‘We are trying to build expertise in management, strategy consulting’
In a wide-ranging interview at Wipro’s Bangalore campus, Premji, who chooses his words very carefully, speaks with Pankaj Mishra about Wipro’s acquisition strategy.business Updated: Jun 01, 2007 22:28 IST
Azim Hashim Premji, the 61-year-old chairman and CEO of Wipro Ltd, owns more than 80 per cent in the company, which has transformed itself from making vegetable oil to a global software services business with annual revenues of around $3 billion (Rs12,300 crore). In a wide-ranging interview at Wipro’s Bangalore campus, Premji, who chooses his words very carefully, spoke with Pankaj Mishra about Wipro’s acquisition strategy, its ambitious plans to establish centres in the US, the ongoing controversy over H1B visas in America as well as how being “humble” and not being an overt posterchild of Indian technology is actually helping Wipro differentiate itself from rivals. Edited excerpts:
We find many Indian companies today expanding their global footprints by making big-ticket acquisitions that are over $1 billion in size. What is your philosophy for inorganic growth?
Unless it has a lot of strategic value for us, we will not look at a $1 billion kind of acquisition. But we are looking at acquiring companies larger than the eight firms we have acquired in the past, certainly those between $200 million and $300 million in size. We are looking at companies employing 50 to 300 professionals. Good companies are never cheap; the issue is whether they can add value to our company in terms of the existing customer base, or a new technology.
Even though you serve global customers, your workforce is still almost 90 per cent Indian, based in the country. What is the offshore story beyond India?
What is an Indian company and what is an American company? Take Accenture, for instance. They have around 37,000 professionals in India today. At the end of this year, they will employ 40,000 to 45,000 people in the country and there are around 42,000 employees globally. So, is Accenture an Indian company? IBM has already got 48,000 people in India, and they say that they want to go up to 75,000 professionals in the country. They are downsizing in America and laying off people in other locations. So, what is IBM two or three years from today? I think we need to get ourselves branded as a global company, which works in a global set-up and has a work-force which is reasonably global. Today, we employ around 3,500 people in Europe, out of which around 1,300 are locals. Foreign workers outside India account for 7 to 8 per cent of our total workforce currently, and we would like to take this up to around 20 per cent in the coming few years. We now have a centre in Shanghai, and are looking at another one in China. We have a centre in Romania, Brazil, and Mexico. We are now looking at three centres in the US.
The three centres coming up in the US will employ anywhere between 250 and 1,000 professionals in each of the states.
One advantage companies such as IBM and Accenture have over you is their business and management consulting expertise, which helps them in getting those long-term engagements with clients. Do you find it a challenge to get into the consulting space?
We have today about 2,000 people in the consulting division, which accounts for about 6.5 per cent of our revenues ($195 million) currently. Our objective is to have 15% of our revenues coming from consulting in three to four years. We have a central consulting team for Europe and America, headquartered in Boston.
What keeps you up?
Maintaining the solidarity of the company’s culture is a huge challenge, which requires huge amount of time and effort. I spend a lot of time doing this at open forum, question and answer sessions with employees even when travelling. Fighting complacency and retaining the same hunger with the growing size are other big challenges
You and your family own around 80% of the company. Will you have a significant say in the company going forward?
We have a significant stake in the company and its strategy going forward. I think you need to divorce the ownership issue from management of the company. Enlightened owners don’t shoot themselves in the foot. We have consistently displayed a very high degree of professionalism, in spite of very high concentration of ownership.
How sustainable is the restructuring of your top management that resulted in four CEOs for each of the business units? Will you ever have a group CEO or a similar position at Wipro?
There is no immediate succession plan for me, nothing immediate that we will announce. The idea is to engage with clients more comprehensively.