Wipro's Rishad Premji foresees a big opportunity for Indian IT firms in the next 5-10 years
India’s information technology (IT) sector has been playing a key role in boosting the country’s business ecosystem and has been a big revenue-generator for its economy.
An IBEF report showed the IT and BPM (business process management) industry’s revenue was estimated to be around $191 billion in FY20, growing at 7.7 percent year on year. This is estimated to reach a whopping $350 billion by 2025. The sector’s contribution towards the Indian GDP also increased to 7.7 percent in 2017 from 5.8 percent in 2009, as per the report. .
Speaking about Indian IT’s current status and the future outlook, Rishad Premji, Chairman of IT giant Wipro Limited, said the industry has changed its ways consistently over the last 20-25 years of its existence.
“Over the last five or six years, (the industry) has been quite transformative because technology is playing a very different role today. It is becoming an important ingredient whether it be the actual growth, engagement with customers, servicing customers, agility, (or) efficiency. So, I find a huge opportunity… I look forward to the next five to 10 years as to how we become true partners to large-scale enterprise customers to help them in their digital transformation,” Rishad said.
Rishad, in a conversation with Sudhir Sethi, Founder and Chairman of Chiratae Ventures, also said IT companies would now collaborate with the startup ecosystem to lead the next wave of growth in technology. He added that whatever startups and young businesses were currently doing for the country, IT services companies had been doing since the last 20 years in terms of brand building, employment and wealth creation.
Edited excerpts from the interview:
Sudhir Sethi [SS]: The IT services industry has been talked about in many ways: It has created enormous wealth in the country over the last 30 years and continues to do so. How do you see IT services, the business, and the industry over the next 10 years?
Rishad Premji [RP]: I think it will be interesting to get a perspective on where the industry came from, to get a sense of where it has gone. One thing I am quite amazed about the industry is its resilience. The last five or six years have been quite transformative. I look forward to the next five and 10 years as to how we become true partners to large-scale enterprise customers to help them in their digital transformation.
To give you my sense of what I mean by digital transformation - one is, I think, fundamentally helping businesses transform the experiences they provide to their end customers. How do you re-imagine, re-architect, re-engineer the journeys with the customer at the centre of it all as opposed to enterprises? Secondly, operations transformation: how do you fundamentally revisit how you deliver work, how you settle trades better, or how you have a better payment system or a better supply chain? Third is how do you leverage new-age technologies to disruptively offer new business offerings?
For me, these are the components of how we, as IT services companies, can play a very critical role with large enterprises in helping customers in this digital transformation.
SS: In the product world, new startups are growing into companies with large valuations. Maybe there is a Jio on the other side along with a Flipkart. Do you think organisations in the IT services industry, like Wipro, would start servicing a Flipkart because they are also a large enterprise now?
RP: I am hugely optimistic for the next wave of technology growth. Companies like us are going to work with young companies. Today, we have a new age team at Wipro that works only with young companies. Not only are we finding ways to work with them as customers, but also how do we partner with them or leverage their capabilities to bring them into our sphere of innovations because innovation at cutting-edge speed is really happening more in younger companies than at larger companies.
For us, the mindset shifts from everything happening inside of the organisation, to how we can leverage capabilities that outside the organisation. So, it's not only about servicing them, but also partnering with them.
I’ll tell you one thing that's profoundly changed inside of Wipro in the last few years and will continue - the mindset of how we have to work with the ecosystem much more systematically.
Innovation is happening outside; the objective is how can we leverage that and wrap it into solutions for customers. We are a solutions provider at the end of the day, and work with many stakeholders for that.
So who are the stakeholders that we'll have to work with? Mature companies such as Salesforce, younger companies, (and) startups etc. We also work with academia on how to bring in the expertise? How do we bring the tip of the spear into the conversation? How do we work with the startup ecosystem? How do we work with crowdsourcing, where talent is sitting outside of the organisation, somewhere in the middle of nowhere in their pyjamas, and how do you leverage them?
SS: How did COVID-19 impact Wipro? What steps did you take? Work from home is one of the fallouts. Any comments on how you tackled the pandemic and how your customers reacted? Did you see a fall in revenues and how do you see things moving forward?
RP: COVID-19 and work-from-home have opened our eyes completely. If you'd asked me in March that 180,000 Wiproites could work from home, I would have laughed. Because we thought you can never have business continuity planning, but reality is today we have over 98 percent of our employees working from home.
Less than 2 percent of our people, about 3,000-3,500 employees, are coming into the office. Customers have been incredibly supportive. The government has been incredibly supportive in terms of providing a sort of relaxation on rules and requirements that you have to work from SEZ units, etc.
There's certainly a very important component of security. So, it's important that we be obsessive about how we keep the environment safe so our customers feel safe.
I am of the view that we will never go back to the old mode. We will never go back to a 100 percent of the old model actually. We want people to come back, but we would also have our people working from home sometimes.
We want people to come back for two reasons. One is we want people to come back to build culture, and the reality is culture grows by osmosis, it grows by people engaging, at the ward, the coffee machine, or the water cooler, gossiping about the organisation, exchanging notes. Also it is important for innovation. I think it's powerful for people to come together. Often, innovation happens in the downtime when you don't expect something to come about.
I think it's important that people come back, but I don't know how much we'll be back. Maybe we go back to say 60 to 80 percent, I don't know yet, but everybody will come in some of the time.
I am a big believer in that form of intimacy and connect. So, I think, people may work three days or three-and-a-half days from the office. But we would like people as a company to be coming back because that's how you build connections.
SS: Coming back to growth patterns, which we are looking at in IT services companies. If I look at just the top five companies, in the last five years, they have distributed dividends and share buybacks to the extent of $35 billion. And if I take a 10-year cycle, it’s $48 billion. But the other side of the coin is whether the money being spent to innovate, to grow? Any views on that?
RP: I certainly think that there will be opportunities to spend as we move forward into this new world where we are helping drive digital transformation. I think there are opportunities to invest in M&A and startups. We can talk about Wipro Ventures and opportunities to invest organically as well.
We are driving three different avenues of innovation inside of the organisation, investing outside of the whole ecosystem where we are leveraging things that are sitting outside. Another is how we invest in the regular rhythm of a business. In all of our businesses, we closely monitor what they’re investing in, things that can pay off in two quarters, three quarters down the road. The third avenue of inherent investment is our CTO organisation, which is about 200-220 people. We invest in ideas that can pay off in a two- to four-year timeframe. These are ideas that have relevance, but are not scaled today; they can have much more relevance if scaled commercially two to four years down the road.
We've invested in about a hundred ideas to date since the inception of Wipro Ventures, but roughly about five to six ideas a year where we invest in things that can pay off in a four to six-quarter time frame.
SS: Coming back to Wipro Ventures, you led that initiative for about four years. Some of the stance has been quite US-oriented. How have the experience and results been? How do you see this going forward...and why just the US, why not India?
RP: I am very passionate and incredibly excited about Wipro Ventures. I think we have discovered a very systematic and structured way of engaging with young companies and it's not always easy for a large company to learn to work with a small company, but I think we’ve been quite successful over the last four to five years now.
We started off with a $100 million fund. The objective is how do we find ways to work with young, smart companies, how do we leverage the technologies and the capabilities that they have, how do we wrap them into solutions that we have and take them to our customers.
It was all a returns focus; it wasn’t a treasury play for us. It was very much a strategic play. Nobody came to us for financial capital; they came to us for strategic capital. Today we have 23 investments, we’ve done over 200 deals cumulatively with our customers. We’ve had a couple of fabulous exits, which we got very lucky with.
That is the other thing that I learned. That it’s very important to have good exits to be taken seriously as a venture investor, because young startups care about people creating value for them. So it’s been a remarkable journey, we don’t invest in anything in which we simply see a returns play. We only invest in ideas in which we see a strategic play to add value.
This year, we enhanced the fund from $100 million to $250 million. In the next five years, Wipro may have 60 to 80 portfolio companies giving us a neat positioning, in terms of working with a really important stakeholder of innovation. We come in as a strategic investor with a financial stake.
We started off with a focus on the US because that's our largest market. It's the most mature ecosystem for startups, a more enterprise-centric universe, which is where we are focused. So we started off with the U S and Israel.
We have made one investment in India; we’re very interested in looking at India as it is our home market. We want to be supportive and work with young companies here. We have just not found the right fix. I think over the last few years, more enterprise-centric software companies are coming up. Outside of ventures, we have worked with about 30-40 startups as partners.
(Edited by Apoorva Puranik)