Staying power at its best—that would sum up Wipro’s fiscal 2000-01 best. IT revenues grew 45% to nearly Rs 3,000 crore. Gross profits and net profits grew to Rs 765 crore and Rs 666 crore, respectively, while operating margins stood at almost 26% by the end of the fiscal. But within those simple numbers lies a complex story. Wipro’s two IT divisions—Wipro Technologies and Wipro Infotech—showed completely different growth curves. And in this case, an average of the two would hardly give an accurate picture.
SWOT
Strength: Relationship management, quality processes and core technology focus
Weakness: Organizational complexity can cost it the first mover advantage
Opportunity: With competitive billing rates, the slowdown is actually a time when the company can distance itself from the competition
Threat: Competition from both traditional and upcoming players
PERFORMANCE
HIGHLIGHTS
Global software and services arm Wipro Tech grew by 70%, Wipro Infotech grew at 30%
During the fiscal, Wipro Tech—the global software and services division—grew by 70% (61% the year before) and contributed 59% of total revenues (51% in the previous year). At 70%, Wipro Technologies vice-chairman Vivek Paul delivered what Azim Premji had promised—higher than industry average growth rates. Operating margins also grew from 28% to 34%, even as the division remained price point aggressive.
Over the year, the global support division of Wipro Infotech was transferred to Wipro Tech, which is now organized around three major business units: R&D services, enterprise solutions and technology infrastructure services. Of these, R&D services—which does work in embedded and Internet access as well as telecom and internetworking—contributed 50% of Wipro Tech’s revenues, up from 46% last year. The division also expanded into Europe, including one in Germany. As a result, export revenues from the US went down from 70% to 64%, while revenues from Europe went up from 24 to 29%.
Closer home, Wipro Infotech grew by 30%, against 26% in the previous year, and its operating margins went up from 5% to 9.5%. However, the division’s revenues from its own products continued to decline, standing at only 17.2% of total revenues (compared to 29% and 35% in the previous two years). During the fiscal, however, Wipro Infotech—so far known as the domestic hardware arm of the company—set into motion a series of changes to transform itself. It decided to move into APAC and West Asia and began hard-selling its services and solutions divisions. Wipro Infotech chief Suresh Vaswani expressed hope that by 2004, services and solutions would contribute 40% of total revenues, compared to 15% at the end of the last fiscal. But the mantra of the year at Wipro Infotech was: “We have the E2E (end-to-end) story.” In a tight market, that could be Wipro Infotech’s ticket to higher growth next year.
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Special Issues
Staying power at its best—that would sum up Wipro’s fiscal 2000-01 best. IT revenues grew 45% to nearly Rs 3,000 crore. Gross profits and net profits grew to Rs 765 crore and Rs 666 crore, respectively, while operating margins stood at almost 26% by the end of the fiscal. But within those simple numbers lies a complex story. Wipro’s two IT divisions—Wipro Technologies and Wipro Infotech—showed completely different growth curves. And in this case, an average of the two would hardly give an accurate picture.
