Wipro poised for growth in telecom

Suvradeep Bhattacharjee/Ovum
11 Feb 2010
00:00

Indian IT services company Wipro has managed to underwrite healthy growth with a leaner cost base. The company grew its net profit 21% year-on-year during the December quarter. Technology, Media and Telecoms (TMT) represented more than 26% of Wipro’s overall revenues and played a vital role in achieving this growth.

Growth has come from the ICT sectors of both mature and emerging markets, with major operators electing to outsource their OSS/BSS to Wipro. While fundamentally different economic markets, Wipro finds customer demands for its services are driven by similar factors, such as the pursuit for lower TCO and faster time to market.

Wipro’s relationships with operators such as BT are meanwhile growing from ‘lift-and-shift’ back-office outsourcing to taking over systems integration activities and end-to-end management of major service fulfillment processes. At a recent analyst event, Wipro customer BT Operate spoke candidly about the improvements in its ability to process orders once Wipro took over its Lead to Cash project.

BT Operate outsourced its back-office functions to Wipro in India in 2007 and saw its implementation time fall from 9–10 months to 4–5 months. This outsourcing relationship has resulted in a range of improvements for BT Operate, including better cash flow, reduced cycle time and a better experience for staff on the shop floor.

Cash flow is a pertinent supply chain issue for many service providers. In this case, BT Operate was paying its third-party equipment suppliers before it was receiving payment from its customers. It is considering output-based pricing models to address this time gap, and is looking to Wipro for further improvements.

Interest in Wipro’s Telco in a Box (TIB) offering has been very strong, particularly in emerging markets. Appetite for pre-integrated, quick-to-implement IT stacks are on the rise, and TIB offers average capex savings of 20–40% over traditional custom-made OSS/BSS solutions. This is a compelling proposition for finance departments, which are ready to go to great lengths to achieve a fraction of these cost savings in this difficult economic climate.

But Wipro should not rest on its laurels. This is the time for the company to take its big risks. We see an opportunity for it to invest in research, with the aim of holding multiple patents in areas such as social networking, voice and text analytics. This would involve significant investments and deferred returns, but a game-changing act will be necessary if Wipro intends to challenge the major vendors such as IBM, SAP, Oracle and Amdocs.

Suvradeep Bhattacharjee is a Principal Analyst at Ovum

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