Wipro's Azim Premji: 'Ecology Is One of Our Big Bets for the Future'Published: June 17, 2010 in India Knowledge@Wharton
Wipro chairman Azim Premji believes that just as the past few decades have been the "Information Age," the next few decades will be the "Ecological Age." And just as he transformed Wipro from a small oil and soap business into a US$6 billion IT and FMCG (fast-moving consumer goods) powerhouse, Premji is now betting on ecology as the next big business opportunity for the group.
Wipro Water and Wipro Eco-Energy were set up in 2008 and 2009 as part of Wipro Infrastructure Engineering (WIE). In a recent company reorganization, Premji has appointed two of his top executives to head these fledgling businesses. Wipro Eco-Energy has been spun off as a separate business unit under the leadership of T.K. Kurien, who was formerly president of Wipro consulting, global programs and strategic initiatives. Pratik Kumar, executive vice-president (human resources), has been given additional charge of WIE, which includes the group's hydraulics and water businesses. In an interview with India Knowledge@Wharton, Premji talks about ecology as a social and business imperative, the vast opportunities that it holds, and Wipro's foray and plans in this space.
An edited transcript of the conversation appears below.
India Knowledge@Wharton: When did you first start thinking of ecology as a business proposition? How did you zero in on the areas of water and eco-energy, and how do these fit in with Wipro's overall gameplan?
Azim Premji: Ecology and economy are becoming inextricably entwined and the world is becoming more conscious of this fact. Despite widely differing perspectives and agendas, there seems to be a remarkable global consensus that has built up over a fairly short period of time that climate change and ecology is one of the truly defining issues for humanity. This is not a 'few quarters trend'; this is something that will build over the next few decades and will become the defining force for all of us. We think that if the past few decades can be characterized as the "Information Age", the next few will be the "Ecological Age".
One of the simplest ways to address this at Wipro -- simple, because in a way [that] was within our control -- was to try and implement methods and policies which resulted in a positive impact in each of these areas: economy, ecology and society. Hence the idea was that Wipro should go green internally. Next was the question of how we influence our other stakeholders: employees, partners and customers. All of these questions led us to an incremental business opportunity we could create in our existing businesses.
Around January 2007 we narrowed down on ecology as the key strategic socio-economic dynamic that we would invest in. We finally decided on water and renewable energy as two areas within the ecology domain we would evaluate and enter. The choice of ecology has a double benefit: in itself ecological considerations will dramatically change and drive opportunities across the world and secondly, a lot of these factors will also leverage infrastructure growth. Our focus on water and eco-energy does not only make ecological sense, but underlines business sense, as well.
India Knowledge@Wharton: How big do you expect these new businesses to become in the long term for Wipro? Is this Wipro's big bet for the future?
Premji: According to a U.N. report, the global market for environmental products and services is expected to be more than $2 trillion by 2020. Together both the businesses [Wipro Water and Wipro Eco-Energy] currently employ around 300 people and in the last year and a half we have done several key projects for large organizations in the country. We have big plans for this business and believe that it has the potential of becoming a significant business in the next five years. Yes, in that sense, it is one of our big bets for the future.
India Knowledge@Wharton: How much have you invested till now in Water and Eco-Energy and what kind of investments are you looking at making over the next three to five years?
Premji: We have made and will make adequate and significant investments. Whatever investments are required to make these businesses fulfill their promise, we will do.
India Knowledge@Wharton: What areas are you focused on at Wipro Water?
Premji: We have a methodical, step-by-step approach. We are not in a hurry. We are focused on segments where customers value engineering, technology and execution capability. We are in high-purity water segments where we can deliver complete solutions for large and small- scale industrial water treatment, effluent treatment and reuse solutions. We offer desalination solutions also. Over a longer period we will be across multiple segments and geographies.
India Knowledge@Wharton: What is Wipro Eco-Energy focused on and how do you see it evolving?
Premji: We can offer a range of clean energy and energy efficiency technologies customized for specific client situations and integrated with a lot of system intelligence. We consult, engineer, implement, integrate and manage these systems.
In simple terms, we can help build green facilities and infrastructure for you, make your factories green or help manage your service operations to become green. We can do this for a bank, a telecom services company, a steel plant, an airport operator, a tire manufacturing firm, etc. We can do this at a very large (utility) scale or at the scale of smaller facilities.
India Knowledge@Wharton: What is your business model in these two new areas?
Premji: Our business model is primarily that of consulting, engineering, system integration and managed services.
India Knowledge@Wharton: What are the current strengths within the Wipro Group that you believe you can leverage in these two new businesses?
Premji: We understand how to build and manage businesses that involve technology, engineering and people at a large scale on a global platform. Added to this is our focus on process excellence. We also have expertise in systems integration and high-precision manufacturing.
The fact that Wipro has implemented what it preaches helps. By addressing our own energy problems first, we have sharpened our learning in this area. Wipro's 22,000-people campus at Electronic City [in Bangalore] has turned into a test bed. Besides this campus, we have the largest number of LEED (Leadership in Energy and Environmental Design) Gold and Platinum level "green buildings" in India.
India Knowledge@Wharton: Can you share some more details of how you are addressing energy and water issues within Wipro itself?
Premji: Everything that we are offering to customers, we have done ourselves. For example, extensive water treatment in combination with rainwater harvesting ensures that 32% of our total water requirements are met through recycling and harvesting. Implementation of waste-to-energy conversion at our biogas and paper recycling plants in our Electronic City facility are important milestones. [The latest sustainability report is available at http://www.wipro.com/corporate/investors/sustainability-wipro.htm.]
India Knowledge@Wharton: What are the green initiatives within the other businesses of Wipro? What are the key priorities and challenges?
Premji: All of our businesses have their own green offerings. There are three aspects of green in the IT business. We think that 'IT for Green' is far more important than 'Green IT'. IT in itself or IT infrastructure has less than 2% contribution to greenhouse gases or other ecological concerns. The big opportunity for IT is to help mitigate the effect of the other 98%. We will work with customers to create opportunities for their businesses, in the "Ecological Age", using IT. This is where IT can play a real role and this is what we are trying to build on.
Let me give two examples. One, technology-enabled energy management services is integral to intelligent buildings and intelligent buildings are going to be one of the key battle fronts for climate change. We have made significant investments in a smart energy grid along with our technology partners. Two, IT is the heart of "intelligent" devices which can use less or more energy from the grid based on load or other factors. Say you had a refrigerator that would use power based on a combination of the food inside the refrigerator and the load on the grid. This can dramatically increase energy efficiency. Simply put, IT can help improve efficiency of all assets. We will help our customers with this and build on this opportunity.
Our innovation program combines the rigor of process with widely spread (across employee and partner base) sparks of creativity. We have built it over the past seven years. We are now [promoting] 'green' as a big theme in our innovation program. This is a long-term and fundamental investment theme for IT.
In our PC manufacturing business, we have made significant progress on the Green PC on all three dimensions: energy efficiency, RoHS (Restriction of Hazardous Substances Directive) and Take-Back [recycling] program.
In our lighting business, we have the entire range of LED lighting solutions. Already, 70% of LEED-certified buildings in India are lit by Wipro Lighting.
India Knowledge@Wharton: What are your key priorities for Wipro Water and Wipro Eco-Energy?
Premji: [We want] to prepare a sound platform of engineering ability and technology so that we can scale this up over the long term; we are very clear that we are in it for the long haul.
India Knowledge@Wharton: What do you see as the key challenges for Wipro in these new businesses?
Premji: The regulatory environment must execute the policies well and with stability. Also, technology is rapidly evolving in certain segments and we must keep pace with that.
India Knowledge@Wharton: Do you plan to get into equipment manufacturing in these two businesses?
Premji: No plans as of now; however, in the very long view that we have of the businesses, we won't rule anything out completely.
India Knowledge@Wharton: Do you plan to take these businesses global? If so, when?
Premji: Yes, we will. But we will do that after a while.
India Knowledge@Wharton: You have recently spun off Wipro Eco-Energy as a separate business to be headed by T.K. Kurien. What was the thinking behind this move? Will the Water business also be spun off as an independent unit?
Premji: Eco-Energy is a key area of growth and requires that degree of leadership attention. This structure enables the same leadership attention on Water as well.