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The Wipro guide to outsourcing

Jeet Thayil in New York | November 06, 2003 05:06 IST

Here's a way to put outsourcing in context.

An American parent had a question for an India-born acquaintance: "If all the manufacturing jobs are going to China, and all the service jobs are going to India, what should my son graduate in?"

Good question. No easy answers.

Or at least none that Vivek Paul, Vice Chairman of Wipro Ltd, was willing to provide.

He was talking to a roomful of students from the Columbia Business School and the topic under discussion was outsourcing.

"Don't try and change the future. Outsourcing will happen whether you put speed bumps in its way or not," he said.

"India is the outsourcing hub of the future."

In fact, he thought it was important to stop wasting time on the moral implications of outsourcing, on whether it was a good idea, and it if could be stopped.

"Instead industry should be thinking about its workforce and devising new training methods," he said.

Paul's reasoning is simple: Since you cannot stop the future, you might as well try and work through the transition.

Speaking plainly and urgently -- with regular shots of dry humour -- Paul had the undivided attention of the hundred or so young people in the audience. He made it a point to use real-life examples.

For instance: An unnamed automotive client asked Wipro to help them set up a local consulting group that would do what Wipro does, except with American talent.

Wipro signed the lease for a three-floor centre in a suitable location, and only then did the client mention costs: "Costs will be the same right?"

Eighteen months later, the centre's five-year lease still has a long way to go. And what about hires? "Zip," said Paul. "Nobody has been hired."

When it came down to it, the client was not willing to commit the kind of funds a comparable US operation would cost.

Another instance: A Scottish company approached Wipro with the idea of setting up a similar operation in Glasgow. They wanted 100 Wipro employees to move to Scotland.

"It didn't make sense to us," said Paul. So Wipro said they would set up the facility with 100 local hires.

The client came back with this: "If I wanted it done with people from Glasgow why would I come to you?"

India, with its enviable 5.7% annual growth rate, is set to be the third largest economy in the world in 30 years -- after the US and China. In a decade it will overtake Italy, France and Germany.

"All in all," said Paul, "India has really made a mark. It started in IT but now it has spread to other services."

Talking about Wipro, Paul said the company has just crossed $1 billion. He reiterated its number one objective -- quality. It began, he said, with a goal that was considered "audacious" at the time: to be among the top 10 global technology service providers.

Or: "To be the best at what we do. If we don't have that we have nothing."

The company is now widely seen as having helped to engineer a change in the industry landscape. (It was the first outside the US to be awarded a level 5 rating, in 1999.)

The average age of its employees is 28, which raises an important question: How do you retain your culture when a large percentage of the workforce has been with the company for less than two years.

Such is the level of its success that some US companies are now setting up centres in India, to avail of the cost-effective environment. How does Wipro react to such blatant copying?

"Imitation is the best form of flattery," Paul said. He sees it as another sign that there is an emerging gravity shift towards India.

What is it about India that makes it such an attractive business destination for outsourcing?

Simple, really: There is no other place where a company can set up a facility with up to 40, 000 highly-trained English-speaking employees at such low cost.

Paul kept his presentation short so as to have more time for a question and answer session at the end.

Asked what kind of place Japan is to do business, Paul minced no words. It is "slow and painful", he said. Wipro has been in the country for eight years without much to show.

"You have to pay your dues to get anywhere in Japan," he said.

Asked about the disadvantages of outsourcing, how it creates a wall between one part of a company and another, Paul, predictably, did not seem to see it as a negative.

"Obviously," he said, "there will be a wall. But that wall is as likely to arise between one floor and another, or between one side of the room and another."

As for the time lag: "We work strange hours, but that's just the way it is, there's nothing we can do about it."

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