Wipro's way ahead
Wipro, the Bangalore-headquartered soaps-to-software company, has laid out elaborate plans to globalise its businesses and become yet another Indian MNC.
Now that he has laid a seemingly firm foundation for his $4-billion (Rs 16,400 crore) business, the 62-year-old Azim Premji has the task of ensuring that Wipro can metamorphose into a world-beater.
By all accounts, Wipro has all the right bits in place. Buying 11 companies over the last two years has boosted its profile in the global IT space.
Premji also entered the domestic business early and has jump-started his two non-IT businesses with big-ticket acquisitions. But the big challenge will be to transform them into world-beaters.
Having recently snagged the New Jersey-based Infocrossing in a $600-million (Rs 2,460 crore) deal, Wipro Technologies is now well positioned to snap up big IT outsourcing contracts. But it will still have to prove its end-to-end capabilities to large companies looking for an outsourcing vendor.
Key high-value segments such as consulting will have to be ramped up and the recently repaired BPO business, too, will need to quickly gain traction if Wipro is to bag the really big $200-million-plus (Rs 820-crore-plus) deals.
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| Wipro: Sound foundations |
Wipro has other worries, too. Its third rank in the Indian IT industry could be under threat from smaller rivals such as Cognizant Technology Solutions, even as its two main rivals at home, TCS and Infosys Technologies, step on the gas and try and build on their existing leads. Fortunately for Premji, the till-recently ignored domestic market has begun to pick up steam and Wipro can hope to net a cool $1 billion (Rs 4,100 crore) in business from this stream this year.
Elsewhere, his non-IT businesses, too, need to be beefed up. Wipro Consumer Care and Lighting has only just made its presence felt in the Asia-Pacific region, while it is the #3 player in India and growing faster than the market. While Premji has firmly said that both Consumer Care and Infrastructure Engineering are integral parts of his business, he may want to rethink this strategy as these businesses begin to scale up and it begins to make sense to spin them off into separate companies.
Perhaps the prickliest issue facing the Wipro Chairman is succession. Premji seems to have taken the first tentative steps in this direction by inducting his elder son, Rishad, into the board of Wipro Technologies’ financial services arm; and his younger son, Tariq, into his personal investment company. Though he has argued that the media has muddled up the issues of ownership and management, the transition at Wipro may be the company’s most watched move yet.
CALL THE LEFT’S BLUFF
Aspiring for big power status is not easy. That’s what Prime Minister Manmohan Singh is discovering the hard way. His task is made more difficult by the inherent contradictions in the ragtag coalition he heads. A psephological accident ensured that the Congress-led UPA coalition had to be propped up by the Left, which, till then, had been its implacable foe.
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| President Bush and PM Manmohan Singh: Testing times |
As the Indian economy grows and integrates with the world, it will increasingly be called upon to play a greater political role on the world stage. Here, self interest, and not ideology, should define India’s positions on various geopolitical issues. This is exactly what the government has been doing.
But the Left, stuck as it is, in a time warp, is refusing to play ball. The peculiar parliamentary arithmetic means the Left combine, with just 5 per cent of the popular vote and a little more than 10 per cent of the seats in the Lok Sabha, can effectively wield a veto over important decisions.
It is quite apparent now that more than the specifics of the Indo-US N-deal, it is the larger partnership between the two countries that the Left is unhappy with. This partnership opens up a window for India to play a much bigger role, first in the region and later, in the world.
The emerging quadripartite alliance between India, the US, Japan and Australia is another step in this direction. These are merely the first of many more such (often politically controversial) steps that the country will have to take before it can be counted as a “Big Power”. This entire paradigm change in Indian strategic and foreign policy thinking is now under threat.
If the government surrenders to the Left, it will destroy Singh’s standing and make his position untenable. Yes, it may be possible to replace him with another person, but such a move will seriously dent India’s position on the world stage—and the next government, in any case, will only be a lame duck one, which the Left, having tasted blood, will maneouvre at will.
At the time of going to press, there is talk of setting up a committee to find a way out of the impasse. Regardless of what it recommends, Business Today feels the government should stand firm and call the Left’s bluff—it is as unprepared as any other party for early elections. The window of opportunity that has presented itself for expanding India’s global role may well close for good if it gives in.
REJECT THIS TAX
The Parliamentary Standing Committee on Human Resource Development has suggested the imposition of a “graduate tax” on employers recruiting skilled manpower. This, it feels, will address some of the funding requirements of higher education.
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| "Graduate tax": The cheer may fade |
“An employer should be required to pay an annual tax to the government for each graduate recruited by it,” the panel has said. The HRD Ministry will now forward this recommendation to the University Grants Commission and the Finance Ministry.
With due respect to the committee, Business Today feels this is a ridiculous idea. At a time when the economy is grappling with a serious skills shortage and individual companies with rising wage bills, this will merely add to costs, hinder competitiveness and drive many smaller companies to hire less skilled professionals.
This also goes to show how out of touch our politicians are with the ground realities of a modern economy. India’s competitive advantage in today’s globalised world depends critically on its massive population of technically skilled, English speaking workers who churn out quality comparable to or better than that available in the West at a fraction of the cost.
But rising wage bills have narrowed the advantage that companies in India enjoy. Yes, the way forward is to move up the value chain, but even here, the cost advantage will remain a key, even if not the most important, differentiator.
The way forward should be to make it easier for Indians to acquire higher levels of skills and to make it even easier for companies to hire them. This illconceived proposal does precisely the opposite and, if translated into policy, will severely erode the country’s competitive advantage.
Instead of imposing a retrograde recruitment tax, the HRD Ministry will do well to ensure that it targets its existing budget of Rs 28,674 crore better. It is no secret that it has on its rolls lakhs of “ghost” teachers, and that it funds thousands of “schools” that exist only on paper. If only it audits and targets its expenditure better, it will have all the money it needs instead of having to resort to patently ridiculous levies.
Instead of doing their bit to really deliver quality education to more Indians, successive HRD Ministers (and here, incumbent Arjun Singh is remarkably similar to his supposed ideological adversary and predecessor, Murli Manohar Joshi) have tried to meddle with the system, mainly to its detriment. Our fervent appeal to the UGC and the Finance Ministry: reject the proposal without further ado.
