International Business Circle

Bangalore Tiger
IBCC Book Discussion Recap / April 2007

By Andrea Meyer
           
            Twelve of us gathered in Brook Tower where, thanks to our gracious hostess Hilary Arleth, we enjoyed delicious hors d'oeuvres while discussing the book Bangalore Tiger by Steve Hamm. The book focuses on Wipro, a $2.4 billion Indian outsourcing services company that symbolizes the rise of India. Our discussion ranged from dissecting Wipro's success to assessing India's future.  Here are some highlights.           

            Many of us saw ways in which Wipro's successes in business process management, HR, and leadership could be applied to our own companies. At the same time, however, the book said nothing critical about Wipro, which made us suspicious -- the book seemed too much like an infomercial. 

Processes v. Innovation

            Wipro's disciplined business processes have helped it achieve a CMM rating of 5 (a software process maturity rating which even few US companies achieve), but in some ways Wipro may be "over-processed" -- that is, Wipro may not be as innovative as it needs to be. Wipro is aware that it will have to innovate in order to stay competitive, especially as it becomes a global player. As Wipro has grown, it has started to lose its connection with customers.

Control v. Complexity

            Wipro followed the Balanced Scorecard concept before the concept even had that name. It also has useful HR-related metrics for quantifying learning and job performance. A culture of measurement ensures more objective decisions free of office politics. But, the company's matrix structure is extremely complex, and it's hard to know who is responsible to whom for what.

Would you invest in Wipro? We wondered. Wipro is traded on the NYSE, but one person – Chairman Azim Premji-- owns 80%-84% of the stock, so it's not very liquid. 

Wipro At-A-Glance

            Wipro’s Strengths
             * Impeccable ethics (from the top down – the ethical culture permeates the company)
             * High quality
             * Disciplined business processes
             * Strong HR human resource practices and culture

            Wipro’s Weaknesses
             * Overprocessed -- lack of innovation
             * No clear succession plan
           
India’s Future
           
           The book also stimulated a discussion about the future of India. One change taking place is that U.S. companies are now offshoring to India directly – that is, starting their own facilities in India. IBM, for example, aims to hire 60,000 Indians for its operations in India. Companies like Wipro are now facing competition from the very companies who were its customers.

            Labor arbitrage was the original driver for companies moving work to the India, but it's not clear how sustainable that is. Although India has a deep pool of low-cost labor, labor rates are rising and competition for skilled workers is fierce. For example, in the IT arena, it’s not uncommon for Indian employees to change jobs five times a year as they seek higher wages. In addition, many Indian employees currently put in extremely long hours on the job. It's also unclear how long they will continue to do so.
           
          Education is one differentiator for India. The ethic of education is not as prevalent in China as it is in India. India has a broader education infrastructure.  The Chinese still see a college education as the domain of the elite, not of the masses. A Chinese official on a tour of US campuses came to Metro State in Denver and was surprised looking around at the students. "These don't look like the children of the upper class,” he said.  

            Challenges facing India: India still has 300-400 million people living in poverty on $1 a day, which is both a problem and an opportunity. The darkest cloud on India's horizon is the government’s and private companies’ high level of corruption and low level of infrastructure investment. Democratic institutions need to be strengthened. Transparency needs to increase in order for corruption to decrease. 

Prepared by:
            Andrea Meyer 
            Working Knowledge