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Fast-evolving technology landscapes, dynamic economic environments and the emergence of digital business has created a need for enterprises to look for a partner to advise, design and execute their technology transformation and support programs. Large multinational enterprises are engaging global IT Services companies who can deliver high quality service on a global scale and at competitive costs. Over the past two decades, with the emergence of the internet and inexpensive connectivity, the global delivery model of service delivery has risen to become the preferred model in sourcing of IT services, business process services and research and development services. In this period, service providers have gained technological expertise, domain competency and delivery capability by either developing organically or by acquiring companies with these competencies. Large multinational enterprises are engaging global IT Services companies to deliver high quality service on a global scale and at competitive costs. We believe the IT Services industry has significant growth potential.
Global IT service providers offer a range of end to end software development, digital services, IT business solutions, research and development services, technology infrastructure services, business process services, consulting and related support functions. According to the Strategic Review 2018 of NASSCOM (the NASSCOM Report)
14 in FY 2018, IT export revenue, from India was estimated to grow by 7.8% to $126 billion.
In the last few years, enterprises around the world are embracing the reality that digital transforms every aspect of business. Experiences, consumers, entire industries, business models and ways of working are all rapidly and fundamentally changing. Recognition of these trends, combined with the realization that enterprises may not be able keep up with this pace of change, has a profound impact on our clients. This requires new business models, new ways of working and integrated capability across strategy, design and technology.
The key components of the hardware industry are servers, desktops, notebooks and tablet computers, storage devices, peripherals, printers and networking equipment. According to the NASSCOM Report, the hardware segment of the IT-Business Process Management exports from India is estimated to be $15 billion in fiscal year 2018. Emergence of cloud computing technologies is negatively affecting demand for IT products such as servers.
We are one of the leading providers of IT services globally. We combine the business knowledge and industry expertise of our domain specialists and the technical knowledge and implementation skills of our delivery team leveraging our products, platforms, partnerships and solutions in our development centers located around the world.
We develop and integrate innovative solutions that enable our clients to leverage IT to achieve their business objectives at competitive costs. We use our quality processes and global talent pool to deliver time to development advantages, cost savings and productivity improvements.
Our IT Services business provides a range of IT and IT-enabled services which include digital strategy advisory, customer-centric design, technology consulting, IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, global infrastructure services, analytics services, business process services, research and development and hardware and software design to leading enterprises worldwide.
The vision for our business is "To earn our clients trust and maximize the value of their businesses by providing solutions that integrate our deep industry insights, our leading technology and best-in-class execution". We seek to emphasize our core values of being passionate about our clients success, treating each person with respect, being global and responsible, and maintaining unyielding integrity in everything we do.
The markets we serve are undergoing rapid changes due to the pace of developments in technology, innovation in business models and changes in the sourcing strategies of clients. Pressures on cost-competitiveness, an uncertain economic environment and immigration restrictions are causing clients to develop newer business models. On the technology front, digital business has changed the nature of demand for IT services. Development of advanced technologies such as cloud based offerings, big data analytics, mobile applications and the emergence of social media is making technology an integral part of the business model of our clients. In addition to the Chief Information Officer, newer stakeholders such as Chief Marketing Officer, Chief Digital Officer and Chief Risk Officer play a key role in shaping the technology roadmap of our clients. These trends on newer business models, emerging technologies and sourcing patterns provide us with significant growth opportunities.
Our IT Products segment provides a range of third-party IT products, which allows us to offer comprehensive IT system integration services. These products include computing, platforms and storage, networking solutions, enterprise information security, and software products, including databases and operating systems. We have a diverse range of clients, primarily in the India and Middle East markets from small and medium enterprises to large enterprises in all major industries. We continue to focus on being a systems integrator of choice, where we provide IT products as a complement to our IT services offerings rather than sell standalone IT products.
Our customers today are undergoing an unprecedented change and transformation in their businesses led by forces such as Digital, Consumerization of technology, Industry platform disruptions, and competition from new age companies across industries. We at Wipro believe that there are a few key industry trends, which over the next 5-10 years, will fundamentally transform the way technology is bought and consumed by enterprises. These are as-a-service, Intelligent automation, Digital such as Design and user experience, Digital ways of working and shared economy, Cyber-security and Cyber-defense.
In todays market context, our vision and our strategy is about helping our clients navigate to a Digital future while driving hyper-efficiencies in their Run operations through a comprehensive and integrated portfolio of services. We deliver this through industry wrapped process, and technology solutions and services through an open innovation led approach.
Modernize the core the "Run Strategy"
Our "Run" strategy is about "Modernizing the clients core" operations and technology landscape. It includes the following strategies:
a. Business Solutions brings together domain and technology solutions across applications, infrastructure, business process services and analytics to deliver business value to our clients in an as-a-service model.
The Integrated Services and Solutions Group (ISSG) focuses on building integrated offerings across four key business themes: Customer Experience, Business Acceleration, Simplified and Sustained IT and Connected Ecosystem. An example is Insights-as-a-Service, which accelerates Time-to-Insights using the Data Discovery Platform (DDP) powered by advanced visualizations, models, accelerators and algorithms and is offered as Pay-Per-Use.
b. Process & IT Simplification is about demystifying the complex processes and technology landscape of our clients. We deliver this through consolidation, elimination, automation and cloudification to deliver agility and productivity benefits. An example of one of our approaches is the Framework for Application Services Transformation which covers:
New age application development;
App rationalization, optimization and modernization;
Cloud application services;
Newer methodologies such as AgileBase and DevOps; and
Next generation quality assurance, application support and trust management.
Enable the future the "Change Strategy"
Our "Change" strategy is about "Enabling our clients digital future". It includes the following strategies:
a. Digital is about enabling transformation for our clients as they become a digital enterprise. It begins with an advisory and design approach followed by engineering and build initiatives, all of which are deployed in a native cloud environment and delivered in an AgileBase delivery model (DevOps). We co-create and co-innovate with clients by leveraging our Digital pods across the globe and new ways of working.
We have adopted a four m model: method, model, machine and mindset:
Our method applies a five-step design and build methodology through our Designit and Buildit platforms;
Our team of teams model allows us to create multi-disciplinary, collaborative digital teams to scale across client projects;
A custom-built engineering machine, which we call the Digital Rig, creates the environment for rapid prototyping, testing and launching at extreme velocity; and
A specific mindset, which focuses on attracting and retaining the right people and surrounding them with a digital culture, ensures we have the right talent to support our customers.
Our acquisition of Cooper, an award-winning design and business strategy consultancy, strengthens Wipros design and innovation capabilities. Cooper, as a part of Digital, expands our reach in North America and adds significant capabilities in professional education. We are seeing significant synergy across our integrated digital and design capabilities.
Through March 31, 2018, we have trained over 90,000 professionals in digital technologies. We are expanding our innovation labs, or digital pods, to offer enhanced transformation services to global customers. Currently we have 18 Digital Pods spread across the globe and are continuing to expand, introducing two new pods this year in Edinburgh, Scotland and Mountain View, California.
Our approach of creating a consulting ecosystem has seen success. It continues to focus on delivering growth and improving quality for our clients, thereby delivering impact to us through growing business relationships and creating integrated deals.
b. Big Bets: A key element of executing the Wipro Strategy is the approach to prioritization on high potential growth areas. Towards this, we have focused on Big Bets at a company level where we are making disproportionate allocation of investments to drive differentiated focus and growth. Examples of these include Cloud, Cyber and Digital.
Four core strategies
Underlying the Run and Change strategies, are four key strategies which apply equally to the Modernize the core and Enable the future strategy. These are:
a. Non-Linearity is about driving differentiated offerings leveraging IP, platforms, solutions and innovative commercial constructs to realize the as-a-service need of our clients, thus allowing them to have a variable cost structure in a risk reward model (e.g., transaction-based and outcome-based pricing).
We have invested significantly to drive non-linearity through investments in IP in the form of platforms acquired through acquisition of Gallagher Financial Systems Inc., Opus Capital Markets Consultants, LLC, HPS and ProMAX Systems, Inc. and organically developed platforms, frameworks and solutions such as Wipro HOLMES.
As part of this effort, we have increased our patent filings significantly in the past few years and have developed a business model that emphasizes upon our patent portfolio and growth in our inventor base within the organization. Industry analysts and rating organizations recognize the quality of our intellectual property (IP) and we intend to continue developing high quality inventions. Many of our patents are in emerging technology areas and serve as a foundation for many of our new technology platforms, including AI, IoT, connected devices, and autonomous vehicles.
b. Open Innovation is about leveraging the innovation ecosystem through following vehicles:
Wipro Ventures: The strategic investment arm of Wipro, is a $100 million fund that invests in early to mid-stage cutting edge startups. As of March 31, 2018, we have invested in and partnered with 11 startups in the following areas AI (Avaamo, Inc., Vicarious FPC, Inc.), Business Commerce (Tradeshift, Inc.), Cybersecurity (Demisto, Inc., IntSights Cyber Intelligence Ltd., Vectra Networks, Inc.), Data Management (Imanis Data, Inc.), Industrial IoT (Altizon Systems Private Ltd.), Fraud & Risk Mitigation (Emailage Corp.) and Testing Automation (HeadSpin, Inc., Tricentis GmbH). In addition to direct investments in emerging startups, Wipro Ventures has invested in two enterprise-focused venture funds: TLV Partners and Work-Bench Ventures.
Partner Ecosystem: We have established a dedicated unit to drive and deepen our partner ecosystem to drive creation of new markets and solutions, expand in key verticals and geographies, drive innovation in our offerings and drive go-to-market outcomes. We have sub-divided the partner ecosystem into the following categories:
Strategic Partners: Multiple product lines with significant business volume and potential
Growth Partners: Single practice alliances
Niche Partners: Niche products with differentiated solutions
Academia Partners: Collaborating with academic institutions and associations in the United States, Europe, Israel and India in the fields of computer and electrical engineering to promote innovative technology research and capability
Horizon Program: The goal of the horizon program is to drive organic incubation in emerging areas covering products, platforms, solutions and capabilities. In order to achieve this objective, we are investing in key areas such as AI, AR/VR, IoT, cloud computing, Software-Defined Everything, autonomous vehicles, cybersecurity, digital experience, digital marketing and commerce, and Industry 4.0. During the year ended March 31, 2018, we funded 19 projects as part of this program.
Crowdsourcing Topcoder: A community of more than one million developers, designers and data scientists with offerings focused around analytics, Connected Customer Experience (CCX), quality assurance, enterprise transformation, community experts, self-service and hybrid expert networks.
M&A: Acquisitions are key enablers for us and drive our capability to build industry domain, focus on key strategic areas, strengthen our presence in emerging technology areas, including Digital, and increase market footprint in newer markets. We focus on opportunities where we can further develop our domain expertise, specific skill sets and our global delivery model to maximize service and product enhancements and higher margins. We also evaluate business units to determine if divestments would maximize our focus on key priorities.
Acquisitions consummated during the year ended March 31, 2018 include InfoSERVER and Cooper. InfoSERVER is a Brazilian IT Services company that predominantly caters to the Banking, Financial Services and Insurance market in Brazil. Over the last 21 years, InfoSERVER has been recognized for its excellence in delivery and specialized knowledge of local banking domain and processes. InfoSERVER is headquartered in So Paulo, Brazil. With this acquisition, Wipro and InfoSERVER will be able to deliver a full suite of integrated IT services across Digital, consulting, and business process services to four of the top five banks in Brazil. Cooper is an award-winning design and business strategy consultancy. Cooper will further strengthen design and innovation capabilities and expand reach in North America besides adding capabilities in professional design education. Increasingly, global enterprise clients recognize that design is a critical part of any digital or business transformation. By adding Coopers skills and expertise, Wipro will be better positioned to support its clients digital programs.
We have also made minority investments in Denim Group, Ltd., a leading independent application security firm, serving as a trusted advisor to customers on matters of application risk and security and Harte Hanks, Inc., a U.S.A based global marketing services company specializing in omni-channel marketing solutions including consulting, strategic assessment, data, analytics, digital, social, mobile, print, direct mail and contact center. Also, during the year ended March 31, 2018, we have increased our ownership in Drivestream Inc. from 19% to 43.7%.
Further, we have entered into an agreement with Ensono Holdings, LLC (Ensono), a company engaged in providing complete mainframe and Hybrid IT services to mid to large enterprises across industries, to acquire 10.2% stake in the entity. Ensono has a right to repurchase up to an aggregate of 5.5% of the above units if Wipro is not able to achieve certain joint business milestones agreed between the parties.
c. Localization: We are focused on acting local and thinking global. The core components of this strategy are local hiring, campus hiring, setting up local delivery centers, establishing digital pods and making strategic investments through acquisitions. We are driving localization initiatives in our key geographies such as the United States, United Kingdom, Continental Europe, Canada, Latin America, Africa, Asia Pacific and the Middle East. We believe that commitment to these geographies is important in growing our business. We expect an increase in the percentage of our global workforce comprised of local employees and consultants, and diversity is a key strategic priority as part of our globalization efforts.
d. Hyper-Automation: is about driving efficiency in business process and technology operations through deployment of robotics and cognitive automation, through Wipro HOLMES. Wipro HOLMES helps enterprises hyper-automate processes and offload specific cognitive tasks to the artificial intelligence (AI) platform to gain agility, enhanced user experience and cost efficiencies. Wipro HOLMES helps businesses adopt a hybrid mode of operation (i.e., pairing automation and human effort), which is achieved through a combination of virtual agents, predictive systems, cognitive process automation, visual computing applications, knowledge virtualization and AI reasoning. We also offer automation advisory services to help clients in their journey of AI/Automation through designing Automation roadmap and setting up Centers of Excellence for automation initiatives. In addition to the Wipro HOLMES platform, we are building a collaboration ecosystem for automation, working with partners such as Robotics Process Automation providers, startups, and established partners. Over 3,000 employees have been trained and certified on AI/ML.
Commitment to Sustainability
a. Driving differentiation and leadership through our people
We believe that our employees are the backbone of our organization and a key differentiator in the global market for IT services. We are committed to recruiting and training highly skilled employees, service providers and leaders. Our aim is to build a best in class global, diverse leadership team, hire locally and provide our employees with attractive opportunities for learning, career enhancement and growth. We continue to design and implement processes and programs to foster people development, leadership development and skill enhancements among our global team. It is our aim to be a global company that not only serves clients but also empowers our employees worldwide to increase their expertise beyond their industry peers.
b. Acting Responsibly
At Wipro, we think it is critical for businesses to engage with the multiple social and ecological challenges that face us. We have classified eight sustainability mega forces that have an implication on our business. Such engagement must be deep, meaningful and formed on the bedrock of long term commitment; and that is the only way by which real change can happen on the ground. This is also reflective of the fact that such an approach serves both, enlightened business interest and social good.
c. Environmental Sustainability
As part of Wipros deep commitment to ecological sustainability, we have been involved with multiple environment related programs, both within our business ecosystem as well as in the civic and social sectors outside. The four pillars of our ecological sustainability program are:
Carbon Mitigation and Energy Efficiency
Waste and Pollution Management and
d. Community Initiative
At Wipro, we think that it is crucial to engage with proximate communities wherever we have significant presence. This is a reaffirmation of our belief that at its core, social responsibility and sustainability must transcend boundaries whether organizational or national. Wipro runs the following community programs in the various geographies we operate in.
Wipro Applying Thought in Schools
Wipro Science Education Fellowships
Wipro South Africa Initiatives