Wipro Chairman Azim Premji wakes up early in the morning to answer e-mails from branch managers around the world. The company's headquarters is a 10-story building not far from his home, and every morning he hikes up to the top floor of his office, chatting with employees as he goes. The work begins with breakfast discussions and averages 100 hours a week.
He doesn't have to work so hard. India's richest man at $5 billion, Premji owns 84 percent of Wipro. The 23,000-employee Indian software company develops software for Microsoft, Sony, Nokia and others. He drives an unassuming Ford car, takes home-prepared pakodas and vegetables for lunch, and uses "national" products for his clothes and watches. Although he often has to fly around the world, he doesn't buy a special plane, but only flies economy class.
IT giant started as cooking oil company
It's hard to believe that the software giant's fortune began in a cooking oil company. Premji's father, Hasham Premji, founded West India Botanical Products Ltd. in 1945. Premji was born in July of that year. Although he was the oldest of four children, his father decided to groom him to run the family business and he was sent to Stanford University to study engineering.
When his father died of a heart attack in 1966, 21-year-old Premji dropped out of school and returned home to take over the $2 million family business: selling cooking oil to retailers. He did well, with sales growing from 40 million rupees to 104 million rupees in five years. The young Premji hired an MBA to standardize management and then began to diversify products.
At the time, India's mixed economy based on regulation was known as "licenseraj" (license is king). By the late 1970s, IBM had been driven out of the Indian market, and a vacuum had been created in the country's computer industry. Premji, who was 35 years old at the time, saw the opportunity and renamed the company "Wipr o" and started making hardware and services.
Wipro made its first venture into office software in 1984. Though it failed, Premji made his first attempt in the world of software." I am not bitter about failure." He then bought technology from American companies and looked for a breakthrough in after-sales service.Wipro's name gradually overtook giants like IBM, HP, Dell and others to become India's largest computer seller and manufacturer.
In 1990, Wipro entered the international market and gradually stabilized its business model: identifying strategic partners in the "Global 500". GE, Nokia, Cisco, HP, Microsoft are among its clients. Wipro's rates are not low, but 80% of its business is repeat business.
Building the Indian software myth hand over fist
He's very direct in his business, it's an 'eyeball-to-eyeball' kind of thing," said Jack Welch, former CEO of GE.
By providing services to multinational companies, Premji has created a new multinational enterprise. On the Bombay Stock Exchange, Wipro's average annual return from 1995-1999 was 164 percent. In February 2000, Wipro's share price soared from Rs. 3,975 to Rs. 9,624, and Premji became "the world's second-richest man" with assets of $35 billion. According to the Sunday Times, he is the only Indian among the world's 50 richest people.
In August 2000, Wipro received permission from the Indian government to list overseas. On October 19, 2000, Premji rang the opening bell of the New York Stock Exchange." It was a historic moment." He recalled.
The CMM (Capability Maturity Model), the "passport to the international market", had long been on his radar. In 1999, Wipro became the first company in the world to achieve CMM Level 5, and the first software company in the world to achieve the manufacturing standard 6Sigma. According to statistics, Wipro has a 99.3% contract completion rate. This is an unbelievable figure, as the average for Chinese companies is less than 10%. The company has annual revenues of $900 million and a net profit of nearly $200 million, a significant portion of which is grossed up to 100% by programmer "labor". No software company in China has a tenth of Wipro's sales revenue, and profits are a million miles away.
As India's largest independent software developer, Wipro is highly internationalized, with 19 overseas branches and thousands of engineers based in the US. Four years ago (1999), Premji moved its technical headquarters to Santa Clara, California, and more than 90% of its international business comes from North America and Europe." Fifty employees, including Plumage, were working in New York on Sept. 11, and four are missing.
Global expansion hits backlash
Premji is not slowing down. Indian companies are eager to make big profits, like IBM. A few years ago, Indian software companies were primarily involved in software coding, but are now expanding into more challenging systems development and consulting. Consulting revenues account for 7 percent of total revenues. The company has added nearly 10,000 new employees to expand its call-center services and to augment its technical strength in industrial software. With hundreds of millions of dollars in cash, Plummeridge is expanding worldwide, especially in the Middle East. He is one of the richest Muslims on the planet, where U.S. companies are less popular.
On the other side of the battlefield, white-collar IT workers from Silicon Valley to Sydney are growing in numbers, fearful of losing their jobs to Indian engineers. Successful software outsourcing (O utsourcing) has created fears of job creation, leading the US Congress to enact restrictions. On October 1, 2003, valid visas for foreign professionals in the US fell by 66%. This has hit Wipro hard, as the ability to develop globally "24/7" from Bangalore to the US West Coast was a traditional strength of the Indian software giant.
One-man show
"I want Wipro to play a major role in the global IT industry," says Premji. He has embarked on a number of mergers and acquisitions. In July 2002, he invested $90 million to set up India's top call center; in November, he spent $24 million to buy the 100-person energy sector business of American Management Systems Ltd (AMS), the first time an Indian IT company had acquired a business unit of a major US company; in May 2003, Premji spent another $19 million to for $19 million to buy a financial consulting firm.
In April 2003, Wipro beat Oracle to become the technology services provider for Scandinavian telecom companies.Oracle's Larry Ellison feels that Indian companies are the new trouble outside of Microsoft: "They're getting more and more involved in big projects, and we're under a lot of price pressure." A similarly large order could amount to $70 million.
M&A strategy at risk. Technology overhead is falling globally, and customers simply want to spend less on IT services. M&A in 2003 cut corporate earnings from 3 0 percent to 24 percent, and at one point stock prices were down 24 percent from their January 2003 peak.
Observers are unhappy that Wipro is a "one-share company" with "illiquid stock" even though 30% of its employees are enrolled in an employee option plan (ESOP). But Plummeridge insisted on controlling the direction of the business." The company is run to achieve long-term goals, not on the stock price." This workaholic never loses sleep over stock prices. His dominant share of the stock eliminates the need for him to please other shareholders. Other analysts think he was right to do so." Although the merger has caused some problems, it will create a full-service technology company and Wipro will be a model for future technology companies in India." said Ajay Ishant, vice-president of a Mumbai-based investment bank.
Patiently grooming family heirs
Wipro is ranked among the "Top 20" in the global software industry, according to BusinessWeek's annual rankings. 59-year-old Premji's goal is to become one of the top 10 IT firms in the world by 2004, and one of the top 10 "Most Admired Companies" in the world.
While software contributes more than 80% of profits, Premji also has a hardware division with sales of nearly $200 million, in addition to retaining a light bulb factory, a medical equipment company that has been partnered with GE for more than a decade and an "ancient" cooking oil company. Wipro continues to produce cosmetics and soaps, and "WiproBabyS oft" for babies, which provide 35% of sales. These businesses provide 35% of the sales, don't take much time and make money.
Premji has a loyal team, with several deputies who have been in the business for more than two decades. He has been described as a "model CEO for a model business" and many young people have joined his company. In 1987, he refused to pay officials for "favors," and the plant had to supply its own electricity for 18 months.
Premji was not a member of the "Bombay Club", where national entrepreneurs opposed the opening of industries to foreign investment and called for government "protection". As one of India's biggest multinationals, Premji believes that international competition "can improve the quality of products and expand markets".
The software company owner often refers to "the inherent mathematical mind of the Indian people" -- who created the concepts of zero and negative numbers 1,300 years ago. He has no interest in publicity and rarely appears at celebrity cocktail parties, preferring to spend his free time traveling in the mountains around Bangalore. His wife, Yasmeen, is a magazine editor, and his eldest son, Rishad, 24, is a family trainee in financial management at GE, having graduated from Wesleyan University in Connecticut.