42

PART

ONE

INTRODUCTION AND OVERVIEW

That might not sound like a lot, but in India, where the annual per capita income is still less than $500, it can translate into a very good living. GE quickly set aside $5 million ayear to hire Wipro software programmers to write code for GE's ultrasound machines and its CT scanners. By the mid-1990s, senior GE managers began to encourage other units to follow the medical division?s lead and outsource information technology work to Indian companies. As a result, at one point during the mid-1990s Wipro was getting as much as 50 percent of its revenues from General Electric. However, along the way GE taught Wipro a hard lesson. GE,was soon contracting out work to other Indian information technology companies, playing them offagainst each other in its drive for ever lower costs. To hold onto its GE business, Wipro found that it had to improve its own operating efficiency, so Wipro looked at what GE was doing, and copied it. Wipro's joint venture with GE helped in this regard, since it gave Wipro a window into GE's relentless push for operating efficiencies. Thus, following GE's lead, Wipro was one of the first Indian compdnies to adopt the Six Sigma process for improving operating efficiency made famous by GE. Today, Wipro executives credit much of their success in the intemational market to the hard lessons it leamed about effrciency as a GE vendor. By the late 1990s, GE began to tum its attention from simply buying software from India, to using the country as a base for data entry, processing credit card applications, and other clerical tasks that could be performed over the Intemet. About this time, other Western companies such as American Express and British Airways began doing the same thing. GE estimates that it cut operating costs $300 million a year by shifting such work to India. Wipro was a major beneficiary. Today Wipro's 39,000 technology employees write software, integrate back-offrce solutions, design semiconductors, debug applications, take orders, and field help calls for some of the biggest companies in the world. Its customers still include General Electric along with Hewlett-Packard, Home Depot, Nokia, Sony, and Weyerhaeuser, By using the Internet, Wipro can maintain and manage software

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applications for companies all over the world in real time. Typical is Wipro's relationship with Weyerhaeuser, one of the world's largest timber companies. Wipro's involvement with Weyerhaeuser began in 1999 when two employees conducted a modest on-site analysis at Weyerhaeuser's U.S. headquarters just south of Seattle. By 2003, Wipro was supporting a broad array of Weyerhaeuser's
information systems including logistics, sales, and human resource applications from Bangalore, India.

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Overall, Wipro estimates it can save clients as much as 40 percent of the cost of maintaining such systems. In a highly competitive global economy, the imperative for companies such as Weyerhaeuser
to outsource is compelling Wipro, however- is not content to remain in the low-margin end ofthe software business. The company increasingly is moving upstream into high value-added applications. For example ,ii2002,Wipro signed a deal to design and engineer tape storage devices for Storage Technology. In2004, Wipro took over responsibility for all development work on this product line from 200 employees in Minneapolis. Wipro is also moving rapidly into high value-added software services, such as establishing global supply chain or billing systems for large corporations, a business that is currently dominated by Westem consulting outfits such as IBM, EDS, and Accenture. As Wipro expands its business, it is also taking steps to become a more global company. Around the world, Wipro has been hiring local nationals to lead its sales push. The company now has a direct sales presence in 35 countries, most of which are staffed by local nationals. By 2005, the company hopes that three-quarters of the employees that customers see will be local nationals-in Europe the figure is already 90 percent. According to-a Wipro spokesman, using locals 'oprovides the cultural and linguistic

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