|(Top) Azim Premji and Infosys boss NR Narayana Murthy
Bangalore, July 22: Corporate rivals don’t usually admire each other but few say so in public. Azim Premji proved an exception, if fleetingly.
The Wipro chairman took an uncharacteristic swipe at Infosys today while reporting the company’s first quarter performance.
“I think our (organisation) structure is superior to the Infosys global delivery model,” he said in reply to a question.
Infosys would not join issue. Its chief financial officer and director, T.V. Mohandas Pai, said: “Our (global delivery) model has increased competitiveness and market share.”
If that does not quite produce the clang of clashing swords, it’s as far as it gets in the corporate arena, particularly in the world of information technology where competition does not go down to the street level, such as in the cola or soap war.
Premji, who reported a 20 per cent net profit growth on a 28 per cent revenue increase, was asked how the new structure put in place after Vivek Paul’s recent resignation as chief executive compared itself to the global delivery model of Infosys.
In the past, Premji has cautiously avoided making comments on Infosys’s policies or growth. As recently as April 2005, he held his silence on Infosys’s decision to train 1,000 Chinese students every year.
Not this time. “Though it is not fair for me to comment on the business models or structures of other IT firms, I think our structure is superior to the Infosys global delivery model. Frankly, I have not fully understood the global delivery model (of Infosys). Also, you must appreciate that Infosys is still struggling in trying to establish a verticalised structure. We are quite clear about what we wanted to do... and are confident that we can do it.”
The global delivery model, pioneered by Infosys in the early ’80s, set off the phenomenon of global outsourcing. It harnesses the educated, technically-skilled and low-cost talent in India and other emerging economies to deliver lower costs, higher quality and productivity.
Under this model, Infosys spreads pieces of work to its development centres across the world to get maximum value.
The “verticalised” structure Premji referred to means carving out separate divisions, a task that was completed in 1999, such as manufacturing, automation, energy, telecom, consultancy and banking, financial services and insurance. Earlier, the heads of these divisions and of outsourcing were reporting to Paul. After his exit, that drew wide coverage in the media which saw it as a loss for Premji, they report to the chairman.
“Verticalisation”, it seems, is the in thing. Pai said: “We have verticalised our structure in November 2003 and it has been working very well as can be seen from the increased contribution of value-added services, enhanced growth rate and multiple clients.”
Observers can make their own judgements how well whose structure is working from the numbers. In 2004-05, Wipro reported a total income of Rs 7326.8 crore and Infosys Rs 6987.16 crore. Net profit for Wipro was Rs 1494.8 crore and for Infosys Rs 1904.38 crore.
Rivalry spilling out in public in the infotech business is not unknown. Sun Microsystems CEO Scott McNealy is famous for bad-mouthing rivals like Bill Gates and Steve Ballmer of Microsoft.
He has called Microsoft “the beast from Redmond (headquarters)” and “the evil empire”.
Ballmer hasn’t been any less vicious. “Sun is just a very dumb company,” he once said.
Such entertainment, alas, hasn’t visited Indian infotech yet.