Question: As global demand rises for technology and engineering services, Wipro, Ltd., wants to bring much of the business to Bangalore. The Indian company-which has offices across Europe, Asia, and the United States-writes software, handles back-office operations, and designs high-tech products for some of the world's largest corporations. When Fiat wanted a satellite navigation system for its Alfa Romeo sports cars, it hired Wipro. Nokia, Morgan Stanley, Cisco, Honeywell, and General Motors are among the 420 other companies that have drawn on Wipro's expertise. Wipro is prospering from the trend toward outsourcing, in which companies reduce their costs by sending projects or jobs to countries where labor costs are lower. Skilled technology professionals in India are paid far less than their counterparts in Western Europe and the United States. Although Wipro raises salaries regularly and offers employees stock and other benefits, "the cost advantage is still in India's favor," observes the chief marketing officer. This is why some companies hire Wipro or its main Indian competitors, Tata Consultancy Services and Infosys Technologies, to perform functions such as providing technical support to customers. In only six years, Wipro's annual sales have soared from $150 million to nearly $2 billion. To keep up with this explosive growth, the company hires three new employees every hour of every business day.
In 2002, 14,000 people were on the payroll; today, nearly 42,000 are on the payroll, including several thousand who work on assignment for months at a time at customers' offices in the United States, Japan, or Europe. By hiring Wipro to deal with operational nuts and bolts such as processing paperwork, business customers can focus on the tasks that make a difference to their customers. Florida's E-OPS, for example, is a start-up company that markets mortgage-processing services to banks. Instead of having their own employees fill out forms, make multiple copies, and send documents to different departments and organizations, banks seeking to cut costs and save time can hire E-OPS. Wipro does the actual processing, whereas E-OPS concentrates on signing new customers and meeting their needs. "It's amazing that you can run a national company with just a handful of employees, and Wipro does the rest," says the CEO of E-OPS. As Wipro expands its menu of services, it faces tough competition not only from Indian firms but also from IBM, Accenture, and other corporations with decades of experience in working with a global customer base.
Profits are healthy, and customers are satisfied, yet Wipro is constantly on the lookout for ways to improve. Not long ago, Wipro managers toured a nearby Toyota factory and came away with ideas for reconfiguring workspaces, boosting employee involvement, and more-ideas that took quality to a new level and hiked efficiency by more than 40 percent. Wipro is also investing in new facilities for specialized services, both in India and in other countries. One of the newest is a software-development center in Beijing's high-tech district. A senior Wipro manager points out that China is best known as the world's factory, but in the future, "there will be a shift toward the knowledge or services sector." By opening a development center now, the company will have the time to study the foreign companies that plan to do business in China and figure out how to profit from tomorrow's opportunities. Around the world and around the clock, Wipro is pushing hard to bring more business to Bangalore.20 For more information about this company, go to www.wipro.com.
1. How is Wipro using the factors of production to fuel global growth?
2. What are the advantages and disadvantages of using a manufacturer like Toyota as a role model for a service business like Wipro?
3. What effect might the trend toward outsourcing have on the economy of India? What effect might this trend have on the economy of the United States?