Financial Daily from THE HINDU group of publications
Saturday, Jun 08, 2002
Financial Daily from THE HINDU group of publications Saturday, Jun 08, 2002 |
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Info-Tech
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Off-shore Development Wipro plans new facilities in S-E Asia, Europe Our Bureau
BANGALORE, June 7 WIPRO has said in its annual report that it intends to establish new development centre facilities outside India (other than the US), including SouthEast Asia and Europe. ``While to date most of our software development facilities are located in India and in the US, we intend to establish new development facilities, including potentially in SouthEast Asia and Europe,'' the report said This would be a step to diversify its activities, and bring down its dependence on the US. Currently, 57 per cent of revenues come from the US. The company, which has software development centres in Bangalore, Chennai, Gurgaon, Hyderabad and Pune, as well as overseas, has not yet made any ``contractual commitments'' and could change its expansion plans, it says. However, setting up new facilities is listed as a risk factor, on grounds that the company's ``limited experience with facilities outside of India''. Such an initiative might cause difficulties in regulation of business globally, export requirements and restrictions, and multiple and possibly overlapping tax structures. Any of these events could harm the company's future performance. Last year (2001-02) has made it more challenging for Wipro to reach its famous Vision for 2004. ``The challenge is in getting our revenues up there among the top 10 companies globally, without diluting our profitability,'' according to Mr Azim Premji, in the annual report. In the highly competitive IT services market, the company expects competition to increase. A lot depends on factors outside its control such as competitors' ability to attract, retain and motivate highly skilled IT services professionals; the price at they offer their services; and the extent to which they can respond to a client's needs, says the company. Other risks this year include the possibility of a wage increase, which may dent the country's competitive advantage and negatively affect Wipro's margins. "We may need to increase the levels of our employee compensation more rapidly than in the past to remain competitive. Unless we are able to continue to increase the efficiency and productivity of our employees, wage increases in the long term may reduce our profit margins".
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