Wipro Limited Presentation to Investors July-Sep 2008 Safe Harbor - - PowerPoint PPT Presentation

Wipro Limited

Presentation to Investors

July-Sep 2008

Safe Harbor Safe Harbor

This presentation may contain certain “forward looking” statements, which involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those that may be projected by these forward looking statements. These uncertainties have been detailed in the reports filed by Wipro with the Securities and Exchange Commission and these filings are available at www.sec.gov. This presentation also contains references to findings of various reports available in the public domain. Wipro makes no representation as to their accuracy or that the company subscribes to those findings.

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Overvi Overview of

• f Wipro Corporati

Wipro Corporation Performa Performanc nce

1. Revenue for the corporation at

4,963

$4.9 billion for 2007-08 2. Total Employees ~100,000

1,273 1,820 2,391 3,325

USD MN

3. Total IT business touches $4.3 billion 4 C C

, 223 363 465 652 816 2003-04 2004-05 2005-06 2006-07 2007-08

4. Consumer Care and Lighting business achieves $378 million

• Wipro Corporation revenue at Rs.200 billion for 2007-08

f d f

Revenue USD MN Net Income USD MN

5. Wipro – Infrastructure Globally among the top 2 in

• 5 year CAGR of Revenue 36% and Net Income of 34%
• IT business contributes 87% of Revenue and 92% of PBIT
• 85% of IT business is Services and 15% is Products

3 Hydraulic Cylinder Business

*All numbers are IGAAP Financial numbers translated into USD on the basis of realized exchange rate

Offshore Still Small Offshore Still Small Part Part o

• f Ove

Overall Spend all Spend

1,759

• 1. Despite the growth

India has seen in

Global Global Technol Technology Relat Related Spend & d Spend & India’s India’s Current Current Exports Exports ($ Bn) n)

802

Global IT Services market, it is still a very small proportion (~2%) of

Current Current Exports Exports ($ ($ Bn) Bn)

Indian Exports As % of Global Spend 495 462 23.1 10.9 6.3 40.3

global spend ~5% ~2% ~1% ~2%

IT Services BPO R&D/Engineering Total 2007 Exports from India (FY08)

Source:Nasscom Review, 2008

Relative Gro Relative Growth Rates th Rates Demonstr Demonstrate This ate This - Glo Global IT IT Spend Spend Growt wth Rate ate ~5%

~5% (CY

(CY 2007); 2007); Growth rowth of Indian ndian Expor xports ts 28%

28% (FY08)

(FY08) Glo Global IT IT Spend Spend Gr Growth Rate Rate ~5%

~5% (CY

(CY 2007); 2007); Gro Growth of

• f Indian

Indian Expor Exports 28%

28% (FY08)

(FY08) 4

*Scale adjusted for better readability

Indi India Story becom a Story becoming Stronger Stronger

India India’s offshor ffshore IT IT and and BPO PO exports exports US $ Bn Bn

• 1. Industry

India India s offshor

• ffshore IT

IT and and BPO BPO exports exports, , US US $ Bn Bn.

~80

CAGR BPO

120-180

continues strong momentum – grew 28% in FY08

CAGR IT 22%

~60

40%

FY08

• 2. IT-BPO exports

could reach a size of $120-

CAGR IT 25%

31.4 40.3

CAGR BPO 50%

size of $120- 180 Bn by 2015 ; CAGR of 15-21% from FY07-08

6.2 17.7 23.6

33% 35% 28%

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Source: NASSCOM McKinsey report

Offshore I ffshore IT BPO BPO > 28% > 50%

5 year CAGR

Incenti Incentive to Outsource / e to Outsource / Offshore Offshore

• Cost optimization is the top most agenda worldwide

Sti k t C C t O t t h dl IT t f ti

• Stick to Core Competence – Outsourcer to handle IT transformation
• Large vendors with Deep Domain / Technology / Global Delivery

Model best geared to service customer objectives Model best geared to service customer objectives

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How do we capitalize on the opportunity? the opportunity?

…Through our differentiators - Current and Prospective Current and Prospective

7

Wipro Differentiators Wipro Differentiators

1 V 1 Verticals 1. . Ver Vertical als

• 2. Serv
• 2. Service

ice Lines Lines

• 3. R&D
• 3. R&D
• 4. India & Middle East
• 4. India & Middle East
• 5. Wipro
• 5. Wipro Way

Way

• 6. Ac

Acqu quisition isition

8

Wipro Differentiators: 1. Ver

• 1. Vertical

als

Improved Addressabil Improved Addressability through ty through Verticalizatio Verticalization

Verticals Addres Verticals Addressed

Telecom Telecom Bankin Banking Securit Securities es Manufac Manufacturing turing Energy Energy & & Utilities Utilities CMSP CMSP Insura Insuranc nce Retail & Retail & Healthcare Healthcare Technology Technology

• Pioneered the Vertical framework in 1999 – first among Tier 1 players

Transpor Transportation tation Healthcare Healthcare

• Verticalization resulting in deep rooted domain competence.
• Deep domain competence facilitates engagements with cost / service transformation – need
• f the hour from the perspective of customers
• Model designed to facilitate scalability

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Model designed to facilitate scalability

• Creation of new verticals on segments reaching scale

Enhanc nhancing C ing Customer C stomer Centricity ntricity

Wipro Differentiators: 2. Serv

• 2. Service

ice Lines Lines

Service Lines – Service Lines – Growth Drivers rowth Drivers and Differentiators and Differentiators

T i T i

FY07 FY07-08 8 YoY YoY%

42 42% 38% 38% 54% 54%

BP BPO PE PES Te Testing Tes esting ng

% 40% 40% 15% 15% 27% 27%

PI PI PI PI PI PI TI TI S TI TIS TI TI S TI TI S BP BPO BP BPO

49% 49% 36% 36% 15% 15%

PI PI PI PI PI PI PI PI

FY01- 01-02 02 FY03 03-04 FY05- 5-06 06 FY07- 07-08 08

Incubate Incubate Expand Expand Enhance Enhance De Deliver V liver Valu lue

Deliverin Delivering Comprehen g Comprehensive Solutions ive Solutions

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Wipro Differentiators: 3. R&D

• 3. R&D Business

Business

Leaders in R&D Leaders in R&D Busine Business ss

Indus Industry ry Vertica Verticals Addr ddressed

514 672

27% 27%

Fiscal Year

851 851

Indus Industry Vertica Verticals Addr Addresse essed

1064 1064

25% 25%

Wireless Net & Devices

Printing and Imaging

514

2004-05 2005-06 2006-07 2007 08

Devices

Imaging

1800 18000+ talent pool engaged in R&D Services

2004-05 2005-06 2006-07 2007-08

Computer Sys & Storage Semiconductors

Largest player based on headcount World’s largest independent team of Hardware Design Engineers of 2 200+ Hardware Design Engineers of 2,200+ Leaders in Telecom OEM Pioneers in the Embedded space

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Pioneers in the Embedded space World’s largest 3 World’s largest 3rd

rd party R&D busines

party R&D business

Wipro Differentiators: 4. India & Middle

• 4. India & Middle East

East

Wipro Inf Wipro Infote

• tech

ch – – Emergi merging g Market Market Focus Focus

• 1. Leadership position in India, pioneer

in Middle East

• 2. Best of breed partnerships
• 3. Revenue of $931 million ; 3-year

CAGR of Revenue at 39% and EBIT at 44%

• 4. Transformational customer

engagements 5 Incubator of global service lines

• 5. Incubator of global service lines

Comprehe Comprehens nsive IT ive IT solutions solutions portfolio portfolio

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Wipro Differentiators: 5. Wipro Way

Driving Innovation

• Understanding customer and his customers needs better
• Understanding customer and his customers needs better
• Moving from doing what is contracted to being a partner in solution success
• Internal partnerships to create value for the customer
• Relationship building

Excellence in governance Relationship building, Excellence in governance

• Partner of choice

Customer & Wipro

• Strategy
• Internal Controls
• Customer centered
• Experimentation
• Adaptable to changes
• Business Models
• Proactiveness
• Well defined and efficient Work processes
• Right skill at the Right place
• Well defined and efficient Work processes
• Seamless Execution
• Optimized and Effective roles
• Appropriate tools / methods for process improvements
• HR practices aligned to business needs
• Training and Education
• High Employee engagement

pp p p p

• Culture of Experimentation
• Mission 10X

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Proprietary delivery methodology guar Proprietary delivery methodology guarantees best-in-class productivity antees best-in-class productivity

Wipro Differentiators: 6. Ac Acqu quisition isition

Ac Acquisition Strategy quisition Strategy

• 1. Enhancing domain and technology competence

2 d S f l

• 2. Expanding Service Line portfolio
• 3. New geographies
• 4. Investment of $1 billion+ towards strategic acquisitions

est e t o $ b

• to a ds st ateg c acqu s t o s

Infocrossing

• Transformational deal for Wipro: Infocrossing’s Pan-US Local Hosting
• Transformational deal for Wipro: Infocrossing s Pan US Local Hosting

Capabilities with a Managed Services Layer providing a significant competitive advantage in large TOS deals

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Enhanci Enhancing g growth growth and maximizi and maximizing ng v value

Shapi Shaping the Future g the Future

1 G 1 Global TOS 1. . Global Global TOS TOS

• 2. Global
• 2. Global Programs

Programs

Business Transformation

• 3. B
• 3. Best Shoring

st Shoring

• 4. Inte
• 4. Integrate

ted Consulti d Consulting g g g g

• 5. M

Mega ga Part rtnersh nerships ps

IT Transformation

• 6. Product Engg
• 6. Product Engg as a Service

as a Service line line

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Shaping the Future: 1. Global

• 1. Global TOS

TOS

Total Portfolio of Total Portfolio of Services Services

TIS TIS

Infrast Infrastruc ucture Consulti Consulting & ng & SI SI Manage Managed Servi ervices Open Open Systems Systems

Infocrossing Infocrossing

Manage Managed Data Center Servi d Data Center Services Manage Managed Servi ervices Mainframe Mainframe & Managed Managed Servic Services es – – Open Open Systems Systems Networ Network Management k Management Business Servic Business Service Management Management Servic Service Desk esk Managed Managed Servic Services es – – Mainframe Mainframe & Storage Storage Non-linear delivery model Non-linear delivery model

Unleashing the Unleashing the value of value of Infocrossing acquisition Infocrossing acquisition

• A

A superior value proposition for Global IT superior value proposition for Global IT Outsourcing Outsourcing Deals Deals

Servic Service Desk Desk

• Leveraging on Infocrossing’s world class Data Center Services capabilities to address

Global IT Outsourcing deals involving management of customer’s strategic IT assets

• Augmentation of

Augmentation of Service Portfolio Service Portfolio

• Augmentation of Managed Services portfolio through addition of Mainframe services
• Transformation from Remote In

Transformation from Remote Infras frastructure Management to tructure Management to IT IT Infrastructure Outsourcing Infrastructure Outsourcing

• Robust onshore front-end to address IT Outsourcing as opposed to only Remote

M t Management

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Compr Comprehensive Service Propositio hensive Service Proposition for Global Total Outsourcing n for Global Total Outsourcing

Shaping the Future: 2. Global

• 2. Global Programs

Programs

Global Programs Global Programs – Transformational Outsourcing ransformational Outsourcing

Program Manageme Program Management nt Consultative Approach IT Ra Rationalizat alization ion Applica ication ion Ra Rationalizatio lization Del Deliver ery Assuranc y Assurance Ch Ch M C i l pp Multi-tower engagements Ch Change ange Management anagement Commercial Management Re-architect Implement and Institutionalize

From To

• Traditional single service depth capacity

silo sale

• Efficiency and technology delivery

focused

• C

bili b d l CIO

• Solution sale , integrating various service lines
• Transformation & business process and business
• utcome focused
• CxO / Sr mgt relationship + reference + advisory /

consulting + capability

• Capability based sale to CIO
• Input linked compensation
• Customer driven change / step

improvements

• Minimal risk management requirement

consulting + capability

• Outcome linked compensation
• Pro active change / continuous improvement (

willingness to cannibalize own business volume)

• Significantly enhanced risk management capability

h b l

Refine solutions Refine solutions and increas and increase focus on focus on large, complex multi-tower engag large, complex multi-tower engagements ments

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g q

• Large change management capability
• Strong joint governance processes

Shaping the Future: 3. B

• 3. Best Shoring

st Shoring

Redef Redefini ning the Delivery Model the Delivery Model

Approac Approach to to Optimi Optimize ze Del Delivery Locations y Locations

• Design ideal mix of onshore, offshore and best shore based on client’s business needs and value hierarchy.
• Provide integrated applications BPO and ITO Service Delivery from Global Service Centers

Provide integrated applications, BPO and ITO Service Delivery from Global Service Centers.

• Provide near-shore capabilities with specialized skills aligned with customers’ business needs from Regional Centers.

Glo Global D Delivery livery F Footprin rint t to Deliver B liver Best st Sh Shorin ring

Fin Finlan land Japa Japan 150 150 USA USA 1450 1450 Cana Canada 200 200 Fin Finlan land 250 250 Po Portug ugal 325 325 Germany Germany Neth Nether erlands lands Chi hina Mexi Mexico 1450 1450 Germany Germany 100 100 Austr Austria Romania Romania 250 250 25 25 Egypt Egypt C a C a 375 375 Philip ilippin pines 150 150 Br Brazil 100 100 125 125 Sweden Sweden 75 75 150 150 UK UK 300 300 France France 125 125 300 300

Leverag Leverage growing global prese growing global presence ce

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Shaping the Future: 4. Integ

• 4. Integrate

ated Consulti Consulting ng

Consulti Consulting as ng as an Enabler an Enabler

GEO GO-TO-MARK GEO GO-TO-MARKET ET

Dedicate Dedicated MEGA EGA / GAMA GAMA account account alignment alignment

BUSINE BUSINESS PERFORMANC SS PERFORMANCE VICES ICES

Dedicated icated MEGA MEGA / GAMA GAMA account account alignment alignment Sin Single s le services ch rvices channel f l for r Ve Vert rticals/ icals/ Acc Accounts/ Analyst unts/ Analysts

IT P PLANNING ANNING & & GOVERNANC VERNANCE ENTERPRISE ARCHITECTURE ENTERPRISE ARCHITECTURE SULTING SER ULTING SERV

Comprehe Comprehensi nsive market-al market-aligne ned advisory d advisory servi services Sin Single le acco ccountability ability for though ght leadership dership

INDUSTRY SERVICES INDUSTRY SERVICES CON CONS

Single Single acco ccountability ability for for thought thought leadership leadership Sin Single s le support rt services gro rvices group

CENTRAL SUPPORT SERVICES CENTRAL SUPPORT SERVICES

Consulting aligned to accelerate growth

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Shaping the Future: 5. Meg

• 5. Mega Partner

Partnershi hip

Partnershi Partnership with p with Technology Leaders Technology Leaders

A Winning Combination:

Enhanced customer value proposition Enhanced customer value proposition Improved Improved customer ustomer penetration enetration and and global lobal go to to market market Improved Improved cust customer

• mer penetration

penetration and and global global go go-to to-market market Co-inn Co-innovation and

• vation and Co-creation of

Co-creation of Solutions Solutions Emer Emergin ing Market Focus Market Focus g g g g Synergistic Partnership Synergistic Partnership ecosys ecosystem for tem for the future the future

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Mega Partners Mega Partnership help us leverage on p help us leverage on untapped busin untapped business potential ss potential with partners with partners

Shaping the Futur Shaping the Future: : 6. PES

• 6. PES as a Service

as a Service line line

Cutting Cutting Edge Edge Product Engineering Services Product Engineering Services

• Product Engineering – a

differentiated capability in Wipro

• Incubated in our

Telecom, Computing & Semiconductor business Semiconductor business

• Leaders in VLSI services
• Addressing new segments through this differentiated capability
• Lot of traction in Aerospace Defense Automotive Healthcare Retail and
• Lot of traction in Aerospace, Defense, Automotive, Healthcare, Retail and

Energy & Utilities

• Electronics is becoming a big proportion of manufacturing and design

spend of customers – Untapped opportunity. Able to address this spend through our PES capabilities

PES addressing multip PES addressing multiple m le market s rket segments gments

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through our PES capabilities

P f P f Hi hli ht Per erformance

• rmance Hi

Highli hlight hts

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Performance of Performance of IT Services IT Services

CAGR of CAGR of 36% 36%

2 611 3,647

Combine Combined IT IT Services USD Mn Services USD Mn

1,458 1,952 2,611

Our Combined IT Products and Services business at $4.3 billion in 2007-08

2004-05 2005-06 2006-07 2007-08

Global Global footprint footprint Listed on NYSE 54 countries 14 500 l O it Partner to Partner to industry leaders industry leaders 743 active global clients as on 31 March 2008 184 Gl b l 500/F 1 000 li ~14,500 employees Onsite across geos 25 near-shore Development Centers Diver Diverse talent pool talent pool Over 97,000 employees 56 i li i 184 Global 500/Fortune 1,000 clients

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56 nationalities One of the most preferred employers for the top class talent (Survey by Hewitt Associates, Fortune Magazine, and The RBL Group, 2007)

IT Services IT Services – Highlights in Q2 09 ighlights in Q2 09

• Revenues at $1,110 Mn

$1,110 Mn significantly ahead of guidance of $1089 Mn for the quarter with sequential growth of 4% (constant currency of 5.6%) and yoy growth of 29.4%

• IT Services added 28 new clients in the quarter
• IT Services added 28 new clients in the quarter.
• Turbo charged growth in India & Middle East business with 48% yoy and 14% sequential (19%

at constant currency).

• Rate Realization and Fixed Price Projects mix improved sequentially by 200 basis points and

100 basis points respectively.

• Gross Utilization improved by 240bps

240bps sequentially, while Net Utilization improved by 260 basis points sequentially.

• The operating margin increased by 10 basis points sequentially through improved

The operating margin increased by 10 basis points sequentially through improved realization, utilization and other operational parameters in spite of the offshore wages increasing from August.

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• Total employee strength in IT Services at 97,552

97,552 employees.

• Won 6 multi-year multi-million dollar deals in the quarter.

IT Services Business

Strength of Strength of De-Risked De-Risked Business Model Business Model

l d l d b f l d l d b f Servic Service line ine distri istribut ution n for

• r Q2 2008-09

Q2 2008-09

TIS 19% Testing 11%

ADM 44%

Vertica Vertical distri istribut ution n for Q2

• r Q2 2008-09

2008-09

Technology, 12% CMSP, 9% Telecom, 10%

PI 11%

PES 6%

BPO 9%

44%

• Differentiated Service lines contributing 56% of

BFSI, 26% Retail & Transportation, 17% E&U, 8% Mfg & HLS, 19%

• Differentiated Service lines contributing 56% of

Revenues

• Total integrated consulting revenues including

those embedded in the verticals constitute 2%

• f Revenue

Transportation, 17%

• Diversified Vertical portfolio, with no vertical

contributing more than 30%

CSMP refers to Communications, Media & Services Provider

Geo distribution for Q2 Geo distribution for Q2 2008-09 2008-09

Japan 3% India & Middle East business 8% Emerging Markets 3%

Reve Revenue nue contribut contribution of n of Top Top custome customers s for Q2 for Q2 2008-09 2008-09

Customer Concentra Customer Concentration (% of ion (% of revenue) revenue)

North America 59% Europe 27%

US ib l h 60% I l di IT

Top customer 2.7% Top 5 11.5% Top 10 20.4%

N ib i h 3%

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• US contributes less than 60%. Including IT

Products, contribution will be 50%

• Strong presence in India / Middle East /

Emerging markets

• No customer contributing more than 3%
• 426 customers with $1 million revenue on

trailing 12 month basis

Performance Highlights IT Services

Platform for Platform for Sustainable Sustainable Growth Growth

1. Tightened qualification process for new No.

• No. of Active Customers
• f Active Customers

% Revenues % Revenues from from New Service Lines New Service Lines accounts 2. High focus on existing accounts resulting in

720

906 928

54.3% 54.7% 53.1%

increase in million dollar revenue customers 3. 16 Clients >$50 Sept-07 June-08 Sept-08 Millio Million dolla n dollar Revenue Revenue Custo Customers Volume Gro Volume Growth% % (Per Person-mo

• months

ths Billed Billed) Sept-07 June-08 Sept-08 Mn Revenue on trailing 12 months basis in Q2 09 (from 9 in Q2 08) 308 404 50 426 124,381 125,872 108,235

7.4% 7.4% 2.2% 2.2% 1.2% 1.2%

39 47 50 Sept-07 June-08 Sept-08 >$20 m >$20 m Run-rate Run-rate >$1 m >$1 m Run-rate Run-rate

For IT Services

June-08 Sept-07 Sept-08 26

Performance Highlights IT Services

Loo Looking Ahea g Ahead

For the Quarter ending December 2008, we expect Revenue from our IT Services business to be approximately $1,121 million*. We expect volume led growth for the quarter.

*based on *based on closing exchange closing exchange rates as rates as of 30

• f 30th

th Sep 08

Sep 08

Clo Closing rates Sep 08 ing rates Sep 08 Averag Average rates (1st Oct to e rates (1st Oct to Nov) Nov) GBP to GBP to USD USD 1.80 .80 1.69 .69 Eur to Eur to USD USD 1.43 .43 1.33 .33 INR to INR to USD USD 46.96 46.96 48.63 48.63 AUD to AUD to USD USD 0.81 .81 0.70 .70

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Performance Highlights

Strength Strength of

• f our Bal
• ur Balance Sheet
• 1. Cash balance as on 30th Sep is Rs. 59.6 billion ($1.3 billion).
• 2. Net cash generated from operating activities in the last 6 months is

Rs.17 billion ($370 million), a yoy growth of 48%.

• 3. CAPEX spend in H1 of Rs.8.5 billion ($180 million). We expect a

d f d d h d h lf d certain degree of moderation in CAPEX spends in the second half due to completion of some facilities.

• 4. On the whole, we are a high margin business with strong ability to
• 4. On the whole, we are a high margin business with strong ability to

generate cash flows.

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Our Non IT busine Our Non IT business ss

Wipro Wipro Consumer

• nsumer Care

are and nd Lighting Lighting (WCCL) (WCCL)

• For the quarter, Wipro Consumer Care and Lighting (including Unza) recorded Revenues of Rs.

5.27 billion, a growth of 42% YoY and PBIT of Rs. 643 million, a growth of 46% YoY.

• Our domestic business Grew 22% yoy. Operating Margin Expands by 30 basis points in

Q2, despite cost pressures.

• Unza continued to see good underlying value growth in Malaysia, Middle East, Indochina and

Indonesia. Wipro Wipro Infrast nfrastruc ructur ure Enginee ngineering (WIN WIN)

• Wipro – Infrastructure Globally among the top 2 in Hydraulic Cylinder Business
• Business in current quarter severely impacted due to slowdown in overall infrastructure spend

Business in current quarter severely impacted due to slowdown in overall infrastructure spend.

• Focus on managing impact of slow down by improving internal efficiencies till demand pickup.

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Tha Thank you for your time k you for your time

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Information contained and transmitted by this presentation is proprietary to Wipro Limited and is intended for use only by the individual or entity to which it is addressed, and contains information that is privileged, confidential or exempt from disclosure under applicable law.