One of the wealthiest people in India, Azim Premji is these days perhaps more known for his philanthropy than his wealth or business skills. As of Oct. 2019, Forbes reported Premji had a net worth of $7.2 billion. He derives his wealth from his ownership of Wipro Limited (WIT), an information technology (IT) company that ranks as India’s third-largest outsourcer of IT services. In this article, we review Premji’s rise as the owner of a small, family-run business to one of India’s most influential entrepreneurs.
Wipro’s Early Days
Wipro was started as Western Indian Vegetable Products Ltd. in 1945 by Mohamed Premji, father of Azim Premji, as a manufacturer of hydrogenated cooking fats. At the time, Premji’s father was already an established rice merchant. Azim Premji completed his schooling in Mumbai and was pursuing electrical engineering at Stanford University in the United States when in 1966 he had to leave and return to India due to his father’s sudden demise. He then became the chairman of Wipro at the young age of 21 amidst shareholder revolt. He expanded the company’s product line to include hydraulic cylinders, soaps, and lighting products, renaming the company Wipro in 1977.
Premji Enters Technology Sector
Wipro entered the IT space in 1980 after IBM had withdrawn from the country. The company started with manufacturing microcomputers under a technology-sharing agreement with U.S.-based Sentinel Computers. Later, it started providing software solutions to complement its hardware operations.
The 80s saw a series of ventures by Azim Premji and Wipro. He started a manufacturing plant for the production of hydraulic tipping systems in 1983, followed by an entry into the manufacturing of industrial cylinders and hydraulic cylinders. In 1989, Wipro formed a strategic joint venture with General Electric (GE) for the manufacture and distribution of imaging products called Wipro GE Medical Systems, which became a subsidiary of Wipro the following year.
Premji Diversifies and Grows Wipro
Following India’s economic deregulation in 1991, Wipro further diversified into the manufacturing of lamps, powders, oil-based natural ingredients, medical and diagnostic equipment, and IT hardware products such as printers and scanners. It also entered the IT services business in the 1990s and was among the first to experiment with offshore IT services.
In 1999, Wipro became the only Indian computer manufacturer to receive Y2K-compliant certification from the National Software Testing Laboratory in the U.S. It also entered into a joint venture with KPN to provide Internet services in India. The following year saw Wipro list in the U.S. via American Depositary Receipts and emerge as one of India’s largest software exporters and the second-largest listed company in India.
Throughout the late 1990s and early 2000s, Wipro continued to perform well, with IT remaining its core business. It also opened a Business Process Outsourcing (BPO) unit in 2002 and was one of the best-performing stocks during 1998-2003 on the Indian stock exchanges. Premji created a culture of striving for excellence in business operations, and Wipro was successful in implementing the objectives that were part of this culture and being one of the first software companies to get SEI Level 5 certification.
Wipro’s Corporate Structure
The exit in 2005 of chief executive officer (CEO) Vivek Paul, who played a key role in making Wipro a billion-dollar enterprise, led to Azim Premji becoming the CEO until 2008. This was followed by a change in corporate structure that led to the installation of joint CEOs until 2011 when there was a reversion in the company back to a single CEO.
The company added a chief operating officer (COO) post to support the CEO and look after day-to-day operations, product delivery, and customer satisfaction in order to allow the CEO to focus on global operations and future strategies. After the global financial crisis of 2008, the company’s revenue growth stagnated, forcing management to restructure its business model to find new business outside of the U.S. market and within its own domestic market.
Under Premji’s leadership, Wipro’s revenues grew from around $2 million in the late 1960s to around $7 billion in 2014, with IT contributing around 75% of total revenue. In July 2019, Azim Premji stepped down as the chairman of the board of Wipro and was succeeded by his son, Rishad. In its 2018-2019 annual report, the company reported annual revenue of $8.4 billion.
Azim Premji has his own family wealth management company, Premji Invest, that manages around $1 billion of his personal wealth and invests in public as well as private companies.
Premji Focuses on Philanthropy
One of the many reasons—perhaps the most significant—that Azim Premji will be remembered is for his philanthropy. He has already given away $21 billion of his wealth as part of the Giving Pledge, a commitment by the world’s wealthiest individuals to donate the majority of their wealth to charitable causes. Premji was the first Indian and only third non-American to make this pledge.
This includes two-thirds of his Wipro stock, which has been placed in a separate trust and will be used for educational purposes. The Azim Premji Foundation was set up as a non-profit organization in 2001 with the aim of improving primary education in India. It has also set up a university in Bengaluru, India, and works with schools and governments in various districts of India to improve education in a holistic way, rather than just through financing.
Something else that is noteworthy about Azim Premji is that he has managed to build an organization that has a reputation for being an ethical company committed to certain core values, and he has taken a keen interest in creating high-performance teams.
The Bottom Line
Azim Premji is one of India’s most well-known and respected business leaders and has received many awards during his lifetime, most notably India’s second-highest civilian honor for his contribution to business. He was also selected as one of the 30 Greatest Global Entrepreneurs of all time by Business Week and was named one of the 100 most influential people in the world.
He has transformed Wipro under his leadership from a $2 million cooking fat company into a conglomerate spanning multiple businesses that consistently generate billions of dollars in revenue each year. Premji is indeed one of the pioneers in developing the IT sector in India and putting the sector on the global stage.
But perhaps his most lasting legacy will be the way he has used his wealth to improve the lives of others who are less privileged.