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'We are not a five-star organisation... We have to run tight shifts. We cannot run tight shifts with a five-star culture.'

No, I don't think it is only a question of lower cost. I think it is a global trend that 'don't do anything in house whatever you can do out-house'. I wouldn't do anything that my supplier can do for me. I would never hold a security company. I would never hold a courier company. I would never hold an advertising company. Irrespective of the volume of my company. It is because if I find I can get a job done better through somebody else, why should I do it myself?

I should be able to leverage my area of being the best in my area of being the best; not in the area of somebody else being the best.

It is a global trend now that if you can get a job done outside don't do it yourself. It is a global trend now that software departments are becoming more globally oriented.

Two years back an American software department would think unthinkable that he can get development work done in India. Now you go and speak to GE. You go and speak to AlliedSignal. You go and speak to Nortel. They will tell their experience is good. Their trade-off in terms of getting a job done in India is not much in terms of getting a job done in Milwaukee or getting a job done in Atlanta or in x, y, zee.

It is a global trend towards outsourcing depending on competence, core competence. And it is determined by the fact that MIS departments and technical departments are getting more global in their outlook.

Two, talent is scarce all over the world. So they are getting forced to go outside not because they can't do the job within but because they have resources which are limited. And they want to prioritise those resources absolutely in their core areas. And they are not able to hire and retain the best resources in non-core areas.

So there's a global trend also that your resource constraints in terms of resource availability is low so you go outside. That is a major driver of this trend also, outsourcing. Because it is cheaper. More cost-effective.

For this you keep a cost variable. Every person you hire is a fixed cost. You have to look after them. It is not all that easy to fire people even in America. Now, for instance, that new law that is coming out in America where they have raised the visa limits. Why are they not being released?

They are not being released because they are asking American companies that you have to give a citation, a signature, that if you want to hire anyone by issuing an H1B visa that you will not lay off US citizens.

There is no American company that is ready to sign the citation, or give the guarantee. So, if you hire it is not easy to get rid off the labour but if you subcontract your work you are better off. If you need it you do it. If you don't need it you don't do it. If you want 50 people more you get 50 people more. If you want 50 people less you tell your contractor or your partner or your colleague, whatever you call him, look, after six months I do not want so many people.

From a strictly, human resource point of view, what is Wipro's strategy for the infotech industry where rapidly changing technology not only puts pressure on the engineering staff but also the marketing team? Then again, the immense employee turnover of the industry must be putting pressures on the highly respected work culture and ethics that Wipro is famous for?

We have very high stability of our top management. And very high stability of our senior management. They really are your evangelists or ambassadors. What we are now trying to build is high stability of our middle management.

Through job challenge, growth opportunities and, importantly, stock options, you will get more stability in the middle management who again become your ambassadors to your fresh recruits.

Because they are the people who are interfacing with the freshers all the time. The senior management or the top management does not work on a hand-to-hand basis or a day-to-day basis with your first line, or your programmers, or your recruits from campus.

We have to build strong stability at our middle management so that there is continuity of the ambassadors who have been inculturised. Because there are fewer of them, you can inculturise them much easily.

Secondly, we are putting in much more effort, much more training into inducting in a much more systematic way.

I am not saying we are addressing 100 per cent of the problem, okay. This is a situation of high growth with a lot of new recruits coming in from campus with different cultures. So you do have some trade-offs.

But I still think that maybe we have lost 30 per cent. I don't think we have lost much more than 30 per cent of cultural value. And we are trying to reverse this. We are intensifying what we are doing. We are intensifying retention of people. We are intensifying the induction quality. We are intensifying the communications systems of the organisation. There are more frequent communications from the top management.

Could you illustrate this with some specific innovations at Wipro?

One is already stock option to retain people. But in terms of innovative approaches vis-à-vis keeping people for a longer period, we are recruiting people from non-premier institutions with bachelor degree in math, bachelor degree in physics, bachelor degree in chemistry.

We work with them over a three-year period. By the end of the period, as they are taken in as a trainee, they qualify with a master's degree with a BITS Pilani certificate. And they have to serve us for two more years after that.

So we have ensured the continuity of those people for at least five years. And they have very high stability. So that becomes a core of people who have longer tenures with you. And we are trying to step up this one.

The programme, tied in with education, is ensuring more continuity. Because a person does not chuck out a master's degree from BITS Pilani. Because BITS Pilani is as difficult to get in today as an IIM. It is a prestigious institution. First rate institution.

We are replicating a similar thing with the Indian Institute of Management Bangalore. For project management. We have 20 seats in here where people are sponsored to a three-year programme, which is part-time. Where you work and study, work and study, work and study. Again, we are able to integrate a lot of tenure apart from qualified training in project management.

Do you believe that the infotech industry's marketing model is rapidly shifting from the familiar distribution one to a direct marketing one? How do you plan to retrain your vast army of sales people in this event?

You mean direct sales over the Internet or direct sales as in personal selling?

Both.

That proportion is coming down. It is not going up. I think the Internet will pick up direct sales but it is not happening in Asia-Pacific.

I think the culture very much in Asia-Pacific is that people must touch and feel to be able to buy.

You know what do you use a distributor for?

You use a distributor for the fact that he is able to manage the logistics function more efficiently than you are able to. You use a distributor because first of all a distributor is an entrepreneur. He has a personal stake in the business. He probably owns 90 per cent of the business. He is a proprietor. To be giving higher quality service, to give higher responsiveness to the customer is a livelihood issue for him. So because of his proprietary interest, he is probably more effective than an employee in the selling, the service, the relationship process.

So you are exploiting a distributor channel for maintenance and marketing and three, you are keeping it ready. The advantages of a distributor channel continue.

But what will happen is that distributor margins will come under more pressure so they will have to be more volume oriented.

There may be different kinds of distribution where you may have more specialised distributors who may be able to add value for the customer.

They don't just sell hardware; they also sell software, a solution along with the hardware. You may have to integrate more service revenue with the distributor because hardware margins are under more pressure.

So for him to be profitable you must have some kind of business which has a higher margin that he also can move into. More of our distributors are our franchisees who do after-sales service.

The model is changing. But our proportion of direct sales of computers is coming down. It's not going up. And our proportion of Internet sales of computers is negligible. Maybe we have not exploited it fully. The communications lines in India are not generally very good. The credit card culture is not fully there in the marketplace. Also, the Indian customer wants a direct one-to-one...

You know, typically, how many of your interviews are you able to conduct on the telephone? You get forced in you job to go and meet any prospective person you are wanting to interview.

An American person in a job similar to yours is going to be using telephonic interviews at least 10 times more than you do. Why? I try to cut off meetings by having telephonic conversations. But I meet with enormous resistance.

Very often you find that you have a half-an-hour work with ICICI in Bombay. Now why can I not solve that half-an-hour work on the telephone? Why do you have to make a one-day trip to ICICI? I keep telling my people send the material in advance and call. If he never met you before I can appreciate. Why do you have to fly down to Bombay and spend 12,000 rupees and a full day of your time on a meeting that takes just half an hour?

It is changing. But still, I don't think you should underestimate the value of touch and feel. Why is there a head office in Bangalore? You want a touch and feel of the operation. You want a touch and feel of what is going on and you cannot get that in isolation.

And in Bombay.

We found that we were getting completely isolated in an ivory tower there.

Behind every corporate success are the passions of a few key people. Given the exciting times at Wipro, what kind of people are you looking at to fire up the workforce? And at which strategic points would they be placed in the corporate hierarchy? How are the managers that you are recruiting today different from the managers that built Wipro?

Most of them have started their careers with us. Because the people we first took from the campus have now an age profile of 40 to 45, they are ready to take top management responsibilities.

So, if you see our new crop of people who are in senior positions, when they started 10 years back, 15 years back, 25 years back, they were young people. They typically had four, five, ten years of experience in other companies.

So you see that the younger group of people, and when I say younger, you know, I mean 45 and below. They are typically people who have begun their career with us. That is not to say that we do not hire people from the outside.

If we find that we do not have a certain talent in a certain area or if we find somebody with unique values that he can bring to the organisation, then we hire people.

We just hired a person as vice-president for our ERP initiative. He is from another company. We wanted that specialised talent and we did not have that specialised talent within the company. So, after a long time, and by long time I mean a year, year and a half, two years, we had a vice-president from outside.

So if we do not have a talent for a particular job from within the company we hire from outside.

Smart people are difficult to manage. They have a mind of their own and may have ideas and approaches that may not fit in with the overall scheme of things. They talk back. They assert. The real challenge must be in managing good managers. How did you do it so successfully in the past? Will the same methods apply today or some basic rules of the game have changed?

We are a good company to work with. People learn a lot. We are a growing company so people have career growth. We give priority to people within the organisation for career growth.

People love the jobs they are working in the company. They feel they are part of the company. They feel they own the company. They feel that the company is completely owned by them.

Our value statement is not hollow. It is the easiest thing in the world to say that you are a human organisation. That you are giving a person innovation. That you are giving a person integrity. You are giving a person leadership. But it is different thing practising it. And the key challenge is in practising it.

Here we ask people every 18 months, are we practising what we are preaching in terms of our values? And if we get negative answers, we get to the root cause of the negative answers. And if there are certain problems that we are creating for our people and for the culture of our organisation, we try to set it right quickly.

A company publication shows that core competence will be based on these four core values for total coherence and development

And the most important thing is that what we profess in terms of our value systems, we practise. If you are asking, the single most important strength of the organisation is that the four values (human values, integrity, innovative solutions, value for money) we profess, we practise. I am not saying that we are practising it 100 per cent. But we are driven as an organisation that what we are professing in terms of the value system, we are practising. And that very few organisations do.

It is easiest thing in the world to articulate a value system. It is the most difficult thing in the world to consistently practise it. That is what we are consistently driving at.

We do not make value statements that we don't practise. I think, as an organisation, we are democratic. If you ask me how you manage smart people, I think you can ask the same question to Ashok (Soota, president, Wipro Infotech), how he is able to manage smart people? We are democrats.

Sometimes I feel we are all democratic. We got to be more unilateral in terms of decision making instead of trying to be so democratic. But we think we get more commitment to implementation by being democratic. So I think the flip side of that is sometimes you get to be slower. We are less directed. But that is why we have such high commitment in terms of being a part of the organisation because people feel they are more part of the decision making process. This is important to the organisation.

It has its pluses and has its negatives. And hopefully, I think that the majority of our top management is modest. So they are willing to listen.

The prerequisite for ability to listen is that you must be modest. If you think you are the cat's whiskers you never listen. Because you already have an answer to whatever somebody else is saying, even before he opens his mouth.

What are you looking at when you are hiring people?

Leadership qualities. We have a write-up on it. There are seven points on it. Second thing you look at is if he is a good culture-fit. Is he a person having a mindset that is broadly compatible with what you hope for?

We are not a five-star organisation. We are a three-star organisation in terms of living style. When somebody joins us from Oberoi, he comes with a five-star culture. With a five-star mindset. It is not that way. It is not that way in the way we live. It is not the way we travel. It is not the way we spend. So, that is an important part of our culture. We have to run tight shifts. We cannot run tight shifts with a five-star culture.

Another is his track record, obviously. What is his sustained track record? Because, management in the final analysis, is track record. What results have you given in your previous jobs? That is extremely critical. What is his track record? What are the results he has given on a consistent basis?

How is the person capable of growing? That is very important. Because in any situation where you are growing at 30 per cent plus a year, you have to have people who are able to manage growth. If you are not able to manage growth and manage operating efficiency at the same time you are at a loss.

And managing growth is not easy. Because things change fast. Because you make decisions with less information. You got to make decisions where areas are more grey as compared to black and white. So we require people to manage growth.

Today, if you recruit, you would want people with a little more global experience. International experience. Because such a large part of our business today, particularly in software, is clearly a global operation. So if we recruit from outside at a senior level, we want people who have had a lot of global experience, particularly in the IT business. So they are able to understand global cultures better. Global requirements better. Global customers better. Global market dynamics better.

Typically how long would you spend with a prospective employee?

I don't recruit any employees. I wouldn't be on a panel even for a senior manager.

Typically, I would be on a panel for group two and above manager. So in that category, if we were recruiting, I would be on the panel at least 7 out of 10 times. He (HRD chief Dileep Ranjekar) would be on the panel 10 out of 10 times. At that level I would spend an hour.

But you have to appreciate that the man has undergone at least two or three interviews before that. They have data compilation on him. The details on him. The detail analysis of his track record. And you read up on that before the interview. Typically, it will take you about half an hour to read up. If you are talking about a person at my direct level, I would spend an enormous amount of time.

Outside the corporate environment?

Yes. Meet socially. Perhaps, call him and his wife for dinner.

How did you arrive at the revenue targets for your unit heads? Why 29 per cent of net worth on assets revalued every three years? Why a minimum of 24 per cent on capital? And why 21 per cent on new investment? Why should growth be just 25 per cent higher than the average industry rate? Why should international operations and exports contribute to more than exactly 50 per cent of the group's net profit? How have the figures been worked out?

[They are driving for a 15 per cent operating margin at the corporate level. But what if a unit misses the target?]

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