Wipro & Infosys: "Built for the Long Haul"
It's important first to understand how India's two IT services icons built themselves before we question whether the Indian BPO revolution can yield similar giants. Wipro Technologies and Infosys both started during the early eighties. Infosys started in 1981 when 7 programmers, using $1,000 in seed capital, began relatively low on the value chain by providing product-testing services. Its business model was simple and straightforward: to become a specialist, providing only select high quality services at a reduced cost. As client loyalty was built, the company began offering newer, higher value services to both its existing customers and newer, larger clients. This method enabled Infosys to quickly attain profitability and to soon start financing expansion using internal accruals. Even when outside funds were required, the management team ensured that the amounts were small, thus limiting the effects of investors' short-term focus. Infosys went public in India with a market capitalization of roughly $10 million in 1993, 12 years after its start. The company maintained its "high-quality provider" reputation by obtaining the much sought after ISO-9001 and SEI-CMM certifications. In 1999, the company listed on the NASDAQ. Today, after more than 20 years, Infosys has emerged as a global behemoth synonymous with high-quality IT Services.
Although Wipro Limited was formed in 1945, Wipro's Technologies didn't start until the early eighties when it sought to address the rising demand for outsourced IT services. Like Infosys, Wipro Technologies started out by providing a few services extremely well. Only with customer traction and profits did they expand into other business lines in the IT Services arena. With the backing of Wipro Limited and early profitability, Wipro Technologies was also able to avoid reliance on venture capital. The company was one of the world's first to obtain international quality certifications like PCMM and SEI-CMM. When Wipro listed on the NYSE in 2000, it marked the first time an Indian firm had done so.
Lessons Learned
Wipro and Infosys have taught us a few valuable lessons:
• The services business is a “long haul business.” Global IT Services powerhouses are built over decades as opposed to years.
• There is no big-brand IT Services firm today that was heavily backed by venture capitalists or early stage investors.
• Services companies have the highest chance of success when they initially specialize in a few select high-quality offerings until they achieve profitability, as opposed to providing "everything to everyone" from day one.
• International quality certification is a must to compete in the global marketplace.
These same lessons are extremely relevant to the Indian BPO industry and, in fact, shed light on how Indian BPO powerhouses can be built.
Sudhakar Kosaraju is a co-founder and Vice President at 24/7 Customer, an outsourced provider of customer support and BPO services to the Global 500. While an analyst at Jupiter Communications, he focused on market forecasts in addition to the e-commerce and customer support fields. Kosaraju was elected a Flinn Foundation Scholar, an IBM Thomas J. Watson Scholar, and an ESPN National Scholar. He graduated cum laude from Harvard University.
