Lighting Wipro's Consumer Care and Lighting business segment accounted for 5% of its revenue in fiscal 2007. The Company's product lines include hydrogenated cooking oil, soaps and toiletries, wellness products, light bulbs and fluorescent tubes, and lighting accessories. Brands include Santoor, Chandrika and Wipro Active. The Company's product line includes incandescent light bulbs, compact fluorescent lamps and luminaries. It operates both in commercial and retail markets. Its product line consists of hydrogenated cooking oils, a cooking medium used in homes, and bulk consumption points like bakeries and restaurants. It sells this product under the brand name Wipro Sunflower.

The Company competes with Hindustan Lever, General Electric and Philips. Growth figures for last five years

Comparison with Competitors TCS

Infosys

Wipro

Sales growth (CAGR, FY05-FY07, %)

36%

29%

38%

Profits growth (CAGR, FY05-FY07, %) Revenue in crores Operating margins (%) No. of employees (Nos.) Attrition P/E EPS

39%

35%

42%

15471.99

13149

13679.6

27.8

32.12

23.9

105000 13.70% 30.08 38.39

72241 11.50% 29.29 66.14

75000 20.00% 25.96 19.48

1) Wipro’s profit growth is maximum because of series of acquisitions by Wipro n different areas like Financial Services, FMCG and Infrastructure services 2) The operating margins are lower because of hike in onsite salaries, increased expenditure on R&D services, foreign exchange problems and expenses incurred after number of acquisitions 3) Attrition Rate is higher in Wipro and is close to 20% because people going for higher studies 4) Financial Services are growing at a CAGR of 50% for last four years and has crossed 1 billion mark in overall revenue 5) The hardware work in Wipro specially in Telecom area is the killer differentiator, Infosys on the other hand is rated highest for their systems excellence whereas TCS is mostly appreciated for their execution skills. 6) TCS still enjoys the maximum revenue 7) Data Quest rates TCS as no.1, Wipro as 2nd and Infosys as 3rd in top 20 IT rankings

Business Philosophy: Inorganic Growth One of the major components of Wipro’s growth is attributed to the series of acquisitions in diverse business portfolios. The major focus of Wipro is to gain market competence in business consulting and strategic division. Their recent acquisitions in American Management Systems, Nervewire and Ericsson’s Indian IT R&D Operations will enable it to seek high end consulting in offshore outsourcing. From recent acquisitions we can make out that Wipro is strengthening its BFSI, Energy and Utilities and Telecom Domain. Please find the list of acquisitions at

Reuters - http://stocks.us.reuters.com/stocks/fullDescription.asp?rpc=66&symbol=WIT Some recent ones WIPRO'S ACQUISITION APPETITE Acquired Nature of business entity 3D Networks Communication and Planet PSG solutions Computer-aided design Quantech and engineering services Telecom design and Saraware Oy engg. services Enabler Retail solutions Business cMango management service solutions Unza FMCG

Period

Deal size

Nov-06

23

Jul-06

10

Jun-06

32

Jun-06

52

Apr-06

20

Jul-07

246*

* Approximately $246 million in an all cash deal (All figures in $million)

Question: Can acquisitions help Indian companies to join big league? Wipro is in move to enhance its IT infrastructure management division by acquiring Infocrossing for $500 million with $18.70 per share deal. This acquisition of an acknowledged industry leader in technology infrastructure space broadens the data center and mainframe capabilities of Wipro Technologies. Infocrossing will considerably enhance Wipro’s ADM & BPO offerings to Healthcare customers. Wipro also acquired mechanical design firm Quantech; retail solutions firm Enabler; and wireless design firm Sarawareall three aimed at skill acquisition Wipro’s strategy for growth • • • • • •

Business acquisitions is most visible strategy of Wipro, I have already discussed in Philosophy Account Management Process Consulting and Domain Experts (from product out to customer centric). According to 2005 estimates the annual consulting revenue is 5% of total. But Wipro is bullish on this space Geographical footprint expansion in Germany, Japan, Canada and Middle East Increasing global delivery capabilities through centers in Beijing and Shanghai, Bucharest, Portugal and Brazil. Increase in training spend, significant increased training onsite in US, Europe, Japan and Middle East to complement offshore training initiatives in India

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Transforming BPO business from a call center to an integrated solution offerings