Enterprise Risk Management in Wipro's Software Services Division
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Case Details:
Case Code : ERMT-001
Case Length : 12 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Wipro
Industry : Information Technology
Countries : India
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Excerpts
Overview of Major Risks Contd...
Concentration Risks
Geographic Concentration
Approximately 57% of Wipro's Global IT Services and Products revenues were from
the US. During an economic slowdown, Wipro's clients delayed or reduced their IT
spending significantly. This in turn lowered the demand for Wipro's services...
Operations Risks
Wipro used specified software engineering processes and its past project
experience to reduce the risks associated with estimating, planning and
performing fixed-price, fixed- time frame projects. But Wipro still took the
risk of cost overruns, completion delays and wage hikes...
Risks related to Mergers, Acquisitions & Strategic Alliances
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Wipro had plans to make investments in complementary businesses, technologies,
services or products, or enter into strategic partnerships with parties who
could provide access to those assets. There was always the possibility of
choosing wrong acquisition candidates.
Political Risks
In early 2002, a majority of Wipro's personnel in the US held H-1B visas (721
persons) or L-1 visas (510 persons) . Although there was no limit to new L-1
petitions, there was a limit to the aggregate number of new H-1B petitions that
the US immigration authorities approved in any fiscal year...
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Regulatory Risks
Most of Wipro's software development facilities were
located in India and in the US. Wipro intended to establish new development
facilities in South-East Asia and Europe. Because of Wipro's limited
experience outside India, Wipro was subjected to additional risks. These
included, difficulties in regulating its business globally, export
requirements and restrictions, and multiple tax structures...
Legal & Contractual Risks
Many of Wipro's contracts involved projects that were mission critical to its
clients. Any failure in a client's system could result in a claim for
substantial damages, regardless of Wipro's responsibility for such failures.
Wipro attempted to limit its contractual liability for damages resulting from
negligent acts, errors, mistakes or omissions in rendering its services...
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Human Resources Risks
Wipro's ability to execute projects and to attract new clients
depended critically on its ability to attract, train, motivate and
retain highly skilled professionals, especially project managers,
software engineers and other senior technical personnel...
Financial Risks
Wipro defined market risk as the risk of loss of future earnings, or
a decline in fair values or future cash flows that might result from
a change in the price of a financial instrument... |
Exhibits
Exhibit I: Wipro: Business segments
Exhibit II : Wipro: Major customers
Exhibit III: Wipro Operating Profit
Exhibit IV: Wipro: Debt Maturity Profile
Exhibit V: Wipro: Key Financial Indicators
Exhibit VI: Wipro: Profit and Loss account
Exhibit VII: Wipro: Balance Sheet
Exhibit VIII: Relative Performance of Wipro Share Price vs. S&P CNX Nifty Index
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