4 min read.Updated: 19 May 2015, 01:26 AM ISTVarun Sood
The firm is seeking to build products on automation, artificial intelligence tech in partnership with innovative start-ups
Bengaluru:Wipro Ltd will open a technology innovation centre in Mountain View, California, by the end of December as it seeks to build products on automation and artificial intelligence technologies in partnership with innovative start-ups nested in the Bay Area, thereby strengthening its offerings to clients when competing for large outsourcing orders.
Wipro’s new facility—the firm’s first outside its headquarters in Bengaluru—will have to compete with global software giants, including Google Inc. and Facebook Inc. for talent and partnerships with start-ups, and comes after local rival Infosys Ltd decided to shut its research and development wing and merge it with other business units within the company earlier this year.
“Why Mountain View (having an office)? (Because) Bay Area represents that right area where we can bring together a lot of start-ups (to work along with our) customers," Wipro chief technology officer K.R. Sanjiv said in an interview. “We are (already) working with lots of start-ups in the automation space and we are looking at having this facility opened by December-end".
Sanjiv declined for now to give details on this innovation lab, including the number of engineers and scientists the lab will have, but another executive familiar with the development said that, for now, the firm plans to have “about 100-150 people" working out of the facility.
“We will have start-ups work with our core team, especially in areas of automation, artificial intelligence and big data," said the second executive.
Wipro’s Bengaluru innovation lab has helped the company come up with its first artificial intelligence platform, Wipro Holmes, and other technology platforms for its banking and financial services customers and retail clients, which the company believes gives it an edge when bidding for outsourcing deals. The Bengaluru innovation centre employs nearly 300 people.
Silicon Valley is considered to be the cradle of start-ups focused on next-generation disruptive technologies and home to blue-chip companies across sectors. Firms ranging from Apple Inc. to Ford Motor Co. have significant presence in the area. Institutes such as Stanford University supply people to these companies, while venture capital firms such as Andreessen Horowitz help in turning many ideas into blockbuster products, thereby making the region a powerful magnet for companies across the world. Of late, many Asian firms, including Chinese search giant Baidu and South Korean electronics giant Samsung have set up research arms in Silicon Valley. India’s largest software exporter Tata Consultancy Services Ltd has a presence in the area for close to eight years. Its COIN, or Co-Innovation Network, screens almost 800-1,000 start-ups every year, some of which work with the Mumbai-based company.
“Silicon Valley is a unique, very dynamic innovation ecosystem where players are used to innovate across boundaries, and to experiment and take risks—so firms from around the world see this as a place where they can best learn fast and access skills and resources they need in order to succeed," said Eilif Trondsen, research director at Strategic Business Insights, formerly Stanford Research Institute.
Sanjiv, who reports to Rishad Premji, head of group technology and strategy and son of chairman Azim Premji, said the company decided to merge the technology office with the strategy office earlier this year as technology is core to the future of any firm. “The tipping point for merging the role of strategy with technology happened over what we have seen over the last year or so. It is becoming more technology-led. Over the last two-three years, strategy was not so much technology dependent as far as process dependent. So historically, it was kept separate," explained Sanjiv.
However, some observers believe that having a mere presence in the valley does not assure success.
“The vast majority of corporate incubators in Silicon Valley are disasters. That is because companies think that just by having some people in Silicon Valley, some magic will happen and their culture will change," said Indian American technology entrepreneur and academic Vivek Wadhwa. “The problems are much more fundamental. This is likely to be the fate of incubators that Indian companies are setting up here as well. They are making the same mistake that American companies do."
Infosys, the India’s second largest software exporter, knows this well as it had to shut its research and development arm, Infosys Labs, which first started in 1999, before merging it with the back-end verticals of the firm.
“They (Indian software exporters) are deluding themselves by thinking that by setting up Silicon Valley incubators and investing in some companies here, they will be saved. They need to be rethinking their entire strategies and reinventing themselves—not chasing Silicon Valley rainbows," said Wadhwa, who in the past has suggested that Rishad Premji seek more partnerships with India-based start-ups.
Understandably, Wipro is going a little slow when engaging with start-ups, and said that 80% of the $100 million corpus kept with its corporate venture arm will be used to invest in start-ups based in the US and India.
“Our focus remains in the US and India. So let me put it like this, when making a strategic investment, focus will remain in US and India, and 20% for those in Europe and rest of the world," said Sanjiv, who has a small team of “three-four" executives who evaluate start-ups that Wipro could partner. Last year, Wipro evaluated more than 200 start-ups, of which the company partnered with less than five and eventually bought a $5 million stake in Drivestream, a US-based start-up that helps in integrating Oracle cloud applications systems. “We are one of the funnels for start-ups before Venu and team (Wipro corporate venture heads Venu Pemmaraju and Biplab Adhya) come and make investments," Sanjiv said.
For now, Wipro has partnerships with about 30 start-ups, and it has also made a minority investment of $30 million in New Jersey-based data analytics firm Opera Solutions. Wipro did make another investment of $5 million in machine-to-machine learning focused start-up Axeda, but sold its stake last year after the start-up was bought by a Nasdaq-listed firm.