Global Computer Related Services

An Industry Perspective
WTO Cross-Border Supply Symposium
Santosh
Head, Talent Engagement & Development, Europe
Sept 28, 2005

The agenda

1
2
3

Industry Snapshot

Wipro Advantage

Outlook Going Forward & Key Challenges

Wipro confidential

Landscape of Computer Related (IT) Service

India Advantage

Range of Services
Application
Development

Product
Engineering

Indias Emergence as IT Sourcing Hub

Key Drivers
Highly Talented Labor Pool
Cost Arbitrage

Systems
Integration

ERP Services

Leapfrog increases in Telecom reliability

in 90s
Quality Advantage

BPO

Independent
Testing

Faster Time to Market

24 Hour Service Window

Infrastructure
Management

Consulting

Enables customers internal work-force to

focus on core & strategy

Services from India touch all three aspects of IT software, hardware & network

Wipro confidential

Translating into >30% Growth for Indian Industry;

.. & Corresponding Cost Savings for Customers
$ Bn

Export of Computer Related Services

Geo Distribution

Source: NASSCOM, Strategic Review 2005

Wipro confidential

And Yet, Indias True Potential is Far from Realized

Share of Offshore in Total IT
Services Pie
Total Global IT
Spend (2005): $640 Bn

Worldwide Offshore IT Services

Export
Share by Region, 2003

Even at 72% Share of total offshore spend, India accounts

for less than 6% of Global IT Spend

Adopted from IDC, Gartner & Nasscom Estimates

Wipro confidential

Even as more & more Global Corporates Adopt

Offshore Model

we continue to expect a robust demand backdrop for offshore services over the next two
years which should drive sustained growth of at least 25%-30%. In our opinion, the
predominant factor driving growth is the continued adoption of the offshore model,
which by our estimates continues to be low.
From a client IT budget perspective, our estimates suggest that that the offshore
model has penetrated less than 10% of Global 500 (G-500) IT budgets for core
application maintenance and development work.

Goldman Sachs, September 2005

Leveraging Offshore Model = Delivering Greater Shareholder Value through Smart Sourcing

Wipro confidential

The agenda

1
2
3

Industry Snapshot

Wipro Advantage

Outlook Going Forward & Key Challenges

Wipro confidential

Wipro Today
Our history a track record of success
Incorporated in 1945; 60 years track record of growth & profitability
IPO in 1946; Listed at NYSE [WIT] in 2000
Entered IT business in 1980s; IT Services business launched in 1991

Compounded Growth Rate- First 59 Years:

Revenues: 21%, Net Income: 31%, M-Cap: 24%

IT Services Foot-Print

Clients

217

226

288

339

421

430

Partner to industry leaders

and challengers
89 global 500 clients
151 clients among Forbes 2000

Diverse talent pool

Employees

10

13

19

29

42

42
(thousands)

1595*
Revenues

384

475

625

2000-01

2001-02

2002-03

934

2003-04

1354
(millions USD)

2004-05

2005-06

23 nationalities
2000 domain consultants

Sustained growth
CAGR of 42% in last 5 years
Part of NYSEs TMT (TechnologyMedia-Telecom) Index, NSE Nifty
Index and BSE Sensex
*June Quarter Revenues Annualized

Ranked leader by IDC, MetaGroup, Forrester 2004

Awarded the highest rating in Stakeholder Value Creation & Corporate Governance by ICRA,
Wipro confidential
an Associate of Moodys Investor Services

Growth Envisaged Across the Range of Services

Wipros Global IT Revenue pie

Indian Export
Potential*

13.5

FY04
FY09

CAGR 21%

Q1 2005-06

CAGR 42%

CAGR 31%

21

5.2

$398.5 M

CAGR 23%

3.1 1.7

CAGR 64%

3.6

0.3

Custom
App Dev &
Maintenance
25%

6.5

CAGR 64%
3.6 CAGR 52%

0.3

4.9 3.6
0.6

1.1

R&D Services
32%
Consulting
5%

Infrastructure
Outsourcing
8%

IT Enabled
Package
Implementation Services / BPO
11%
11%

Testing Services
8%

Source: Mckinsey-NASSCOM Study, NASSCOM, Company estimate ( all figures in USD B)

Percentages below the pie chart represent Wipros distribution of Revenues for the Quarter ended June 2005

Constantly incubating newer services

Wipro confidential

Manpower Demand-Supply Scenario:

Wipro- Preferred IT Employer

One of the top 3 leading recruiters in

India

Wipro career portal

Hired over 15000 employees in last one

year
Has a career portal with active
applicants of over 300,000.

Track applicant

Candidate applications
Screen / manage

Evaluation
Offer

Recruits from over 160 leading

engineering and management colleges.
One of the most preferred employers for
the top class talent in India.

100%
15%
4%

0.8%

Retain

Wipro confidential

Q-cult: Enterprise-wide quality culture for

continuous improvement

1st company

People

outside the USA

to receive IEEE
award (2003)

Worlds 1st
PCMM Level 5
software
company (2001)

4,000+ employees trained in Six Sigma

methodologies
204 certified black belts and 10 master black belts
Over 700 PMI certified consultants, highest in India

Six
Sigma
no

ces
s

33% business parameters for the Wipro CEO

relate to quality

l og

Pro

h
Tec

Worlds 1st
IT Services Company to
use Six Sigma (1999)

All fresh recruits undergo a 3 day Veloci-Q training

Worlds first SEI CMM/CMMI Level

5 IT services company (1998-2002)
BS7799
ISO 9000

Wipro clients see additional application maintenance

productivity of 10% to 15% from added familiarity with
systems; another 10% to 15% raise in productivity after
applying Wipro's CMM-based methodology and
consolidating redundant programs applications; and yet
another 3% to 30% productivity improvement thanks to
process automation and tools
Forrester

Wipro confidential

What analysts speak about us

because of its brand, impressive size, and breadth of
capability, Wipro is often selected as a strategic partner
by customers seeking large, broad-based capability in
their primary offshore outsourcing providers. .
- Indian Offshore Suppliers: The Market Landscape,
Forrester, April, 2004

An increasing number of offshore players are

building greater presence in the United States.
Examples include Wipro, with its acquisition of the
consulting company formerly known as NerveWire
- US customer experiences and best practices when
going offshore, IDC, May 2004

Wipro's most recent annual results provide further

validation that upscale/upstream services provided
by "offshore" firms are now mature
- No Longer Off-Broadway: Offshore Moving to Center
Stage, META Group, May 2004

Wipro confidential

The agenda

1
2
3

Industry Snapshot

Wipro Advantage

Outlook Going Forward &

Key Challenges
Wipro confidential

India continues to rank as the preferred destination

Likely to benefit disproportionately from Offshoring Drive

Vendor Sophistication
(Number, Quality)

India - the Preferred Offshore Destination

India

2004

2008

Philippines

China
CIS
Mexico

People Sophistication
(Number, Cost, Language Skills)

Ireland

Israel

Cost

Singapore
Mexico
Hungary

Malaysia
Philippines
India

China
Russia

India
Low Cost
High Quality
Development

Quality of Supply

Source: Nasscom

(Resource Availability, CMM Level, Cultural Fit)

Source: McKinsey-NASSCOM study

Deep Rooted strength for sustained global market-share gain

Wipro confidential

And Yet, There Are Challenges

Movement of Employees
Immigration & Visa Issues
Universal Recognition of Qualifications, Experience and Training
Employment laws enforcing local hiring
Wage Parity Insisted upon
Social Security Tax
Tax Withholding

Wipro confidential

And Yet, There Are Challenges

Government Regulation on Business Entity & Vendor Selection
Structure of Entity (Branch, JV, Fully owned Subsidiary etc.)
Restrictions on Foreign Investments & Local equity participations
Remittance of foreign exchange
Staffing & Management conditions
Restricted Access to certain market segments based on the structure
Dual Taxation

Wipro confidential

And Yet, There Are Challenges

Other Challenges
Macro environment related

Improving quality of technical education in India

Challenges posed by Urban infrastructure

Preparing for competition from other low cost countries

Business model related

Expanding the breadth of service offering

Managing scale without diluting quality & delivery excellence

Expanding geographies & adapting to local language and cultures

Financial

Adverse currency fluctuations

Managing wage inflation

M&A and their impact on financials

Wipro confidential

Conclusion

Offshore Model is a Great Opportunity for Developed nations to achieve

Highest Quality services at reasonable prices
Visa & Immigration, Taxation, Protectionist Law and Uniformity in
Qualification are some of the key challenges still faced by a service
provider like us
A uniform GATS framework and commitment will provide the right
impetus to the growth of Cross-Border IT Services

Wipro confidential

Q&A

Our promise
With utmost respect to Human Values, we
promise to serve our customers with Integrity,
through Innovative, Value for Money solutions,
by Applying Thought, day after day

Information contained and transmitted by this presentation is proprietary to Wipro Limited and is intended for use only by the individual or entity to which it is addressed,
and contains information that is privileged, confidential or exempt from disclosure under applicable law.