On Aug. 11, 1966, Azim Premji got the phone call that would change his life. The 20-year-old was studying for summer exams at Stanford University in Palo Alto, Calif., just two terms short of graduation. It was his mother on the line. His father, M.H. Premji, had died suddenly of a heart attack at the age of just 51.
Summoned home, he discovered himself in charge of the family business, a small vegetable oil concern called Western India Vegetable Products, Wipro for short. He found its methods primitive at best.
One of its lines was making cakes and shortening from peanut oil. Its buyers would test a farmer's peanuts by biting them to gauge how much oil they might yield, then make the farmer an offer. Mr. Premji, then just 20, had a better idea. Why not ask the farmer for a sample of his peanuts, weigh them to gauge their oil content, then strike a deal.
That simple step to upgrade methods and measure results laid the foundation for what Mr. Premji calls the Wipro Way. A cerebral, fastidious man who often seems more college professor than tycoon, he has built a $5-billion (U.S.) information-technology outsourcing company on a cult of continuous self-improvement.
In the process, he has helped invent an industry that is launching India into the 21st century. Once, when people imagined India, they pictured rajahs and beggars. Today, the icon of the new India is the bright young techie in his office cubicle in Bangalore.
Mr. Premji was one of the first to see an opportunity for India as more and more work shifted to computers and the cost of transmitting data among them dropped. Why not take repetitive work like writing software, maintaining computer systems, handling company payroll accounts or answering consumer complaints over the phone and export them to India, where a huge pool of educated, English-speaking workers could do it for a fraction of the cost?
Wipro, the industry's third-biggest player, has grown from 350 employees when Mr. Premji inherited it to 80,000 today. Mr. Premji, now a white-haired 61, is reckoned to be the fourth-richest Indian, trailing only steel maker Lakshmi Mittal and the industrialist Ambani brothers, Mukesh and Anil. According to the Forbes magazine billionaires list, his $17.1-billion fortune puts him at No. 21 in the ranks of the richest people in the world.
"We have been one of the pioneers in the global delivery model, which is really bringing to services what came to manufacturing 15 years back," Mr. Premji said in a recent interview in his Bangalore offices.
But after growing 30 per cent a year for 10 years, the good times may be ending for the Indian outsourcing industry. The rise in the value of India's currency, the rupee, is putting the industry at risk as the cost of farming out back-office work to India soars for American, European and Japanese firms. The cost of employing educated Indians has increased as big Indian firms compete for scarce talent.
Seeing India's vulnerability, other emerging countries from the Philippines to China to Eastern Europe are snapping up more of the outsourcing trade. At the same time, giants such as IBM and Accenture have opened bases in India to compete with Indian firms such as Wipro, Infosys and Tata Consultancy Services on their home turf.
Mr. Premji is responding with the same determination to raise quality that led him to weigh peanuts in the 1960s. Wipro, he said, must move from low-cost provider of IT and back-office services to valued consultant and partner for its customers, helping them not just cut costs but manage and even reimagine how they do business.
When the outsourcing got started, the work was fairly straightforward. Big companies in North America or Europe that wanted their computer software upgraded or maintained hired Indian firms to do the grunt-work of programming and coding. End of transaction.
Today, instead of just making new software for a company's payroll department, Wipro will help redesign the payroll system, create new software for the task and even run the system from afar. It is helping deliver legal and accounting services, and is now moving into pharmaceutical and biotechnology research.
"It significantly expands our breadth of offering to the customer," Mr. Premji said. "Where we were working before with his left arm, we'll be working with his whole body."
To get closer to its customers, Wipro is stepping outside its Indian base and opening new offices in places as far flung as Saudi Arabia, Portugal, Romania and China. (In Canada, it has staff in Toronto, Windsor, Calgary and Ottawa). In January, it scored its biggest contract yet, a nine-year deal worth up to $600-million to handle business transformation for the Indian telecom company Aircel.
In his book on Wipro (pronounced whip-row), Bangalore Tiger, Businessweek reporter Steve Hamm said Wipro's transformation was like moving from an electrician to an architect. If anybody can accomplish such a protean feat, it is Mr. Premji.
He began transforming Wipro almost as soon as taking over in 1966. An engineering student at Stanford, he knew nothing about business, so he bought arm loads of business textbooks and stayed up late plowing through them. His first step was to diversify, moving beyond Wipro's vegetable oil products and laundry soaps to toilet soaps, then light bulbs.
"What struck me even then was his high degree of professionalism and ethical standard," said leading Indian banker K.V. Kamath, who sat on the Wipro board 20 years ago. Unlike many leaders of family businesses, who surrounded themselves with relatives and yes-men, "he went out and got people with qualifications in every field, whether it's accountancy or engineering or management."
His big break came in 1977 when the Indian government shut IBM out of India. Leaping into the gap, he had his engineers knock off an Indian version of a popular computer and launched Wipro onto the path to become India's leading seller of computers, scanners and printers. From there it was a natural step to outsourcing.
For Wipro, says Mr. Premji, the process of transformation never ends. Progress "is not a snapshot; it's like a movie."
You can't tell if you're improving unless you have something to measure yourself by, so Wipro measures everything - not just its earnings and productivity, but customer satisfaction, employee engagement, managers' performance and the results of its business rivals. It even measures the amount of food wasted in the company cafeteria.
Training is close to an obsession. New recruits - Wipro inducted about 20,000 last year - get between 12 and 21 weeks of full-time training before they start work. All employees get another 9-15 days a year - not just lunchtime seminars, but full-time classroom work. This comes on top of periodic, on-the-job training.
Mr. Premji has sent more than 7,000 Wiproites (as its employees call each other) to learn Six Sigma, a data-driven system developed by Motorola Inc. to improve processes by eliminating defects.
Under Mr. Premji's stern direction, the company was one of the first in India to refuse to give or accept bribes, a bold step in a country where payoffs were the grease of business life.
The company once fired a man who claimed expenses for a first-class train trip when he actually rode second, a difference of a few rupees. When the man's union called a strike and stayed off work for three months, Mr. Premji refused to back down.
To set a tone of modesty and discipline, Mr. Premji, a billionaire many times over, rides economy when taking flights around India and drives a four-year-old Toyota Corolla - purchased only when his nine-year-old Ford Escort gave out. He lives in a large but unostentatious bungalow on the leafy Bangalore campus, walking the few steps to his office, a bright penthouse with wood floors, a walkout patio and walls covered with Asian art. His only indulgence seems to be good tailoring. He favours pin stripes and formally cut suits. His swept back snow white hair has a distinctive blue rinse.
Unlike other Indian tycoons who have passed on their companies to their sons, he has no dynastic ambitions. When his son Rishad joined Wipro last year, the company said he would be taking a post "commensurate with his background and experience."
"I couldn't induct my son into top management without causing chaos in the company," said Mr. Premji, "because it's too professionalized."
These lessons seem to rub off on Wipro's employees. Bhavani Latha, 21, an electronics graduate, joined Wipro last year and now writes software for a Japanese consumer electronics form, and revels in the education she is getting. "I just want to excel at what I do," she said.
Marcus Gee