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Micosoft appoints Wipro as strategic partner - Views on News from Equitymaster
 
 
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  • Feb 1, 2000

    Micosoft appoints Wipro as strategic partner

    Wipro has been appointed as a partner by Microsoft for outsourcing software development and testing in India. The two companies will collaborate to enhance capabilities around Windows 2000, Windows CE (an operating system for hand held devices) and Internet applications.

    Wipro has one of the strongest revenue portfolios with almost 50% of its revenues coming from high–end projects such as systems software, networking and e–commerce. The company focusses on five vertical domains: technology solutions, technology based products, telecom and datacom solutions, finance, healthcare and utilities.

    One reason for Microsoft choosing Wipro is the fact that the company was among the first to develop products of the class of Office 2000 in the early eighties. Wipro however realised that more than the development costs, it is the marketing costs which determine the success of the packaged software. Marketing costs are almost three times the cost of development and at that point in time Wipro did not have the wherewithal in terms of funding.

    Secondly, among the Indian software companies Wipro has been successful in software development of a very high level, which has enabled the company to charge rates of even $42/hour for certain projects.

    Third, Microsoft has a tie–up with many Indian organisations (earlier it was another Bangalore based company Microland with which Microsoft had a tie up) and in the past these have not lasted over a long period. This may be partly due to the fact that software itself is a dynamic sector where the partners capabilities could get obsolete quite soon.

    If the tie–up is successful it would be very good in terms of enhancing Wipro’s skill sets but how long the tie up lasts is what would be more relevant.

    Market View:
    Wipro’s premium valuations are expected to sustain owing to the quality of its software services and the fact that 75% of its stock is held by its promoters.

     

     

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