IT giant, Wipro to establish major base in SA, Africa. SA top 5 global focus area

As the global race for the world's last untapped economy is underway, India's Wipro has set its sights on establishing itself in South Africa, looking at it as a spring-board into Africa. The international IT services and business processes outsourcing leader has been known for bringing much-needed skills into South Africa, as well as exporting skills out of the country, and now it is on the brink of tapping into the market, in a big way. This inspiring, insightful interview with Wipro's chairman, Azim Premji and CEO, TK Kurien sheds a new light on the possibilities that the African economy and growth story have to offer. With companies like Wipro backing its growth, can the next great frontier fail? – LF

ALEC HOGG: We're talking about business process outsourcing, one of the global giants, Wipro, has put South Africa in its top five global focus areas. With us in the studio, we we have in the country and in the studio, both the Chairman and the Chief Executive of Wipro, Azim Premji is the Chairman and TK Kurien, Chief Executive of the Wipro Company, a substantial operation. Azim I've got to ask you, clearly, for the two of you to be in South Africa at the same time, there must be something very hot that you are working on, in this country. It is not often to get people of your calibre here.

AZIM PREMJI: Not often, this is my first visit here.

ALEC HOGG: Even more so.

AZIM PREMJI: Yes, we just decided to travel together.

ALEC HOGG: What are you working on?

AZIM PREMJI: No, we had a breakfast with about 25 CIO's this morning and we had a dinner with about 30 CO's yesterday evening, so it was too much of an occasion, not to have Kurien and me present for both of them.

ALEC HOGG: But the opportunities in South Africa, many South African companies are globalising, externalising, or leaving. You guys are looking at it as one of your top-five focus areas. What is it that's appealing to you?

AZIM PREMJI: Well, I think it is, relatively under penetrated, visible global partnering, and that's where we see the major opportunity and India has a very low share of it.

GUGULETHU MFUPHI: Is the legislative environment playing an influence on that?

AZIM PREMJI: No, I think it is just that it didn't come on the screen of people and put in enough priority. You've got to put in priorities to develop any market.

ALEC HOGG: But it's interesting, TK, we had the Minister of Trade and Industry on the programme last week and he was saying 'we have R60bn worth of investment into South Africa, from foreign companies in the pipeline'. Yet, South African companies are going crazy with the legislation and the policy direction in this country. What is it that you see, maybe that the locals don't?

TK KURIEN: Here are a couple of things that I think we must be very clear about. Number one is, if you look at South Africa, it's a fabulous market to be in, not just for South Africa but it's the springboard for the rest of Africa. If you had to win in one market this would be the market that you would start winning in, and you can use that base that you created here, to grow into other markets, I think that's really the philosophy. If you look at us and I heard when you started the introduction, talking about taking jobs to India.

ALEC HOGG: Sure.

TK KURIEN: That's not what we're doing here.

ALEC HOGG: What are you doing here?

TK KURIEN: Our strategy here is pretty clear. What we really want to do here is create a local base and use that local base to move into the rest of Africa. Really, from a talent perspective, what we're doing is that over the past three years we've been here, we've developed local talent. Today we have about 500 people here, locally. Roughly, about 40 percent of them are local. We run an internship program here. We expect to get almost a 1000 people trained, under the internship program. We've already finished 300. We've absorbed about 70 percent of them, so really for us the focus is double-up South Africa, as a base for the rest of Africa. It is very difficult to get people from India to come into Africa and work here. It is much easier for us to develop a base here, which we can leverage for the rest of Africa. I think that is really the strategy.

ALEC HOGG: So you are not looking at the South African economy as a source of business for your Indian operations. It is more a question of establishing a base here, which would be a business opportunity for the rest of the Continent?

TK KURIEN: Absolutely, that's right.

ALEC HOGG: It's a very different approach to what you do in the US.

TK KURIEN: It's very different, exactly; it's very different. Even in the US today. You see, what's happening with the technology space, we are in BPO, but we are also very big in IT. BPO is a small component of our overall business. But what's happening with technology today, is the way technology is going you need to have a very strong interface with the customer, to understand the business process. The technology works, in terms of running a large factory, you can do it from anywhere in the world. India happens to be a 'low-cost base'. There'll be other 'low-cost bases' that will come up as we go along.

ALEC HOGG: But this is not a 'low-cost base', South Africa.

TK KURIEN: You'd be surprised. You know, low-cost is not the unit cost of an employee. It is the unit cost plus efficiency that comes in and if you can't get a guy from India to travel to Africa, to be in front of the customer, say in Nigeria. You can get a person in South Africa faster to Nigeria. The value of speed is huge for us, in our business. If you lose that then we lose competitive advantage.

GUGULETHU MFUPHI: Azim, just on that, how important is that skills development? You, yourself have an organisation where you help educate people in India. Are we seeing more of that skills-transfer taking place?

AZIM PREMJI: Without question. It will both at the primary education level, where we will be discharging social responsibilities. Plus it will be an internship program, which we are scaling up. Plus it will be our participation with engineering colleges here, like we do in India, in terms of upgrading the curriculum, training the teachers on the most modern technologies, we have trained 30.000 teachers in India in the past three-years.

ALEC HOGG: I think we need that. I don't know if you saw the latest World Economic Forum Global Competitiveness Report.

AZIM PREMJI: Absolutely you need that.

ALEC HOGG: South Africa had ranked 144 out of 144 in the education system, and in particularly in science and math. Have you identified any colleges that you can assist?

AZIM PREMJI: We have but we are not in the position to disclose them at this meeting.

ALEC HOGG: At this point?

AZIM PREMJI: Yes, at this point, because we are still a 'work in progress' on that.

ALEC HOGG: But I'm still getting back to this, to have both of you here at the same time. There must be something imminent.

AZIM PREMJI: Not really.

TK KURIEN: There is no deal on the table. Really, what we do is when we develop markets, one of the fundament philosophy that we use there is that when you have to go to the market as a leader, and understand the market. This is my sixth visit to South Africa, over the past three years and this is Azim's first, so it is only a coincidence that we are here together. There is nothing else.

ALEC HOGG: Why do you think that the Indian companies that have come to South Africa have got such a mixed track record? Tata came in with; Ratan Tata was here, I remember having lunch with him. He was very excited about it. Tata hasn't done a whole lot in this country, certainly not living up to the promises, and there've been a number of encouraging or promising starts but the Indian companies haven't really cracked it yet.

TK KURIEN: I think there are a couple of reasons. Number one is that this is not a base where you can move jobs out and get things done here. It doesn't work that way. The social environment doesn't support it. The fact that you have unemployment running at 30 percent doesn't help it, so from a technology perspective you can't develop South Africa, as a base to take away work from here, back into India. It doesn't work, so it requires a very different model. If you are using it as a springboard for Africa, then that's a different equation altogether. Now, time will tell, three years from now, I can tell you whether we've succeeded or not. Right now it is 'effort time', so it's a little too early to say that we don't know whether it's going to succeed or not but we want to try our damndest to make sure that it does.

ALEC HOGG: Maybe they tried the wrong strategy and you are doing it well.

TK KURIEN: I don't know the answer to that.

ALEC HOGG: You are doing a different strategy.

TK KURIEN: We are doing a different strategy, whether we're going to succeed in the end or not, we don't know right now, so from our perspective, put in what you can in terms of effort.

ALEC HOGG: You are too smart not to succeed, TK.

GUGULETHU MFUPHI: Exactly, but if SA is your springboard then where else are you looking on the rest of the Continent?

AZIM PREMJI: In Africa, Uganda, Kenya, and Nigeria. Nigeria is big but Nigeria has got its own challenges.

ALEC HOGG: It's a much nicer place to live in, in South Africa than any of those countries that's for sure.

AZIM PREMJI: Sorry?

ALEC HOGG: Much nicer to live. It's a more pleasant working environment.

AZIM PREMJI: Without question.

ALEC HOGG: And you can, I think presumably get people from India to come and stay in Johannesburg, whereas Lagos, maybe not so easy.

AZIM PREMJI: Yes.

TK KURIEN: You see again, remember that South Africa has got one thing. It can, at least publically, I think it beats itself up much more than it should. Some of our best Program Managers come from South Africa and if you look at Program Management talent across the world, there's a huge shortage of that kind of talent. If you look at the kids who do internships with us, they compete and do as well, if not better, than the kids in India sometimes. There is promise here. I think what happens is getting it together, in a coherent form is where both an aligning Government policy plus the creation of jobs from a couple of responsibility perspective, they both have to kind of align together, both in terms of policies, as well as in terms of impact, and sometimes that is delayed. I think there is talent here. I think there is certainly more talent here than some of the other geographies I've seen.

ALEC HOGG: But you don't have to tell us that. We know that. We know the private sector has produced some champions, global champions.

TK KURIEN: Absolutely.

ALEC HOGG: The problem is that the private sector in South Africa feels like it is getting squeezed; it feels like it's the enemy. That business is the enemy here. Hopefully you guys won't get that impression.

AZIM PREMJI: I hope not.

TK KURIEN: Again, you know I think you need to…in our business, at the end of the day, we're in the knowledge business. We don't mine assets. We don't have very strong Unions in our business. We're in a different business. In the knowledge economy, the fundamentals that drive that are very different from an old world economy.   I think politicians have a hard time understanding our business. That makes it much easier for us.

GUGULETHU MFUPHI: Is that a mindset that you are hoping to change in SA?

TK KURIEN: I think it will but remember, to a large extent what happens is that the political climate of the country is created, to a large extent, by the people who run it and if they come from a certain background and they come from an age, where activism was important. Making a shift from an activist to managing a country are two completely different things, and that shift some countries are able to do well but some countries are not. I guess the biggest challenge, the way I see it, is that as people come into management roles in countries, they have to bring in a new set of leadership that really understands the aspiration of the younger people because it is from there that you are going to have issues. The older generation is going to move along after some time. What they leave behind is going to be important for the younger generation.

ALEC HOGG: That's wonderful insights TK. Azim, just to close off with you, it is your first visit to this country, how long have you been here for and is it too short to be able to give us your impressions?

AZIM PREMJI: It's a two-day visit.

ALEC HOGG: Two days?

AZIM PREMJI: Yes, it was really too short to make a fair judgement, in terms of…

ALEC HOGG: Yes, but there's a wonderful relationship between South Africa and India that goes back to Mahatma's, so are you kind of or a little bit sad that you hadn't come here before?

AZIM PREMJI: Without question, and I'll make it a point to come here every year now.

ALEC HOGG: Well, hopefully your business grows splendidly in this country and into this geography and in to the Continent as well.

AZIM PREMJI: It certainly will.

ALEC HOGG: Because I'm sure that would wave a flag for others.

TK KURIEN: Absolutely, it will. I hope we don't wave it too high and too hard and we get more competition.

GUGULETHU MFUPHI: Well, thank you so m

uch to our guests for joining us today. That was Azim Premji, Chairman of Wipro as well as TK Kurien, Chief Executive and Member of the Wipro Board.