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India must focus on hardware: Premji
September 09, 2003
Azim Premji, Chairman, Wipro addressed the luncheon session at the Second India Asean Business Summit organised by the Federation of Indian Chambers of Commerce and Industry and the Confederation of Indian Industry in Mumbai on Saturday.
Excerpts from his speech:
Honorable Chief Minister of Maharashtra Mr Sunil Kumar Shinde, Secretary General of ASEAN, distinguished guests and friends:
"It is my privilege to be with you this afternoon. I welcome our friends from Malaysia, Singapore, Myanmar, Laos and the Philippines in this summit.
"We have so many things in common with each other. We share the same Asian culture and approach to business. I would like to take this opportunity to speak about the IT (information technology) industry. I am most familiar with this industry. Also, IT has been an important industry that has taken India into the global arena.
"I would also like to dwell on Wipro as a case study, because I am even more familiar with Wipro, and share with you some of the key initiatives we have taken for the APAC (Asia Pacific) industry.
"There is no doubt that in recent times, information technology has emerged as the most fundamental strategic tool for an organisation. IT has influenced every aspect of commercial enterprise -- its structure, its products and services, its markets and processes.
"However, in the beginning, I would like to dwell upon the strategic role of IT in building a nation.
"Information technology has been contributing significantly to productivity and growth in the global economy. A 2001 study of major technological revolutions over the last three centuries by the IMF (International Monetary Fund) has revealed that IT enhanced the growth rate of the United States economy by 1.8 per cent per annum between 1995 and 2000.
"During the same period, IT contributed to improvement in labor productivity by 1.6 per cent annually. The IMF study states that even though the IT spending environment has weakened in the short term, the benefit of IT revolution to the global economy will continue if not accelerate in the long term.
"I totally concur with this view.
"Coming to our own country, the Indian IT industry was $16.5 billion in 2002-03. It constitutes 3.2 per cent of the Indian GDP (gross domestic product).
"While the size is attractive, it is significantly short of our potential.
"Software services exports have been one of the biggest success stories of independent India. Software exports have grown at a compounded annual growth rate of over 40 per cent in the last five years to $9.9 billion in 2002-03.
"This has brought in precious foreign currency and developed the local economies of the places where IT companies are situated. With the emergence of IT-enabled services (ITES) industry, a new avenue of employment has been opened up for graduates.
"This has contributed to mitigating the unemployment problem as well. In the next five years, the IT exports industry has the potential to grow to over $50 billion, contributing to 35 per cent of India's exports and nearly 7 per cent of our GDP.
"Equally importantly, this industry will generate employment for nearly four million people directly and indirectly.
"Often, when one speaks about Indian IT, the discussion tends to begin and end with software and services exports. The latent potential of the hardware sector appears to be completely ignored. Yet it is an area of enormous contribution potential. To see what a robust hardware industry can do to a country, just look at Singapore and Malaysia.
"The truth is that 47 per cent of Singapore's GDP and 65 per cent of Malaysia's GDP come from IT/electronic exports.
"The tremendous economic growth that China has witnessed in the recent decade has been fueled to a large extent by the growth in hardware industry there.
"China exported hardware worth $36 billion in 2001 and is the world's third largest electronics hardware manufacturer.
"Most importantly, I believe that a nation cannot be self-sufficient in strategic sectors like defence, nuclear and space technologies without domestic capabilities in hardware development and manufacturing.
"No wonder, then, that IT accounts for 5.6 per cent of spends in the US and 4.4 per cent of spends in Singapore.
"Initiatives like e-governance bring in transparency, improve internal efficiencies and enhance the quality of citizen services.
"IT is certainly one area where I can see significant synergies we can achieve for our country.
"I come now to the second part of my talk today. I would like to highlight some of the key initiatives we have taken in Wipro towards focusing on APAC countries.
"Wipro began its APAC operations in 2001 in a concerted manner. We set up a dedicated team working on APAC. APAC is one of the fastest growing IT markets in the world. We began operations form Singapore and have offices today in Singapore, Malaysia, Hong Kong, Taiwan and Australia.
"Through these offices we are addressing customers in Singapore, Malaysia, Hong Kong, Taiwan, Australia and New Zealand.
"In a short time, we have been able to help our customers from diverse industries like telecom, enterprise (auto, oil and gas, retail, utilities, health services), and BFSI (banking, financial services and insurance).
"The biggest benefit we have been able to bring to them has been not only our IT experience in India but also our benefits of working in Europe and Americas with some Fortune 500 companies.
"Examples include value-based solutions to our customers such as collaborative manufacturing enabler solution for Petronas refinery in Malaysia and infrastructure outsourcing for a retail customer in Singapore.
"We have also been able to offer industry-specific IT solutions by developing domain specialists internally and through American acquisitions like GEG (Global Energy Group – a unit of AMS) for energy and utilities market, or Nervewire for business and IT consulting for financial services clients.
"A significant area where companies like Wipro can add value to the APAC IT industry is in terms of sharing their process capabilities.
"Wipro is probably the first IT services company in the world to implement Six Sigma and reach the highest levels in SEI software CMM and CMMi level 5 certification and first company in the world to get PCMM level 5 certification.
"Quality goes beyond certification, but these certainly reflect our commitment to excellence.
"I am sure that this summit will help in identifying many other areas where we can mutually benefit from each other. I wish the conference all success."