Enterprise Risk Management in Wipro's Software Services Division
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Case Details:
Case Code : ERMT-001
Case Length : 12 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available Organization : Wipro
Industry : Information Technology Countries : India
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Introduction
Wipro, one of the most admired IT companies in India was founded in 1945 by
Mohamed Hussain Hasham Premji. Under the leadership of his son Azim Premji, the
Rs 70 million company dealing mainly in vegetable oil fats had grown into a $736
million diversified corporation by 2002. The company was ranked 7th among the
software services companies in the world . Wipro's software division served over
300 global leaders including Boeing, Ericsson, Toshiba, Cisco, Seagate, United
Technologies, Digital, IBM, Microsoft, NCR, and Sony.
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Overview of Major Risks
Wipro believed the following factors could affect its software business:
- The size, timing and profitability of significant projects or product
orders;
- The proportion of services performed at clients'sites as opposed to
offshore facilities;
- Seasonal changes that affected the mix of services provided to clients or
in the relative proportion of services and products;
- Seasonal changes that affected purchasing patterns among consumers of
computer peripherals, personal computers, consumer care and other products;
- The effect of seasonal hiring patterns and the time required to train and
productively utilize new employees;
- Exchange rate fluctuations.
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Wipro believed its business environment was becoming
increasingly competitive. Wipro's competitors included software
companies, large international accounting firms and their consulting
affiliates, systems consulting and integration firms, other
technology companies and in-house information services departments
of clients.
Wipro's competitors were much bigger and had
significantly larger financial, technical and marketing resources
compared to Wipro. Wipro's ability to compete depended on the price
at which competitors offered comparable services, and how
effectively competitors responded to their clients'needs. |
Approximately 59% of Wipro's total operating expenses in the
Global IT Services and Products business, particularly personnel and facilities,
were fixed in advance in a given quarter. As a result, unanticipated variations
in the number and timing of projects or employee utilization rates would have an
impact on operating results. Wipro believed that period-to-period comparisons of
results of operations were not necessarily meaningful and should not be relied
upon as indications of future performance...
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