Global Computer Related Services

An Industry Perspective
WTO Cross-Border Supply Symposium Santosh
Head, Talent Engagement & Development, Europe Sept 28, 2005

The agenda

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2 3

Industry Snapshot

Wipro Advantage

Outlook Going Forward & Key Challenges

Wipro confidential

Landscape of Computer Related (IT) Service India Advantage

Range of Services Application Development Product Engineering

Indias Emergence as IT Sourcing Hub Key Drivers Highly Talented Labor Pool Cost Arbitrage Leapfrog increases in Telecom reliability in 90s Quality Advantage Faster Time to Market 24 Hour Service Window Enables customers internal work-force to focus on core & strategy

Systems Integration

ERP Services

BPO

Independent Testing

Infrastructure Management

Consulting

Services from India touch all three aspects of IT software, hardware & network

Wipro confidential

Translating into >30% Growth for Indian Industry; .. & Corresponding Cost Savings for Customers
$ Bn
Europe, 22.6% Japan, 3.0% Africa, 0.6%
15

25

Export of Computer Related Services

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Geo Distribution

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17.2

Americas, 69.4%

Others, 4.4%

12.8 9.6 7.7 6.2

10

4 2.6

0 98-99 99-00 00-01 01 - 02 02- 03 03- 04 '04-05 05-06E

Source: NASSCOM, Strategic Review 2005 Wipro confidential

And Yet, Indias True Potential is Far from Realized

Share of Offshore in Total IT Services Pie Total Global IT Offshore, Spend (2005): $640 Bn 7.5% Worldwide Offshore IT Services Export Share by Region, 2003
Latin America, 2% China, 7% Eastern Europe, 8% Middle East & Africa, 2% Others, 1%

NonOffshore, 96.6

Philippines, 8%

India, 72%

Even at 72% Share of total offshore spend, India accounts for less than 6% of Global IT Spend

Adopted from IDC, Gartner & Nasscom Estimates Wipro confidential

Even as more & more Global Corporates Adopt Offshore Model

we continue to expect a robust demand backdrop for offshore services over the next two years which should drive sustained growth of at least 25%-30%. In our opinion, the predominant factor driving growth is the continued adoption of the offshore model, which by our estimates continues to be low. From a client IT budget perspective, our estimates suggest that that the offshore model has penetrated less than 10% of Global 500 (G-500) IT budgets for core application maintenance and development work.
Goldman Sachs, September 2005

Leveraging Offshore Model = Delivering Greater Shareholder Value through Smart Sourcing

Wipro confidential

The agenda

1
2 3

Industry Snapshot

Wipro Advantage

Outlook Going Forward & Key Challenges

Wipro confidential

Wipro Today
Our history a track record of success
Incorporated in 1945; 60 years track record of growth & profitability IPO in 1946; Listed at NYSE [WIT] in 2000 Entered IT business in 1980s; IT Services business launched in 1991
Compounded Growth Rate- First 59 Years: Revenues: 21%, Net Income: 31%, M-Cap: 24%

IT Services Foot-Print
421

430

Clients

217

226

288

339

Partner to industry leaders and challengers

89 global 500 clients 151 clients among Forbes 2000

Diverse talent pool

Employees

10

13

19

29

42

42
(thousan ds)

23 nationalities 2000 domain consultants

Revenues

384
2000-01

475
2001-02

625
2002-03

934

1354

CAGR of 42% in last 5 years (millions USD) Part of NYSEs TMT (TechnologyMedia-Telecom) Index, NSE Nifty Index and BSE Sensex

1595*

Sustained growth

2003-04

2004-05

2005-06

*June Quarter Revenues Annualized

Ranked leader by IDC, MetaGroup, Forrester 2004 Awarded the highest rating in Stakeholder Value Creation & Corporate Governance by ICRA, Wipro confidential an Associate of Moodys Investor Services

Growth Envisaged Across the Range of Services

Wipros Global IT Revenue pie

13.5
CAGR 21%

Indian Export Potential*

FY04 FY09

CAGR 31%

Q1 2005-06 $398.5 M

CAGR 42%

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6.5

5.2
CAGR 23% CAGR 64% 3.6 CAGR 64% 3.6 CAGR 52%

3.1 1.7 1.1

0.3

0.3

4.9 3.6 0.6

Custom App Dev & Maintenance 25%

R&D Services 32% Consulting 5% Testing Services 8%

Infrastructure Outsourcing 8%

IT Enabled Package Implementation Services / BPO 11% 11%

Source: Mckinsey-NASSCOM Study, NASSCOM, Company estimate ( all figures in USD B) Percentages below the pie chart represent Wipros distribution of Revenues for the Quarter ended June 2005

Constantly incubating newer services

Wipro confidential

Manpower Demand-Supply Scenario: Wipro- Preferred IT Employer

2001-02 2002-03 2003-04 2004-05 2005-06 2006-07 2007-08 2008-09 Total Manpower in IT Services Additional Manpower Required in IT Services Supply of IT Engineering Degree Graduates Manpower Excess Supply of IT Engineering Graduates (Degree & Diploma) Manpower Excess Total Supply Non IT + Graduates Entering IT Manpower Excess 416 56 71 15 115 59 67 126 490 74 81 7 127 53 74 127 588 98 95 -3 141 43 70 113 697 109 100 -9 165 56 70 126 839 142 111 -31 181 39 70 109 1010 171 117 -54 193 22 70 92 1215 205 123 -82 203 -2 70 68 1462 247 129 -118 213 -34 70 36

One of the top 3 leading recruiters in India Hired over 15000 employees in last one year Has a career portal with active applicants of over 300,000. Recruits from over 160 leading engineering and management colleges. One of the most preferred employers for the top class talent in India.

Wipro career portal

Candidate applications 100% 15% 4%

Track applicant

Screen / manage

Evaluation Offer

0.8%

Retain

Wipro confidential

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Q-cult: Enterprise-wide quality culture for continuous improvement

1st company

People

outside the USA to receive IEEE award (2003)

Worlds 1st PCMM Level 5 software company (2001)

4,000+ employees trained in Six Sigma methodologies 204 certified black belts and 10 master black belts Over 700 PMI certified consultants, highest in India

Pr oc es s

Worlds 1st IT Services Company to use Six Sigma (1999)

Six Sigm a

All fresh recruits undergo a 3 day Veloci-Q training 33% business parameters for the Wipro CEO relate to quality

no ch Te g lo y

Worlds first SEI CMM/CMMI Level 5 IT services company (1998-2002) BS7799 ISO 9000

Wipro clients see additional application maintenance productivity of 10% to 15% from added familiarity with systems; another 10% to 15% raise in productivity after applying Wipro's CMM-based methodology and consolidating redundant programs applications; and yet another 3% to 30% productivity improvement thanks to process automation and tools Forrester 11

Wipro confidential

What analysts speak about us

because of its brand, impressive size, and breadth of capability, Wipro is often selected as a strategic partner by customers seeking large, broad-based capability in their primary offshore outsourcing providers. .
- Indian Offshore Suppliers: The Market Landscape, Forrester, April, 2004

An increasing number of offshore players are building greater presence in the United States. Examples include Wipro, with its acquisition of the consulting company formerly known as NerveWire
- US customer experiences and best practices when going offshore, IDC, May 2004

Wipro's most recent annual results provide further validation that upscale/upstream services provided by "offshore" firms are now mature
- No Longer Off-Broadway: Offshore Moving to Center Stage, META Group, May 2004

Wipro confidential

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The agenda

1
2 3

Industry Snapshot

Wipro Advantage

Outlook Going Forward & Key Challenges

Wipro confidential

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India continues to rank as the preferred destination Likely to benefit disproportionately from Offshoring Drive
India - the Preferred Offshore Destination
Vendor Sophistication (Number, Quality)
India

Philippines

Total India

2004
17.2 12.6 1.9

39.6

2008
48.0 20.9

94.0

China CIS Mexico

Canada China

5.0 6.4

People Sophistication
(Number, Cost, Language Skills)

Eastern Europe 1.8 Philippines 0.9

Ireland

Israel Singapore

Mexico 0.5 Others

India Low Cost High Quality Development

2.6

Cost

Mexico Hungary

4.7

1.1 10.0

Malaysia Philippines India

China Russia

Quality of Supply
(Resource Availability, CMM Level, Cultural Fit)
Source: McKinsey-NASSCOM study

Source: Nasscom

Deep Rooted strength for sustained global market-share gain

Wipro confidential

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And Yet, There Are Challenges

Movement of Employees Immigration & Visa Issues Universal Recognition of Qualifications, Experience and Training Employment laws enforcing local hiring Wage Parity Insisted upon Social Security Tax Tax Withholding

Wipro confidential

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And Yet, There Are Challenges

Government Regulation on Business Entity & Vendor Selection Structure of Entity (Branch, JV, Fully owned Subsidiary etc.) Restrictions on Foreign Investments & Local equity participations Remittance of foreign exchange Staffing & Management conditions Restricted Access to certain market segments based on the structure Dual Taxation

Wipro confidential

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And Yet, There Are Challenges

Other Challenges
Macro environment related Improving quality of technical education in India Challenges posed by Urban infrastructure Preparing for competition from other low cost countries

Business model related Expanding the breadth of service offering Managing scale without diluting quality & delivery excellence Expanding geographies & adapting to local language and cultures

Financial Adverse currency fluctuations Managing wage inflation M&A and their impact on financials
Wipro confidential

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Conclusion

Offshore Model is a Great Opportunity for Developed nations to achieve Highest Quality services at reasonable prices Visa & Immigration, Taxation, Protectionist Law and Uniformity in Qualification are some of the key challenges still faced by a service provider like us A uniform GATS framework and commitment will provide the right impetus to the growth of Cross-Border IT Services

Wipro confidential

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Q&A

Our promise
With utmost respect to Human Values, we promise to serve our customers with Integrity, through Innovative, Value for Money solutions, by Applying Thought, day after day

Information contained and transmitted by this presentation is proprietary to Wipro Limited and is intended for use only by the individual or entity to which it is addressed, and contains information that is privileged, confidential or exempt from disclosure under applicable law. Wipro confidential

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