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India’s IT outsourcing giant Wipro takes aim at Canada

Azim Premji is impressed with Calgary’s flowering as a world oil and gas centre.

Todd Korol

When Indian outsourcing magnate Azim Premji flew into Calgary a short time ago, he liked what he saw: a vibrant oil and gas industry with a big appetite for information-technology services.

"Canada is turning out to be an important market for us; we plan to invest much more here than in the past," said the chairman and controlling shareholder of Bangalore-based Wipro Ltd., with the air of a prospector who has rediscovered an overlooked mineral field. "I think broadly we neglected it."

No longer, Mr. Premji vowed, as he outlined plans to build a larger client base in Canada, particularly in the resource industry for which Wipro, elsewhere in the world, is a major provider of IT services. Calgary is a key focus of these efforts. "We have a lot of clients and potential clients here," he said.

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What Wipro is selling is a more nuanced version of the classic offshore-outsourcing model, whereby clients' computer functions are shipped off to low-wage technical workers in places like Bangalore or Manila. Wipro does a lot of that, certainly, but Mr. Premji says he intends to beef up its Canadian work force, now at 650 people, by hiring more people here. To that end, he intends to be an aggressive recruiter of technical talent at Canadian universities.

Wipro's emergence as global outsourcing and software powerhouse has allowed the 67-year-old Mr. Premji to arise as a leader in the Indian economic revolution. In 1966, he had come home from a U.S. university on his father's death to take over the family vegetable-oil firm, and turned it into an IT giant with revenues of more than $7.4-billion (U.S.) last year.

The ability of Wipro's 140,000 employees to serve widely scattered clients in industrialized countries has elevated him to the rank of third-wealthiest Indian and 91st-richest billionaire in the world, with a fortune estimated at $11.2-billion U.S., according to Forbes' newest rankings of the world's rich.

However, Forbes' 2013 estimate of his wealth is down by $1-billion from last year, as he tumbled from 41st in world rankings – reflecting, the magazine says, a lower stock price because of a more difficult global market for outsourcers.

Indeed, Mr. Premji says his business model is changing somewhat as the company steps up recruiting in the countries where its clients are based. "We are trying to localize more and more of our people across the world, and we are going to be doing the same in Canada." About 70 per cent of its Canadian work force consists of local citizens.

Wipro is responding to social concerns in industrial countries, where unemployment is often running high, he said. Meanwhile, the Indian firm wants to develop its own cadre of workers who can be local people but are trained in the Wipro way.

The goal, as he describes it, is building a "fungible organization" where various parts are quickly interchangeable, giving Wipro the flexibility to act both locally and globally to respond to demands. If a client wants more work done close to home, there is local staff; if it wants more IT done in India, it can do that too, or from other low-cost areas such as the Philippines and Eastern Europe. In the United States, in particular, governments are stepping up incentives for local head counts, and Wipro can respond.

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"More of a balance makes for a better long-term relationship with a country or a client," Mr. Premji said.

Rather than poach scarce IT talent, Wipro in Canada will take university recruits and send them to India for six months, including three months of technical training and another three months of job experience working with other Wipro employees before they return to Canada.

The Indian cost advantage is still very significant, and he estimates his homeland's technical workers still earning just one-fifth or one-sixth of the average in Canada. "The cost arbitrage will continue," he says, but the danger for India lies with competition from other low-cost locales such as Vietnam and the Philippines. So India has to step up the value ladder in terms of technical competence and project-management skills.

While he was impressed with Calgary's flowering as a world oil and gas centre, Mr. Premji also got an education, particularly from Alberta Premier Alison Redford, on the high priority of getting the province's future energy production to world markets through new pipelines.

Such competitive challenges are not all bad, he noted. Competition from U.S. shale-oil production, and the shrinkage of U.S. demand, might actually result in more innovation in the Canadian energy sector, he said.

He is less optimistic about the potential creation of new and innovative companies outside the energy field. "Unfortunately, countries which are very resource-rich tend to neglect other areas where they have to create businesses."

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About the Author
Senior Writer, Report on Business

Gordon Pitts is an author, public speaker and business journalist, with a focus on management, strategy, and leadership. He was the 2009 winner of Canada's National Business Book Award for his fifth book, Stampede: The Rise of the West and Canada's New Power Elite. More


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