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Global Computer Related Services An Industry Perspective

Global Computer Related Services An Industry Perspective. WTO Cross-Border Supply Symposium Santosh Head, Talent Engagement & Development, Europe Sept 28, 2005. The agenda. 1. Industry Snapshot. 2. Wipro Advantage. Outlook Going Forward & Key Challenges. 3.

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Global Computer Related Services An Industry Perspective

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  1. Global Computer Related Services An Industry Perspective WTO Cross-Border Supply Symposium Santosh Head, Talent Engagement & Development, Europe Sept 28, 2005

  2. The agenda 1 Industry Snapshot 2 Wipro Advantage Outlook Going Forward & Key Challenges 3 Wipro confidential

  3. Landscape of Computer Related (IT) Service –India Advantage… Range of Services • India’s Emergence as IT Sourcing Hub – • Key Drivers • Highly Talented Labor Pool • Cost Arbitrage • Leapfrog increases in Telecom reliability in 90’s • Quality Advantage • Faster Time to Market • 24 Hour Service Window • Enables customers internal work-force to focus on ‘core’ & strategy Application Development Product Engineering Systems Integration ERP Services BPO Independent Testing Infrastructure Management Consulting Services from India touch all three aspects of IT – software, hardware & network Wipro confidential

  4. Translating into >30% Growth for Indian Industry;.. & Corresponding Cost Savings for Customers $ Bn Export of Computer Related Services Geo Distribution Source: NASSCOM, Strategic Review 2005 Wipro confidential

  5. And Yet, India’s True Potential is Far from Realized Share of Offshore in Total IT Services Pie Worldwide Offshore IT Services Export Share by Region, 2003 Total Global IT Spend (2005): $640 Bn Even at 72% Share of total offshore spend, India accounts for less than 6% of Global IT Spend Adopted from IDC, Gartner & Nasscom Estimates Wipro confidential

  6. Even as more & more Global Corporates Adopt Offshore Model… “we continue to expect a robust demand backdrop for offshore services over the next two years which should drive sustained growth of at least 25%-30%. In our opinion, the predominant factor driving growth is the continued adoption of the offshore model, which by our estimates continues to be low. From a client IT budget perspective, our estimates suggest that that the offshore model has penetrated less than 10% of Global 500 (G-500) IT budgets for core application maintenance and development work.” Goldman Sachs, September 2005 Leveraging Offshore Model = Delivering Greater Shareholder Value through Smart Sourcing Wipro confidential

  7. The agenda 1 Industry Snapshot 2 Wipro Advantage Outlook Going Forward & Key Challenges 3 Wipro confidential

  8. Wipro Today Our history – a track record of success • Incorporated in 1945; 60 years track record of growth & profitability • IPO in 1946; Listed at NYSE [WIT] in 2000 • Entered IT business in 1980s; IT Services business launched in 1991 Compounded Growth Rate- First 59 Years: Revenues: 21%, Net Income: 31%, M-Cap: 24% IT Services Foot-Print • Partner to industry leaders • and challengers • 89 global 500 clients • 151 clients among Forbes 2000 Clients 430 421 339 288 226 217 • Diverse talent pool • 23 nationalities • 2000 domain consultants Employees 42 42 29 19 13 10 (thousands) • Sustained growth • CAGR of 42% in last 5 years • Part of NYSE’s TMT (Technology-Media-Telecom) Index, NSE Nifty Index and BSE Sensex Revenues 1595* 1354 934 (millions USD) 625 475 384 Ranked leader by IDC, MetaGroup, Forrester – 2004 Awarded the highest rating in Stakeholder Value Creation & Corporate Governance by ICRA, an Associate of Moody’s Investor Services 2000-01 2001-02 2002-03 2003-04 2004-05 2005-06 *June Quarter Revenues Annualized Wipro confidential

  9. Growth Envisaged Across the Range of Services Indian Export Potential* Wipro’s Global IT Revenue pie 13.5 FY04 CAGR 31% FY09 CAGR 21% 21 6.5 Q1 2005-06 $398.5 M CAGR 42% 5.2 CAGR 23% 3.1 1.7 CAGR 64% 3.6 CAGR 64% 3.6 CAGR 52% 1.1 4.9 3.6 0.3 0.3 0.6 R&D Services 32% Custom App Dev & Maintenance 25% Consulting 5% Testing Services 8% IT Enabled Services / BPO 11% Infrastructure Outsourcing 8% Package Implementation 11% • Source: Mckinsey-NASSCOM Study, NASSCOM, Company estimate ( all figures in USD B) • Percentages below the pie chart represent Wipro’s distribution of Revenues for the Quarter ended June 2005 Constantly incubating newer services Wipro confidential

  10. Manpower Demand-Supply Scenario:Wipro- Preferred IT Employer Track applicant Wipro career portal • One of the top 3 leading recruiters in India • Hired over 15000 employees in last one year • Has a career portal with active applicants of over 300,000. • Recruits from over 160 leadingengineering and management colleges. • One of the most preferred employers for the top class talent in India. 100% Candidate applications 15% Screen / manage Evaluation 4% 0.8% Offer Retain Wipro confidential

  11. Q-cult: Enterprise-wide quality culture for continuous improvement • 1st company outside the USA to receive IEEE award (2003) People • Worlds 1st PCMM Level 5 software company (2001) • 4,000+ employees trained in Six Sigma methodologies • 204 certified black belts and 10 master black belts • Over 700 PMI certified consultants, highest in India • All fresh recruits undergo a 3 day Veloci-Q training • 33% business parameters for the Wipro CEO relate to quality Six Sigma Worlds 1st IT Services Company to use Six Sigma (1999) Technology Process “Wipro clients see additional application maintenance productivity of 10% to 15% from added familiarity with systems; another 10% to 15% raise in productivity after applying Wipro's CMM-based methodology and consolidating redundant programs applications; and yet another 3% to 30% productivity improvement thanks to process automation and tools” Forrester • World’s first SEI CMM/CMMI Level 5 IT services company (1998-2002) • BS7799 • ISO 9000 Wipro confidential

  12. What analysts speak about us “…because of its brand, impressive size, and breadth of capability, Wipro is often selected as a strategic partner by customers seeking large, broad-based capability in their primary offshore outsourcing providers.. “ - Indian Offshore Suppliers: The Market Landscape, Forrester, April, 2004 “An increasing number of offshore players are building greater presence in the United States. Examples include Wipro, with its acquisition of the consulting company formerly known as NerveWire ” - US customer experiences and best practices when going offshore, IDC, May 2004 “Wipro's most recent annual results provide further validation that upscale/upstream services provided by "offshore" firms are now mature ” - No Longer Off-Broadway: Offshore Moving to Center Stage, META Group, May 2004 Wipro confidential

  13. The agenda 1 Industry Snapshot 2 Wipro Advantage Outlook Going Forward & Key Challenges 3 Wipro confidential

  14. India continues to rank as the preferred destination…Likely to benefit disproportionately from Offshoring Drive Ireland Israel Singapore Mexico Cost Hungary Malaysia India Low Cost High Quality Development Philippines India China Russia Quality of Supply(Resource Availability, CMM Level, Cultural Fit) India - the Preferred Offshore Destination India 2008 2004 Philippines Vendor Sophistication(Number, Quality) China CIS Mexico People Sophistication(Number, Cost, Language Skills) Source: Nasscom Source: McKinsey-NASSCOM study Deep Rooted strength for sustained global market-share gain… Wipro confidential

  15. And Yet, There Are Challenges… Movement of Employees • Immigration & Visa Issues • Universal Recognition of Qualifications, Experience and Training • Employment laws enforcing local hiring • Wage Parity Insisted upon • Social Security Tax • Tax Withholding Wipro confidential

  16. And Yet, There Are Challenges… Government Regulation on Business Entity & Vendor Selection • Structure of Entity (Branch, JV, Fully owned Subsidiary etc.) • Restrictions on Foreign Investments & Local equity participations • Remittance of foreign exchange • Staffing & Management conditions • Restricted Access to certain market segments based on the structure • Dual Taxation Wipro confidential

  17. And Yet, There Are Challenges… Other Challenges • Macro environment related • Improving quality of technical education in India • Challenges posed by Urban infrastructure • Preparing for competition from other low cost countries • Business model related • Expanding the breadth of service offering • Managing scale without diluting quality & delivery excellence • Expanding geographies & adapting to local language and cultures • Financial • Adverse currency fluctuations • Managing wage inflation • M&A and their impact on financials Wipro confidential

  18. Conclusion • Offshore Model is a Great Opportunity for Developed nations to achieve Highest Quality services at reasonable prices • Visa & Immigration, Taxation, Protectionist Law and Uniformity in Qualification are some of the key challenges still faced by a service provider like us… • A uniform GATS framework and commitment will provide the right impetus to the growth of Cross-Border IT Services Wipro confidential

  19. Q&A Our promise With utmost respect to Human Values, we promise to serve our customers with Integrity, through Innovative, Value for Money solutions, by Applying Thought, day after day 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. Wipro confidential

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