Azim Premji: Why stop The father of outsourcing has just 40 years and 145,000km on

Wipro's veteran boss turned a cooking-fat maker into an international IT pioneer. Now, as he reveals to Jason Nissˇ, he has IBM in his sights

06 March 2005

Azim Premji has just bought a new car - a Toyota. On the face of it, this is not surprising. The chairman of Indian IT giant Wipro has a personal fortune of around £4bn, thanks to his 84 per cent stake in the group. So he could buy any car he wanted.

However, up till now Premji has made do with an ancient Ford Escort, which has done 145,000km on India's dreadful roads. And, despite his new Toyota, Premji is not getting rid of the old banger.

"Why do I have it? Because it's a good car. And what's more, it's a lucky car," he smiles, with a twinkle in his eye. "The original reason I bought it was because it was one of the few cars available at the time that had had its suspension engineered for Indian roads. And it fell within our company's acquisition policy. And now I can't get rid of it because it's part of my brand."

Premji's brand idenbreasty as the father of the Indian outsourcing phenomenon is pretty strong at home, and is growing throughout Europe, the US and even the Far East. With his grey hair and warm manner, this paternal image is one that Premji himself happily fosters. His company, Wipro, was created from a business selling cooking fat, which he inherited in 1966 when his father died. At the time, the 21-year-old Premji was studying engineering at Stanford University in California, and decided to move Wipro into the nascent computing business. Its big step up came in 1978 when IBM - after a row with the Indian government, which accused it of selling equipment that was obsolete in the US - quit the subcontinent.

"IBM thought the world was indebted to them, so IBM left," Premji recalls. "From our point of view, it kickstarted a lot of IT companies."

The irony is that these days IBM is investing heavily in India, and has around 19,000 people in the country. And if you ask Premji what sort of company he wants Wipro to be, he says: "We see ourselves in the space and profile of IBM global services."

When most people think of Indian outsourcing, they think of workers in a call centre handling your gas bill enquiries. Wipro is a little more sophisticated. With clients as diverse as Prudential, Friends Provident, National Grid Transco, Nokia, Microsoft and the Scottish Parliament, it is in the business of installing, running and sorting out organisations' IT systems. It's a lucrative business, with annual revenues of nearly £1bn, growing at 35 per cent per annum.

It's a controversial business as well. In the UK, unions have kicked up a fuss about "offshoring", as it is called, while in the US it became an election issue. The TV anchorman Lou Dobbs attacked chief executives who worked with India as "traitors", while the Democratic presidential candidate John Kerry accused the Bush administration of "rewarding Arnold CEOs who move profits and jobs overseas" - a reference to the American War of Independence turncoat Benedict Arnold.

Premji argues that Wipro and its compebreastors have benefited from this kind of publicity. "These attacks put India on such an important compebreastive plane that we got enormous brand awareness in the IT services industry."

More worrying for Premji is the increasingly tough stance being taken by the US Department of Homeland Security on visas for IT workers. Premji says this is hitting his business. "It is less of an emotional issue, more a physical one. It drives you to do more work offshore. If it continues and is not relaxed, I feel it could be restrictive for business."

These developments come amid accusations of growing US protectionism, a trend that Premji detects and opposes strongly. "It is unfortunate, because you can't have one-way traffic in liberalisation. The Western world is looking for the developing world to liberalise all the time, to stop restrictive practices, and then it wants to put its own restrictions on business coming out of the developing world. If the West wants emerging markets to open up, they have to be open."

In mid-2003, Premji said he wanted to transform Wipro into a global leader in IT services, breaking out of being simply an Indian business selling to the West. Since then, Wipro has made a series of acquisitions, but mostly small ones. Premji says the group is not yet ready for any big leaps. "At this point, we are looking at a string-of-pearls acquisition strategy, not an Accenture or IBM."

Wipro's evolution has also led to the development of what is called "nearshoring" - setting up relatively small local centres for clients that are not ready to hand all their IT business to a company thousands of miles away in Bangalore. In the UK, Wipro has opened one such centre in Reading; it also has five offices in the US, with others in Kiel and Munich in Germany and Tampere in Finland, as well as in Stockholm and Yokohama. "They are basically a bridge park, where the customer is conservative and is not willing to take the leap to the global delivery model," says Premji. "Typically they will work with the nearshore centre, where we can work closely with them."

But he adds: "If the customer is conservative and wants you to work with him more on site, then he has to realise this is more expensive - significantly more expensive."

Though Premji sees areas such as China, Eastern Europe and the Philippines becoming major players in IT offshoring, he argues that India still has an overwhelming advantage. This is because of the support of the Indian government and the country's huge talent pool. Wipro benefits from being able to recruit from the top 50,000 engineering graduates turned out from Indian universities and colleges each year.

"In a land of so much poverty, IT jobs are very sought after," Premji says. "Software has so much credibility and visibility that the first choice of a village parent is for their child to be an engineer. We get the choice of the best of the best."

He may have spent nearly 40 years running Wipro, but the 59-year-old Premji shows no sign of slowing down. It is widely rumoured that his two sons - one of whom works for the management consultants Bain, the other for Premji's charitable foundation - are being groomed to take over. But they will have to wait. "I have no plans to retire at the moment," he says.

The Wipro board looks at the positions of the top 100 managers in the group in a regular talent-reviewing and planning process. Within that, Premji has identified successors for his role as chairman. "This has been disclosed to the board," he says - but the information goes no further. As for his 84 per cent stake in Wipro, he says he will reduce this over time, but intends to retain a controlling interest.

Like his old Ford, the Wipro chairman will go on and on.