GROUP 8 Case Study Presentation

[06] Chu Hoang Anh [26] Vu Anh Kha [66] Ta Ngoc Phuong Thao [69] Nguyen Vinh Ngoc Thi [63] Nguyen Thi Kim Thanh [39] Le Hoai Nam

Case Introduction Question 1 Question 2 Question 3 Question 4 Question 5

[06] Chu Hoang Anh

A giant in technology industry

RANK COMPANY (LEADERS) KEY STRENGTH

1 2 3 4

Accenture Infosys Technology Sodexo ???

Customer References Demonstrated Competencies Balanced Performance Management Capabilities

[06] Chu Hoang Anh

IT products and services

Consumer care and Lighting

Healthcare

[06] Chu Hoang Anh

[06] Chu Hoang Anh

1945 Establishment Consumer care, lighting products

1989 Joint-venture with GE (Wipro GE medical system) Moved into technology sector

1990s IT and Outsourcing services Software development Back-office solution, semiconductor design, applications debug IT systems support

2000s High valueadded applications and softwares; consultancy Global expansion 9 development centers in US and EU

[06] Chu Hoang Anh

Wipro financial outcome
Revenue Income 5,273 4,505 3,403 2,574 1,870 1,815 436 2006 615 715 753 1,055 1,199 3,758

Achievement

363 2005

2007

2008

2009

2010

2011

[26] Vu Anh Kha

Question 1
How outsourcing work to Wipro improve GE competitiveness in global economy ?

Does this harm US economy ?

[26] Vu Anh Kha

Outsourcing help GE by:

Greatly reduce labor & operation cost ($300 million) Launch pad to other Asian economies

[26] Vu Anh Kha

Effect on US economy:
Short term
Hurt US workers because many jobs are exported to other country

Long term
Jobs with higher intellectual properties
Higher value added jobs

[66] Ta Ngoc Phuong Thao

Question 2
Did General Electric help to create Wirpo? How?

[66] Ta Ngoc Phuong Thao

Wipro before & after GE

Before GE After GE

Not clear focus Tech revenue: $15 mil

Focus on Technology 50% revenue from GE

[66] Ta Ngoc Phuong Thao

Hard-learned lesson
GE action Wirpo action

Play off Indian companies against each other to drive down cost

Adopt the Six Sigma process to improve operation efficiency

[66] Ta Ngoc Phuong Thao

Wipro: A new-born expert

By being an contractor for GE, Wipro sharpen its professionalism and move forward to high value-added business and expand its business to the world: Hiring local nationals to lead its sales push Direct sales presence in 35 countries

[69] Nguyen Vinh Ngoc Thi

However
There is an income differentials between software programmers in the US and India

[69] Nguyen Vinh Ngoc Thi

Question 3
If Indias information technology companies continue to prosper over time what will happen to the income differential between software programmers in the US and India? What are the implications for the US economy?

[69] Nguyen Vinh Ngoc Thi

THE SITUATION
Strength of Indian labor Talented

Cheap
Solid base of technology English Speaking

[69] Nguyen Vinh Ngoc Thi

A skilled programmer with 2 or 4 years of experience

In India In US

$ 2 one hour

$ 10000/ year

$ 64,000/ year

If Indias IT companies prosper.

The income gap will narrow

[69] Nguyen Vinh Ngoc Thi

1. The increased demand of high quality Indian labor

More and more foreign companies outsource their work to India The demand of Indian engineers Their average wage

[69] Nguyen Vinh Ngoc Thi

2. The severe competition between Indian headhunters

Decrease in the source of US engineers and programmers

Low cost is unsustainable competitive advantage

Foreign companies or US will move to another country that has a cheaper source of labor to reduce their costs.

The income gap is really narrower when.

Indian information technology companies can take self-control to grow their business instead of depending on foreign companies.

WIPRO learnt a valuable lesson from GE

Wipro moved into high value-added applications by signing a deal to design and engineer tap storage devices for storage technology.

The implication for American economy

A downward pressure on wages in IT industry The price of software maybe will decline Focus on more innovative work and higher-skilled activity with a lower cost

Move to another industry with higher content of knowledge and technology

Division of labor

[63] Nguyen Thi Kim Thanh

Question 4
Since 2000, Wipro has moved abroad, establishing sales offices in 35 nations and design centers in 9 nations. > Why is Wipro doing this? > What would happen to the company if it did not follow this strategy?

[63] Nguyen Thi Kim Thanh

Why has Wipro moved abroad ?

Oversea expansion as an inevitably objective demand of development process Under GE's lead & the hard lesson about efficiency

To boost sales, enforce prestige & firm foothold

A global company!!!

[63] Nguyen Thi Kim Thanh

Moving overseas - strategy

Sales offices in 35 nations -be mostly staffed by local nationals! - buy local companies
9 product development centers in Europe and US - more communication with client - deal with language issue

[63] Nguyen Thi Kim Thanh

Why Wirpo moved abroad?

Wipro wished to be closer to foreign customers and build its local presence

Be better tailored to the local

market. Secure the company's long term survival and profitability.

[63] Nguyen Thi Kim Thanh

Why Wirpo moved abroad?

Wipro chased after more lucrative projects beyond the IT work Improve low-margin end of the software business move upstream into high valueadded applications & services

Scenario Wipro did not follow international expansion strategy

Risk of backward lagging behind

Slower growth and loss of competitive advantage

Q5: Lessons learnt from Wipro

[39] Le Hoai Nam

Identify your competitive advantage and use them as a leverage for your company

Low labor cost is not a sustainable advantage

Global company needs to reinvest their gain into local presence