Global Computer Related Services

An Industry Perspective

WTO Cross-Border Supply Symposium

Santosh
Head, Talent Engagement & Development, Europe

Sept 28, 2005

The agenda

1 Industry Snapshot

2 Wipro Advantage

3 Outlook Going Forward & Key Challenges

Wipro confidential 2
 Landscape of Computer Related (IT) Service –
India Advantage…

Range of Services
India’s Emergence as IT Sourcing Hub –
Application Product Key Drivers
Development Engineering
• Highly Talented Labor Pool
• Cost Arbitrage
Systems ERP Services
Integration • Leapfrog increases in Telecom reliability
in 90’s
• Quality Advantage
BPO Independent
Testing • Faster Time to Market
• 24 Hour Service Window
Infrastructure Consulting • Enables customers internal work-force to
Management focus on ‘core’ & strategy

Services from India touch all three aspects of IT – software, hardware & network Wipro confidential 3
 Translating into >30% Growth for Indian Industry;
.. & Corresponding Cost Savings for Customers

$ Bn
25 Export of Computer Related Services
22
Geo Distribution Europe,
22.6%
20
Japan, 3.0%
17.2
Africa, 0.6%
Americas, Others, 4.4%
15
69.4%
12.8

9.6
10
7.7
6.2
5 4
2.6

0
98-99 99-00 00-01 01 - 02 02- 03 03- 04 '04-05 05-06E
Source: NASSCOM, Strategic Review 2005
Wipro confidential 4
 And Yet, India’s True Potential is Far from Realized

Share of Offshore in Total IT Services Pie Worldwide Offshore IT Services Export

Share by Region, 2003

Total Global IT Latin Middle East

Spend (2005): $640 Bn Offshore, America, 2% & Africa, 2%
7.5% Others, 1%
China, 7%

Eastern
Europe, 8%

Philippines,
8%
Non- India, 72%
Offshore,
96.6

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 5
 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 6
The agenda

1 Industry Snapshot

2 Wipro Advantage

3 Outlook Going Forward & Key Challenges

Wipro confidential 7
 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 Compounded Growth Rate- First 59 Years:
Entered IT business in 1980s; IT Services business launched in 1991 Revenues: 21%, Net Income: 31%, M-Cap: 24%

IT Services Foot-Print

430 Partner to industry leaders

421 and challengers
Clients 339
288  89 global 500 clients
217 226
 151 clients among Forbes 2000

Diverse talent pool

Employees
42 42  23 nationalities
13 19 29 (thousands)  2000 domain consultants
10

Sustained growth
1595*
 CAGR of 42% in last 5 years
Revenues 1354
934  Part of NYSE’s TMT (Technology-
(millions USD)
475 625 Media-Telecom) Index, NSE Nifty
384
Index and BSE Sensex
2000-01 2001-02 *June Quarter Revenues Annualized
2002-03 2003-04 2004-05 2005-06

Ranked leader by IDC, MetaGroup, Forrester – 2004

Awarded the highest rating in Stakeholder Value Creation & Corporate Governance by ICRA,
an Associate of Moody’s Investor Services Wipro confidential 8
 Growth Envisaged Across the Range of Services

Indian Export
Potential*
Wipro’s Global IT Revenue pie 13.5
FY04
FY09 CAGR 31%
CAGR 21%
CAGR 42%
21 6.5
Q1 2005-06
5.2
$398.5 M
CAGR 23%
3.1 1.7
CAGR 64%
3.6 CAGR 64%
3.6 CAGR 52% 1.1
4.9 3.6
0.3 0.3 0.6

R&D Services
Custom 32%
App Dev &
Maintenance Testing
Consulting Services
25%
5% Infrastructure IT Enabled 8%
Package
Outsourcing Implementation Services / BPO
8% 11%
11%

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

 Percentages below the pie chart represent Wipro’s distribution of Revenues for the Quarter ended June 2005
Constantly incubating newer services Wipro confidential 9
 Manpower Demand-Supply Scenario:
Wipro- Preferred IT Employer

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09

Total Manpower in IT Services 416 490 588 697 839 1010 1215 1462
Additional Manpower Required in IT
56 74 98 109 142 171 205 247
Services
Supply of IT Engineering Degree Graduates 71 81 95 100 111 117 123 129
Manpower Excess 15 7 -3 -9 -31 -54 -82 -118
Supply of IT Engineering Graduates (Degree
115 127 141 165 181 193 203 213
& Diploma)
Manpower Excess 59 53 43 56 39 22 -2 -34
Total Supply Non IT + Graduates Entering
67 74 70 70 70 70 70 70
IT
Manpower Excess 126 127 113 126 109 92 68 36

 One of the top 3 leading recruiters in India Wipro career portal

100%
 Hired over 15000 employees in last one year Candidate applications

Track applicant
15%
 Has a career portal with active applicants of over Screen / manage
300,000.
4%
Evaluation
 Recruits from over 160 leading engineering and
management colleges. Offer 0.8%

Retain
 One of the most preferred employers for the top class
talent in India.

Wipro confidential 1
 Q-cult: Enterprise-wide quality culture for
continuous improvement

 1st company People  Worlds 1st

outside the USA PCMM Level 5
to receive IEEE software
award (2003) 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  All fresh recruits undergo a 3 day Veloci-Q training
Sigma  33% business parameters for the Wipro CEO
relate to quality
Worlds 1st
Te c

IT Services Company to
s
ces
h

use Six Sigma (1999)

nol

“Wipro clients see additional application maintenance

Pro
o gy

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
 World’s first SEI CMM/CMMI Level consolidating redundant programs applications; and yet
5 IT services company (1998-2002) another 3% to 30% productivity improvement thanks to
 BS7799 process automation and tools”
 ISO 9000 Forrester

Wipro confidential 1
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 1
The agenda

1 Industry Snapshot

2 Wipro Advantage

Outlook Going Forward &

3 Key Challenges

Wipro confidential 1
 India continues to rank as the preferred destination…
Likely to benefit disproportionately from Offshoring Drive

India - the Preferred Offshore Destination

Vendor Sophistication

India
2004 2008
(Number, Quality)

Total 39.6 94.0

Philippines

India 17.2 48.0

China
CIS

Canada 12.6
Mexico 20.9

China 1.9
People Sophistication 5.0
(Number, Cost, Language Skills)
Eastern Europe 1.8
Ireland Israel 6.4
Singapore Philippines 0.9

Mexico 2.6
Cost

Mexico 0.5
Hungary
Malaysia
Philippines India 1.1
India Low Cost Others 4.7
China High Quality
Russia
Development
10.0

Source: Nasscom
Quality of Supply
(Resource Availability, CMM Level, Cultural Fit)
Source: McKinsey-NASSCOM study
Deep Rooted strength for sustained global market-share gain… Wipro confidential 1
 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 1
 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 1
 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 1
 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 1
 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.

Wipro confidential 1