How Indian Bill Gates Transitioned from Oil Production to IT Outsourcing

    imageForbes estimates Indian Azim Premji's fortune at $ 15.9 billion. At the initial stage, he got his father’s edible oil company. However, Premji gradually turned it into an IT corporation. In the ranking of the richest Indians, he is second only to the owner of industrial conglomerate Reliance Industries Mukesi Ambani with $ 18.9 billion and the founder of the pharmaceutical giant Sun Pharmaceutical Dilip Shangwi, whose assets reach $ 18 billion.


    Capitalization of Premji IT company - Wipro Limited.- reaches $ 21.45 billion. Wipro was launched as a company producing edible oils in post-war India. In the 1970s and 1980s, Wipro took the first steps in the IT industry. Premji was able to capitalize the demand for programmers, which has grown many times in the world in the 2000s.

    Wipro has become a market leader in software developers and outsourcing. Large companies turn to Wipro for system solutions. In 2014, the Indian company entered into one of the largest contracts in this area: for ten years it will cooperate with the Canadian energy holding ATCO, this transaction will bring Wipro $ 1.2 billion, RBC writes .

    Right off the bat

    Azim Premji was born July 24, 1945 in a wealthy Indian Muslim family. His father, Muhammad Hasham Premji, was one of the leading rice traders in Bombay (now Mumbai). The funds allowed the family to send Azim to Stanford University to study as an engineer. However, he had to interrupt his studies in 1966 - a semester before graduation. Suddenly, the father of Azim died, and he was forced to return to his homeland and stand at the head of the family enterprise.

    Shareholders of Western India Vegetable Products Ltd initially accepted the new chief of the company with hostility. One of them publicly invited the businessman to resign because he is too young to manage the company. But Azim did not follow his "advice."

    Like clockwork

    In the 1970s, Premji was engaged in continuous modernization of the company, relying on highly qualified personnel and new technologies. But the company made a real breakthrough in the late 1970s - early 1980s. In 1978, the American IBM closed its business in India. The government forced the corporation to leave, accusing the monopolist (IBM controlled 80% of the high-tech market) intentionally supplying outdated products to the country.

    This opened up great prospects for Indian companies in the IT market, which turned out to be almost empty. In 1977, Western India Vegetable Products Ltd changed its name to Wipro Ltd.

    The company started with the production of mini-computers (at that time they were comparable in size to a modern refrigerator). Wipro acquired basic computer technology from Sentinel Corp., an American company. Subsequently, the Indians used their own development, created with the help of specialists from the Bangalore Science Institute.

    “We created a first-class team and went our own way, 40% of our employees were engaged in new developments, 40% worked in customer support, and the remaining 20% ​​were engaged in sales," said Premji.

    Business model expansion

    Wipro's mini-computer sales also went well after India loosened protectionist policies and major multinational computer companies (including IBM) returned to the country. Wipro even had an excess of employees. “Instead of firing them, we thought - what if we made a global research laboratory whose services everyone could use for a fee,” recalled Premji. Wipro was in a favorable position: it already had a customer base, in addition, low costs (including salary) made it attractive to potential consumers.

    So Wipro came to the model of classical outsourcing: instead of doing their own computer research, creating and adjusting software and system solutions, companies could contact Wipro and get ready-made or adapted solutions. So, Indian industrial conglomerates Tata , Infosys and Satyam began to cooperate with the company .

    “We began to do unusual things. We began to hire not good technical specialists, but good businessmen who were profitable, ”said Premji. According to him, this is similar to one of the common maxims of Silicon Valley: “It is easier to give a smart person a technical education than to instill a business management engineer in an engineer.”

    In 1989, Wipro with General Electriclaunched the production of medical equipment. Over the past twenty years, the company entered the international computer technology market - according to Fortune, Wipro had over 100 customers among the 500 largest companies in the world.

    Since the beginning of the 2000s, IT-business has brought the company over 80% of profit. However, its oil business is still alive. “It's fun, it can be touched, unlike software. In addition, it is a profitable business. It is growing at 25% annually. Our managers train at it, we hone our marketing, financial specialists at it, ”Premji told Stanford University Press.

    Scrooge McDuck Philanthropist

    The interest of a wide audience in the personality of Premji arose in the early to mid-2000s. It coincided with rapid economic growth in India and the development of IT technology around the world. In 2003, the Bloomberg Businessweek app published an essay on his life. It told how a billionaire gets up at 4:30 in the morning and begins his day with correspondence with Wipro top managers on four continents.

    Premji's working day ends at seven in the evening. In the 2000s, Premji was actively moving between the cities where Wipro offices are open - San Francisco, London, Mumbai.

    Friends and colleagues of Premji speak of him as a demanding, modest, and to the smallest detail economical leader, but this does not apply to charity. In July, he announced that he was bringing the number of Wipro shares owned by the trust fund to 39%.

    The charity fund is developing primary education in India. In 2013, Premji joined the “oath of gift”, which was previously brought among others by billionaires Bill Gates, Michael Bloomberg, Warren Buffett and Richard Branson. All of them made a promise to transfer or bequeath most of their fortune to charity.

    Travels Premji with regular flights, avoiding business jets. He only stops at three-star hotels and personally does his laundry. These are his ideas about saving. “Scrooge McDuck is just Santa Claus compared to Premji,” said Bloomberg Businessweek, one of Wipro's top executives in Bangalore.

    Since the early 2000s, Premji has been investing in the reform of primary and secondary schools in India. His task is to search for effective models of school education and teacher training. In 2011, the Premji Trust announced the creation of 1,300 schools throughout the country - they are free and taught in the local language.

    “In India, more than 50% of the illiterate. Does this hinder the progress of the country? Of course! ”Said the billionaire in 2010.

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