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The Muse

May 04, 2006

Premji and Aron - II

In one of my previous posts, I had talked about an interview between Premji and Ravi Aron of Wharton. This is the concluding part of that session. I must say that it is no wonder that Wipro is one of India's most successful brands. He is extremelely knowledgeable and current, and his replies are incisive, thoughtful and very cogent.

I had remarked earlier that one of India's challenges would be to transition from a service oriented model to a product oriented one. Premji and Aron discuss the very same issue in this concluding session.

Excerpts:

"...one reason why India has focused on services is that products require an intimate, ongoing understanding of the customer. This requires a strong localized presence in countries where these products are going to be used, which has not been India's global delivery model. Second, most product companies have to invest a lot of resources in brand-building and marketing and you need to have the scale to do this. Many Indian companies could not afford to do this. Third, the service business has provided clear-cut, strong positioning, good profitability and tremendous growth for Indian companies. So these companies chose a path where it was easier to succeed rather than one that was more difficult."

"...let us look at the way our business is distributed. About 75% of our people work in India or India-equivalents, by which I mean low-cost centers. In contrast, if IBM has 50,000 or even 80,000 people in Asia, that is just about 20% to 25% of its total employee base. This is a distinct cost advantage that we will continue to enjoy. Even if companies like IBM move to global delivery models, it is unlikely that their employee base in low-cost regions will go beyond 30% to 35% of their total headcount. This is because their execution model -- which is primarily based on consulting -- does not permit them to do that. The kind of work they do requires a much deeper onsite presence..."


Aron is, of course, not the everyday interviewer. His questions are on the money...

"...the proposition they (consulting companies) make to the customer goes as follows: "We will come in and diagnose the problem," which is management consulting. "We will find a solution," which is management and process consulting. "We will design, develop and maintain the solution," which is technology. And finally, "We will operate the solution," which is BPO. So the promise to the customer runs the gamut from diagnostics through formulation, design, development, maintenance and operation..."

"...consultants earn about six to eight times what the technology delivery people do. As a result, they (a company Aron consults with) are trying not to have a two-caste system form within the company, where higher-earning, suit-wearing, laptop-toting, airport-hopping consultants lord it over the geeks who write code in C-plus-plus and Java. This is proving to be a much bigger challenge than expected... "

Get the whole interview at K@W here

9 Comments:

  • Very informative post Ram. I read the full interview at K@W. Very insightful and he knows the business environment. No wonder Wipro is doing great.

    By Blogger Alexis Leon, at 10:58 PM  

  • Thankx fr sharing it, buddy! Good read. :)

    By Blogger Has to be me, at 6:16 AM  

  • Ram, thanks for posting the interview link...

    Btw, as a continuation to the earlier post on premji, did you think about 5 indian products at the global level?... just curious :-)

    By Blogger NaiKutti, at 7:22 AM  

  • Deeply informative...Apart from the software and service industry when I see the manufacturing part in India, I notice tht the suppy chain management is not very efficient and quick....some lag there...

    The point about consultants n laptops n airport hopping etc is so real...It was like someone showing us the mirror! :)

    By Blogger SCRIBBLEZ TO WAKEUP, at 7:27 AM  

  • Ram,
    Thank u for ur kind words and the offer to help. Please do let me know if the money has been transferred. Thanks again.

    By Blogger Neha, at 11:53 PM  

  • Hi Alex, yes, the interview was very insightful. You know, its amazing what a proper interview can do in terms of getting one's persona across. I wonder why politicians don't do it better?

    Thanks hastobeme, all credits to Aron and the K&W guys, me just the poor messenger.:) [in case Dr.Aron ever reads this...yeah right!]

    Karthik, I'm on it. Its taking this long for me and my network to come up with products other than online poker! hehehehe. You're going to hear from me on this...

    Thanks Scribblez, right on about the manufacturing issue. Lol re: the consultants...true na?

    Hey Neha, I think the money went through into the ICICI account. I'll spread the word soon. The only thanks needed is that you continue your efforts and keep us posted on Thamarai and his family.

    Ram

    By Blogger Ram, at 8:50 PM  

  • Hi Ram,
    Very informative.....Thatnx for sharing the link too...Long time no see!
    Regards,
    Marutham

    By Blogger Marutham, at 12:17 PM  

  • hmmm..interesting post buddy.
    good interview and details.

    By Blogger Maya Cassis, at 7:16 PM  

  • Thanks Marutham, yeah long time.

    Hey Maya. Danke...

    BTW, I have enabled word verification again as people started telling me where to go to get a college degree and so on.

    By Blogger Ram, at 1:47 PM  

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