Sambuddha Deb (“Deb”), Wipro Technologies Chief Quality Officer and Head of Operational Excellence, and Alexis Samuel, General Manager Process, Tools and Productivity, each thanked the other attendees at the lean project review session and walked out the door together. The bright January sunshine and garden-like setting of the Wipro Technologies campus in Bangalore, India was a good match for their current moods. As they made their way to their cars across the campus, they discussed the status of the company’s lean initiative. Less than eighteen months earlier, as a response to organizational and competitive challenges, they had decided to try to port the concepts of the Toyota Production System (TPS) or Lean from manufacturing to software services.
As of January 2006, the company had over 235 lean projects completed or in process. The promise and the possibility of Lean were topics of conversation throughout Wipro, from the boardroom to the company canteens scattered throughout India. Despite the early, positive results, the rollout of the lean initiative was far from complete. Wipro had over 1,100 concurrent projects so less than 15% were using Lean. The process thus far, had been one of substantial experimentation with limited central involvement. They wondered if now was the time to formalize a lean approach to running projects at Wipro. While they were using many tools from Lean, were there others that they should be applying? Finally, they continued to speculate as to whether what they were doing was really Lean. Was it possible to have lean software services or should they be assembling best practices into their own unique system, a ‘Wipro Way’?
Company Overview Wipro Technologies (“Wipro”), a subsidiary of Wipro Ltd., competed in the global software services marketplace. The company provided application integration, development and maintenance services in addition to research and development services and IT infrastructure management. Wipro’s software services included many technological areas such as client server, datawarehousing, e-commerce, embedded systems, enterprise applications, networking, telecom solutions, and webbased applications. It operated in multiple verticals including banking and insurance, embedded systems, energy and utilities, financial services, healthcare, manufacturing, media, retail, technology, telecommunications, and transportation.
Lean at Wipro Technologies
At the end of 2005, Wipro had over 35,000 employees and served customers worldwide through its offices in more than thirty countries (see Exhibit 1, for summary statistics for the company). The company had $1.2 billion in revenue in FY2005 and had been growing rapidly with a compound annual growth rate of 37% over the past four years. Revenue was distributed globally with the United States, Europe and the rest of the world accounting for 67%, 27%, and 6% of total FY2005 revenue, respectively. Over 95% of Wipro employees had degrees in science or engineering prior to joining the company.
While the company was an outsourced provider of software services it worked on projects both onsite (at a customer’s location) and offshore (at Wipro facilities primarily in India). In 2005, the company completed approximately 75% of its work offshore and 25% onsite. Both cost pressure (work done offshore was relatively cheaper) and a shortage of work visas (particularly in the United States) were pushing Wipro to complete more work offshore. Wipro billed for its projects using one of two approaches. Its initial approach, known as time and materials (T&M), involved billing a client at a pre-specified rate for the actual number of hours that its software engineers worked on the project plus the cost of any software or tools required.
In the newer approach, known as a fixed price project (FPP), Wipro quoted its customer a guaranteed price for the work and then was responsible for delivering the final product. Any effort overages on a FPP were the responsibility of Wipro. In 2005, the company’s revenues were split approximately 80/20 between T&M and FPP, respectively. The percentage of FPP was growing as clients were becoming more comfortable with outsourced software service providers and were managing costs more aggressively. Additionally, Wipro found the FPP model attractive as the company was becoming more confident of taking end-to-end accountability and was keen to retain the benefits of its productivity improvement efforts.
Software Services
The process of software development was similar in many ways to the process of building a house. The first step in building a house is to specify the requirements necessary for the solution. This might include determining the number of square feet, floors, bedrooms, bathrooms, etc. Once the requirements have been specified then architects and engineers create detailed designs, which not only specify the location of rooms and fixtures, but also the positioning of electrical and plumbing infrastructure. Only then does the building process begin. During building, flaws are found in the plans and corrected. Throughout construction, work is inspected for defects.
When systems are completed, they are tested (for example, the air-conditioning system) and when all of the work is completed, the entire house is inspected – first by the builder and eventually by the customer who buys the house. In software development, the same basic steps exist in most projects though they have different names: requirements specification, detailed design, coding and unit testing, system testing and finally user acceptance testing. One difference between building a house and software development was that the progress or the shape of things to come was frequently not visible to the user until he saw the final product or service.
Software services was a different business from consumer package software (e.g. Microsoft Word) or enterprise software systems (e.g. enterprise resource planning, ERP). Much of Wipro’s work was not development from scratch; rather it involved adapting, linking and supporting existing software systems. Both technical and market uncertainty for Wipro tended to be lower than for an application software developer as the company did not start a project until a customer requested the work. However, the complexity of the process tended to be high as the company was working on hundreds of projects – with high quality requirements – at one time. Deb described the business saying, “we don’t build the whole house for someone, rather we add the deck on the back. We do however, need to get a good knowledge of the existing house and its foundation / design before we add the deck.”
