Corporate Governance at Wipro 39
State Wide Area Networks (SWANs): The Government has initiated a scheme for establishing SWANs across 29 states of the country with a total estimated budget of US$ 682.27 million, which will be implemented in fi ve years.
State Data Centers (SDCs): The data centers have been identifi ed as important for the core infrastruc- ture of supporting e-Governance initiatives under NeGP.
Common Service Centers (CSCs): The CSCs will develop a platform that can enable both the Gov- ernment and private/social sector organizations to meet their commercial and social goals for the benefi t of the rural population in the country with a combination of IT-based as well as non-IT-based services.
Community Information Centers (CIC): The Government of India has established the CIC’s in the far-fl ung rural and hilly areas of the country with main motive to bring the benefi ts of ICT to the people so that it helps in the socio-economic development.
He submits receipts from a restaurant. At the lunch hour, the manager’s girlfriend stops by to pick him up for lunch and the accountant overhears her telling the receptionist what a great time she had at dinner and dancing with the manager last night. What is the accountant supposed to do?
Everybody working in an organization has to face such situations at some point in time in their ca- reers. Acting diligently is what good corporate governance is.
Other than the organizational dilemmas, one faces dilemmas at the personal front as well. One well- known and frequently discussed example of an ethical dilemma was offered by Jean-Paul Sartre. Sartre asks to imagine a young man who lives with his mother; he is her only happiness in life. But the young man lives in occupied France during World War II and feels obliged to fi ght in the war. What does the young man do? Another dilemma is a situation in which three family members are being held captive.
The captives give one the choice of which of the other two will die. If there is no choice, they all will be killed.
Dilemmas may occur at any point in ones life, but how one handles it, makes all the difference.
There are some of the most debated issues that are considered perfect examples of ethical dilemmas.
They are enumerated as under:
Plank of Carneades:
1.
A thought experiment fi rst proposed by Carneades of Cyrene, it explores the concept of self- defense in relation to murder:
The story goes as: there were two soldiers A and B, who were shipwrecked. They see a plank that can support only one of them. They swim towards it and sailor A makes it fi rst to the plank. Sailor B in order to save his life pushes sailor A off the plank and takes his place. Sailor A ultimately drowns. Sailor B is later saved by a rescue team.
The thought experiment poses the question of whether Sailor B can be tried for murder because if B had to kill A in order to live, then it would arguably be in self-defense.
Trolley Problem:
2.
Given by Phillipa Foot, it goes as follows: A trolley is running out of control down a track. In its path, there are fi ve people who have been tied to the track by a mad philosopher. Fortunately, you could fl ip a switch, which will lead the trolley down a different track to safety. Unfortunately, there is a single person tied to that track. Should you fl ip the switch or do nothing?
The usual answer one would give would be switching the switch and letting one die instead of fi ve. But what if that one is your mother?
The Case of the Speluncean Explorers:
3.
Written by Lon Fuller in 1949 for the Harvard Law Review, is a famous hypothetical legal case used in the study of law.
It says, a trapped team of fi ve spelunkers get to know via radio contact that they might starve to death by the time they are rescued. They decide to eat one person to survive. When the remaining four are rescued, should they be charged for the murder of the fi fth person or not?
The article proceeds to examine the case from the perspectives of fi ve different legal principles, with widely varying conclusions as to whether or not the spelunkers are guilty, and whether or not they should be executed (as is the mandatory punishment for murder in the fi ctitious com- monwealth where the case takes place).
There are a lot of such examples and situations available, where one actually feels the pressure and threat. Some of the other renowned examples are: RV Dudley and Stephens, Prisoner’s Dilemma, Abor- tion debate, etc.
Corporate Governance at Wipro 41
Wipro
Over a period, Wipro has been committed towards effective corporate governance and has been benchmarking its internal systems with global standards. It considers itself responsible and account- able for any of its endeavors. It has earned its present reputation from the core values practiced by it. According to Wipro, its approach to corporate governance is the practice of high level of transpar- ency with all the stakeholders. Examples for this are as follows: publishing consolidation of results and segment-wise reporting from mid-1980s, and constitution of an audit committee many years before it became mandatory.
In spite of all the high level of transparency, regular publishing of results and corporate governance guidelines, Wipro too has some ethical dilemmas in its basket.
Ethical Dilemmas Faced by WIPRO
In June 2007, the World Bank determined the IT fi rm to be ineligible to contest direct contracts from it till 2011. The reason cited for this by a Wipro spokesperson was “confl ict of interest.” Adding to it, it was also said that Wipro’s revenue from the World Bank till date was insignifi cant but that would not affect the business and the results of operations. This change was said to be made in the interest of fairness and transparency.
Wipro is the second company that has been deemed ineligible to receive contract from World Bank after Satyam and followed by Megasoft, under non-IT companies–names like Nestor Pharmaceuticals and Gap International.
The Bank barred Wipro for providing improper benefi ts to bank staff. This change aligns the disclo- sure practice for companies that provide goods and services directly to the Bank with the current policy governing procurement on Bank fi nanced projects in developing countries.
What should a company like this, which practices high levels of transparency and claims high level of accountability and responsibility, do in such a situation?
The not so late case of a Wipro employee (who committed suicide later), from the company’s cor- porate accounts division stole USD$ 4 million (Rs 18 crore) by accessing a colleagues password, is another example of a need of better corporate governance required by the fi rm. The fraud continued for a period of three years and came to limelight only recently.
For Wipro, Is Rape and Murder a Six Sigma?
This question was raised on 3 November 2007; a Wipro BPO employee was found raped and murdered.
She took the pick up car of the offi ce that was supposed to drop her to the offi ce. Little did she know that this is her last day on the planet.
She was raped and brutally murdered by the cab driver and one of his accomplices. The company was put through a lot of questions, some of them were:
How was the cab driver allowed to have another person with him on duty, which is against the 1.
rules of Wipro?
If at all somebody was with the driver, where was his identity card? Wasn’t there supposed to 2.
be an identifi cation check every time a cab leaves and comes back to the offi ce premises?
In the event of answering such questions, Wipro BPO president, T.K. Kurien, put the entire fault on the unfortunate employee, saying that it was not the company’s fault that she got into the cab and invited
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trouble. Kurien also pointed out proudly and mentioned repeatedly—that the cabs that Wipro hires do more than 5 million pickups and drops every year.
What was that supposed to mean?
That it is not such a big deal if one such pickup goes wrong?
That even rape and murder meet a Sigma Six standard in Wipro? (Sigma Six = 3.4 defects per million.)
CONCLUSION
Business ethics and corporate governance have become essential and vital for any organization to follow in its business operations and lifecycle. These practices in all senses benefi t the employees at large.
Wipro, a name that signifi es reputation and excellence, has also been following ethical practices and corporate governance since long. There have been some glitches though in its course of execution. Due to the occurrence of few incidents, any organization cannot be listed as a non-practioner of ethics and governance.
The events of World Bank barring the contracts and the fraudulent practice by an employee are typi- cal business issues, like in other place where corruption in some form of bribe or forgery takes place.
Whereas the rape and murder case cannot be overlooked and management should not shun their respon- sibilities by saying it was unfortunate on the girl’s part to sit in the cab.
Despite the series of events, Wipro stands as an institution of vision, values, innovation, leadership and social commitment. In future, it shall keep on inspiring the youth and sustain as the leader in the IT industry.
EXHIBIT I: Indian software expor ts
100%
Indian Software Exports (1980-2009)
40 35 30 25 20 15 10 5 0 90%
80%
70%
60%
50%
40%
Accounting Year
US$ bn
% Growth
30%
20%
10%
0%
1981 1980(xxxx)
198219831984198519861987
1988-89(xxxx)
1989-901990-911991-921992-931993-941994-951995-961996-971997-981998-991999-002000-012001-022002-032003-042004-052005-062006-072007-082008-09
Exports Growth Rate
Source: http://ict4dblog.wordpress.com/tag/ict4d-statistics/
Corporate Governance at Wipro 43
EXHIBIT II: Indian IT expor ts as a percentage of output
Indian IT : Export’s Share of Total Output (1991 − 2009)
1992–931993–941994–951995–961996–971997–081998–991999–002000–012001–022002–032003–042004–052005–062006–072007–082008–09 1991–92
80
45%
19% 27% 30%29%27% 35%40% 49%
55% 60%
64%
Domestic Richared Heeks, CDI, Univ. Manchester Year
Export
62%
64%
66%
67%
67%
69%
70 60 50 40 30 20 10 0 US$ bn
Source: http://ict4dblog.wordpress.com/tag/ict4d-statistics/
EXHIBIT III: Indian IT growth rates
90%
Indian IT Growth Rates: Exports vs. Domestic(1992–2009) 80%
70%
60%
50%
40%
% Growth
30%
20%
10%
−10%
0%
Year
1992–931993–941994–951995–961996–971997–981998–991999–002000–012001–022002–032003–042004–052005–062006–07 2007–082008–09
Exports Domestic
Source: http://ict4dblog.wordpress.com/tag/ict4d-statistics
4 Corporate Governance.indd 43
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EXHIBIT IV
Turnkey companies WIPRO TECHNOLOGIES LTD.
INFOSYS TECHNOLOGIES LTD.
MAHINDRA SATYAM
Product development SUBEX
RAMCO
ADITI TECHNOLOGIES
INFOSYS
USHA COMMUNICATION
Consulting and training HUGHES SOFTWARE
TCS
ANDERSON
NIIT
Product services ADITI TECHNOLOGIES
TCS
INFOSYS
Source: Wikipedia
EXHIBIT V: Impor tant characteristics of the biggest IT companies in India
TCS Founded: 1968
Key people: Ratan Tata (Chairman), S Ramadorai (VC), N. Chandrasekaran (CEO & MD)
Product: Digital Certifi cation Products Healthcare Management Systems Services: Outsourcing, BPO, Software Products
Revenue: US$ 8.355 billion
WIPRO Founded: 1945
Key people: Azim Premji (Chairman), T K Kurien (CEO, IT Business & Executive Director)
Services: Outsourcing, BPO, Software service Revenue: US$ 6.841 billion
INFOSYS Founded: 1981
Key people: N.R. Narayana Murthy (Chairman Emeritus), K. V. Kamath, (Chairman), S. Gopalakrishnan (CEO & MD)
Product: Finacle, Flypp, mConnect
Services: Information technology consulting services, solutions and outsourcing.
Revenue: US$ 6.041 billion Mahindra SATYAM Founded: 1987
Key people: Vineet Nayyar (Chairman), C.P. Gurnani (CEO)
Services: Business consulting, information technology and communication services.
Revenue: US$ 319.76 million Source: Wikipedia
Corporate Governance at Wipro 45
EXHIBIT VI: Top 10 IT companies in India (as of 2010)
1 TCS LIMITED 2 WIPRO LIMITED
3 INFOSYS TECHNOLOGIES LIMITED 4 MAHINDRA SATYAM
5 I-FLEX SOLUTIONS LIMITED 6 TATA INFOTECH LIMITED 7 CMC LIMITED
8 MPHASIS BFL LIMITED 9 MASTEK LIMITED 10 NIIT LIMITED Source: Wikipedia
EXHIBIT VII: Wipro technologies deals in the following businesses
IT Services:
Wipro provides a complete range of IT Services to the organization. The range of services extends from Enterprise Application Services (CRM, ERP, e-Procurement and SCM) to e-Business solutions. Wipro’s enterprise solutions serve a host of industries such as Energy and Utilities, Finance, Telecom and Media and Entertainment.
Product Engineering Solutions:
Wipro is the largest independent provider of R&D services in the world. Using “Extended Engineering” model for leveraging R&D investment and accessing new knowledge and experience across the globe, people and technical infrastructure, Wipro enables fi rms to introduce new products rapidly.
Technology Infrastructure Service:
Wipro’s Technology Infrastructure Services (TIS) is the
largest Indian IT infrastructure service provider in terms of revenue, people and customers with more than 200 customers in the United States, Europe, Japan and over 650 customers in India.
Business Process Outsourcing:
Wipro provides business process outsourcing services in areas
such as Finance & Accounting, Procurement, HR Services, Loyalty Services and Knowledge Ser- vices. In 2002, Wipro acquired Spectramind and became one of the largest BPO service players.
Consulting Services:
Wipro offers services in Business Consulting, Process Consulting, Quality Consulting and Technology Consulting.
Source: Wipro Annual Report 2009–10.
EXHIBIT VIII: Group companies of Wipro
Wipro Infrastructure Engineering:
It has emerged as the leader in the hydraulic cylinders and
truck tipping systems market in India.
Wipro Infotech:
It is one of the leading manufacturers of computer hardware and a provider of systems integration services in India.
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Wipro Lighting:
It manufactures and markets the Wipro brand of luminaries. Wipro Lighting offers lighting solutions across various application areas such as commercial lighting for modern work spaces, manufacturing and pharmaceutical companies, designer petrol pumps and outdoor architecture.
Source: Wipro Annual Report 2009–10.
EXHIBIT IX: Achievements of Wipro
First Indian IT Service Provider to be awarded Gold-Level Status in Microsoft’s Windows Embed-
ded Partner Program.
World’s largest independent R&D Services Provider.
World’s 1st PCMM Level 5 software company.
World’s 1st IT Services Company to use Six Sigma.
The fi rst to get the BS15000 certifi cation for its Global Command Centre.
Among the top 3 offshore BPO service providers in the world.
Only Indian company to be ranked among the ‘Top 10 Global Outsourcing Providers’ in the
IAOP-Fortune Global 100 listings.
First company in the world to be certifi ed in BS 7799 (2002) security standards.
Source: Wipro Annual Report 2009–10.
REFERENCES
http://www.wipro.com/corporate/investors/pdf-fi les/corporate-governance-guidelines april09.pdf http://www.wipro.com/corporate/investors/corporate-governance.htm
http://www.in.kpmg.com/tl_fi les/pictures/cg%20survey%20report.pdf http://www.wipro.com/corporate/aboutus/profi les/azim_premji.html
http://searchfi nancialsecurity.techtarget.com/defi nition/corporate-governance http://www.heinz.cmu.edu/research/61full.pdf
http://churumuri.wordpress.com/2007/11/05/for-wipro-is-rape-murder-a-sigma-six-operation/
http://www.ehow.com/about_5481837_ethical-dilemma_.html http://en.wikipedia.org/wiki/Plank_of_Carneades
http://en.wikipedia.org/wiki/Trolley_problem
http://en.wikipedia.org/wiki/The_Case_of_the_Speluncean_Explorers
http://timesofi ndia.indiatimes.com/World_Bank_bans_Satyam_Wipro_Megasoft/
rssarticleshow/3966392.cms
http://undpwatch.blogspot.com/2010/03/wipro-fraud-underscores-need-for-better.html
Enron accounting practice is totally legal and appropriate, Enron stock is an incredible bargain, I and my executives still bought the shares two months back.
-Kenneth Lay (Chairman Enron) After a few days Enron fi led for bankruptcy.
In 2001, Enron, one of the leading companies in the world of energy sector fi led for bankruptcy. It was the hardest thing that could have happened to the investors, employees; normal shareholders. It was not the fraud of the accounting or the manipulation of the fund that this company did but it was question on the morals and the ethics of the people involved in this fraud. Cheating millions of people with billions of dollars, taking away their life earned money from pensions, making them suffer in blackouts while they were busy betting and manipulating prices of electricity in California.
“I was extremely greedy and lost my moral compass”.
-Andrew Fastow (CFO of Enron) How did one of the leading companies showing profi t after profi t for every quarter suddenly go bank- rupt? What went wrong? Even after having such strong code of conduct, how could none of the top executives not understand what was going on with this company?