Enterprise Risk Management in Wipro's Software Services Division
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Details
Themes: -
Period : 2003
Organization : Wipro
Pub Date : 2003
Countries : India
Industry : Information Technology
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Case Code : ERMT-001
Case Length : 13 Pages
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Risks related to Mergers, Acquisitions & Strategic Alliances
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Wipro had plans to make investments in complementary businesses, technologies, services or products, or enter into strategic partnerships with parties who could provide access to those assets. There was always the possibility of choosing wrong acquisition candidates. If Wipro acquired another company, it might have difficulty in assimilating that company's personnel, operations, technology and software. In addition, the key personnel of the acquired company might leave. Difficulties might also arise in integrating the acquired products, services or technologies into existing operations. These difficulties could disrupt Wipro's ongoing business, distract its management and increase its expenses. Political RisksIn early 2002, a majority of Wipro's personnel in the US held H-1B visas (721 persons) or L-1 visas (510 persons)3. Although there was no limit to new L-1 petitions, there was a limit to the aggregate number of new H-1B petitions that the US immigration authorities approved in any fiscal year. |
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Wipro might not be able to obtain the H-1B visas necessary to bring critical Indian professionals to the US on an extended basis during years in which this limit had been reached.
If the US immigration laws changed, it would make it more difficult for Wipro to obtain H-1B and L-1 visas for its employees. This would undermine Wipro's ability to compete in the US. In response to the September 2001 terrorist attacks in the US, the US immigration authorities had increased the level of scrutiny in granting visas to people of South-East Asian origin.
South Asia had seen many a civil unrest and hostilities among neighboring countries. For example, tensions between India and Pakistan continued in Kashmir. The potential for such hostilities had recently increased as a result of terrorist attacks in the US. The attack on the Indian parliament in late 2001 was a good example. Events of this nature could have negative impact on the Indian economy and consequently a negative impact on the market for Wipro's ADSs4.
Since 1991, successive Indian governments had pursued economic liberalization policies. Several restrictions on the private sector had been relaxed. Nevertheless, the involvement of the government in the Indian economy remained significant. The incumbent government, formed in October 1999, had announced policies and taken initiatives that supported economic liberalization. These liberalization policies might or might not continue in the future. The rate of economic liberalization could change. Specific laws and policies affecting technology companies, foreign investment, currency exchange and other matters affecting investment in Wipro's securities might change as well. A significant change in India's economic liberalization and deregulation policies might adversely affect business and economic conditions in India.
3] An H-1B visa was a temporary work visa, which allowed the employee to remain in the US while he or she remained an employee of the sponsoring firm. The L-1 visa was an intra-company transfer visa, which only allowed the employee to remain in the US temporarily.
4] American Depository Shares.