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Last Updated: Wednesday, 7 February 2007, 00:31 GMT
India's reluctant billionaire
By Steve Schifferes
Economics reporter, BBC News, Bangalore

AZIM PREMJI
Azim Premji, CEO Wipro
Born: 24 July 1945
Job: Wipro boss since 1968
Net worth: $11bn
Education: BA, electrical engineering, Stanford
Family: wife (Yasmeen), two sons (Rishad and Tariq)

Wipro chairman Azim Premji wears his crown as India's richest man lightly.

He still drives a Toyota Corolla, flies economy class, and lives on campus at Wipro's headquarters in Bangalore.

But Mr Premji is one of India's most important hi-tech entrepreneurs.

He built his father's vegetable oil company into a $25bn global outsourcing giant which is challenging the likes of IBM and Accenture, and transforming the way many multinationals do business.

In an exclusive interview, Mr Premji said that with wealth came responsibilities - to his employees, to his clients, and above all to society.

With the attention I got on my wealth, I thought I would have become a source of resentment, but it is just the other way around - it just generates that much more ambition in many people
Azim Premji

"At the end of the day there is only x-amount you can consume, frankly, so that itself becomes a limitation," he told the BBC.

"I think that any wealth creates a sense of trusteeship ... it is characteristic of the new generation which has created wealth to have some amount of responsibility for it."

Admired, not envied

Mr Premji believes that his success in business, rather than causing envy, has inspired a new generation in India to become more entrepreneurial.

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"With the attention I got on my wealth, I thought I would have become a source of resentment, but it is just the other way around - it just generates that much more ambition in many people," he says.

Many admire men like Mr Premji, or Nandan Nilekani, the boss of Infosys, who has become a millionaire from his share options.

Indians are proud that they are at last joining the ranks of the world's billionaires, with the number of Indians on the Forbes Rich List doubling from 13 to 27 last year.

Many of the new billionaires are also self-made men, like the head of Jet Airways, Naresh Goyal.

Many of India's biggest companies are still family firms, such as Wipro, Tata and Reliance.

And some, like steel magnate Lakshmi Mittal, have become global players and no longer live in India (Mr Premji is the richest Indian businessman who lives in India; Mr Mittal, who doesn't, is wealthier).

Building India's IT industry

Mr Premji played a key role in building up one of India's most successful industries.

India is the most important global location for outsourcing of business services, and Bangalore is the heart of the IT industry.

Mr Premji believes India had two advantages in IT outsourcing: a skilled workforce that was literate in maths; and widespread literacy in English, the global business language.

WIPRO
WIPRO HQ
HQ: Bangalore
Employees: 61,000
Employees abroad: 11,000
Revenues: $2.2bn
Market value: $25bn
Source: Company
employees as of 31.12.06; revenues as of 31.3.06
market value as of 22.1.07

But the industry was only able to develop in the late 1990s when the government liberalised the telecoms sector and the cost of bandwidth dropped dramatically.

"I was basically trying to have a vision. One saw what was happening in manufacturing 25 years ago in terms of globalisation of manufacturing.

"The biggest bet the industry made is that, if can happen to manufacturing, it can happen to services - at least, the type of services that can be remotely delivered," he says.

But for the Indian IT industry to realise its potential, it needed to invest in people.

"I think the most important reason for our success is that very early in our quest into globalisation, we invested in people - and we have done that consistently and particularly in the service business.

"People are the key to success or extraordinary success."

Wipro's values included a refusal to pay bribes, which cost the firm work in the early days.

Western competition

Managing Wipro's explosive growth has been difficult.

For them, India is a back room - for us, India is the front room
Azim Premji

The company now hires 20,000 graduates each year, and faces competition from foreign multinationals also flooding into Bangalore.

As the demand for IT professionals has risen, Wipro has been forced to raise salaries twice in 2006.

However, Mr Premji believes that India is fully capable of increasing its output of college-educated engineers - already the largest in the world, with 400,000 graduates a year - to meet the growing demand.

PREMJI FOUNDATION
schoolchildren in Bangalore
Spending: $4m a year
Schools helped: 18,000
Multimedia DVDs: 464 educational games in 18 languages
He says the industry is also training liberal arts college graduates to do the same work.

And he claims that Indian IT professionals prefer to work for Indian companies rather than foreign multinationals, because their career prospects are better.

"Today we hire more people from IBM and Accenture in India than we lose to them - because they've also realised that they are in India for a certain price advantage and they cannot afford to pay silly salaries because they dilute their price advantage.

"For them, India is a back room - for us, India is the front room," he says.

Reverse outsourcing

But Mr Premji believes that in the long run, the answer to the skills squeeze in India is for Wipro to do more work abroad.

Wipro already employs 11,000 professionals overseas and expects 20% of its business to be offshored from India in the medium term.

INDIA'S TOP BILLIONAIRES
Lakshmi Mittal (steel)*
Azim Premji (IT software)
Ambani brothers (oil, telecoms)
Kushal Pal Singh (construction)
Sunil Mittal (telecoms)
Source: Forbes
*not resident in India

He is planning further expansion in Europe, Japan and the Middle East.

"Indian service companies typically in software services will lead to globalise more - they'll need to localise more," he told the BBC.

"They'll need to localise more because of community reasons - community pressures will build up, visa pressures will build up and in a way, understandably so."

Mr Premji is well aware that in many Western countries, there is a growing backlash against the outsourcing industry, as many skilled professionals fear they will lose their jobs.

I would take China as serious competition for anything in the world
Azim Premji

But he says that globalisation has to be a two-way street.

"If you want emerging countries such as India - which is going to be one of your major markets - to open its borders to global competition and global access for products and services, the quid pro quo is that you have to play fair as a developed nation.

"The Western world loves liberalisation, provided it doesn't affect them. But that's the case with all countries all over the world - liberalisation is a great word if it doesn't affect you."

Many UK companies, however, complain that the UK is far more open to inward investment than India, which is still in the process of relaxing its tough controls on foreign ownership.

The China factor

Like businessmen all over the world, Mr Premji fears one country above all others - China.

Wipro already has set up operations in China, which has one of the world's largest software industries.

At the moment, most of that IT effort goes into manufacturing design, not outsourcing.

But Mr Premji believes that once China has trained enough people to speak English, it will be a real competitive threat to his business.

"I would take China as serious competition for anything in the world. I think Western nations are realising that too late," he said.

Mr Premji believes that the most important thing India can do to maintain its global competitiveness is to improve its education system, which he says is failing women.

He has set up the Premji Foundation to fund projects in 18,000 schools across India, which aim to encourage students to develop computer skills.

And his hope is that, as more girls stay on and finish school, the birth rate will drop to the same level as China.

Improved education and a lower birth rate, he argues, would give India a chance to find enough jobs for the tens of millions of young people coming to the labour market each year.


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Exclusive interview with Azim Premji



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