4 Technology
Toyota’s Lean Lessons for Wipro
In an industry where arresting people-led growth has become the next Holy Grail, Wipro’s early gains from applying Toyota’s
production system provide crucial learnings for the over $60-billion software exports business in the country
PANKAJ MISHRA
BANGALORE
W
hen Sambuddha Deb, 53,
now the chief global deliv-
ery officer at India’s third
biggest software exporter Wipro,
was looking for answers to deal with
rising wage inflation and growing
complexity in large outsourcing
contracts some years ago, Toyota’s
legendary production system was
nowhere on his mind. After all, there
could be no parallel between manu-
facturing cars and writing hundreds
of lines of codes for customers you
do not even get to see till the project
gets over, at least this is what Deb
reasoned until late 2004.
“Around the time when Vivek Paul
was our CEO, McKinsey came and
asked why don’t you look at Lean, but
then it did not look very attractive,”
recalls Deb. Around that time,
Wipro, along with many other
There were many experts
who had done Lean for
manufacturing, some even
for hotels. But none had
any experience in applying
Lean for a software firm
like Wipro
SAMBUDDHA DEB
Chief Global Delivery Officer, Wipro
Indian peers had all the process and
quality certifications the world of-
fered— from ISO 9001 to SEI CMM.
But like most new initiatives and cer-
tificates, even they had become mere
tags that offered no differentiation.
Unlike traditional methods of im-
proving performance and quality of
software projects, Lean promised to
bring about an internal focus for
continuously seeking ways to cut
waste and increase value of invest-
ments. In a software development
context, waste could include dupli-
cation of efforts, more people doing
the same job, and time spent on
readying for a new project.
Later, after looking at options that
included the Malcolm Baldridge
National Quality Award criteria,
TRIZ (short for Theory of Inventive
Problem Solving in Russian), and
Toyota’s Lean, Wipro finally decid-
ed to pick a leaf from the automak-
er’s production system.
EARLY GAINS, LEARNINGS FROM
TOYOTA AND CHALLENGES
What started in 2005 as a 10-projects
pilot to apply the automaker’s leg-
endary system invented for elimi-
nating all wasted material and
labour is now helping India’s third
biggest software exporter make sav-
ings of up to 60% in outsourcing
projects, and even win new consult-
ing contracts from customers such
as Nationwide Insurance. Of nearly
4000-5000 projects being delivered by
Wipro, over 1600 projects are now
Lean, bringing a minimum of 20%
savings on an average.
Bradley R. Staats, who teaches in-
novation management, technology
and operations at the University of
North Carolina, spent over three
years working with Wipro on this
project. Staats believes Wipro’s Lean
experiences can be applied by other
software service providers too.
“Things are getting commoditised
in the industry and there’s pressure
to do more with less. This is where
Lean can help,” he says. Barring
Lockheed Martin, which actually
did a much smaller pilot, no other
company in the world has attempt-
ed to apply Lean for software servic-
es work at this scale.
According to Staats, for every $1,
Wipro makes savings of 20 cents on
an average. “For one of the cus-
tomers, the gains stretched to over
70% after we used Lean for minimis-
ing efforts (read engineers) while de-
 What is Lean?
livering the project,” recalls Staats.
Nationwide Insurance, America’s
fourth largest auto insurer is among
customers now applying Lean with
Wipro’s help. The insurance firm,
which started with around 17 Lean
projects two years ago, has seen $2 
million payback from the initiative.
HUNT FOR EXPERTS
Then started the big hunt for an ex-
pert who could help Wipro start its  What’s Been The Impact
Lean journey. “There were many ex-
perts who had done Lean for manu-
facturing, some even for hotels, but
none had any experience in applying
Lean for a software firm like us,”
says Deb.
Another challenge was to find ways
of applying Lean principles to the
business of software exports. Deb,
along with several Wipro officials
visited factories in Japan to under-
stand how heavy equipment and car
manufacturers eliminated waste
from their processes. “There’s no
recipe or cookbook for applying
Lean. The goal is more about build-
ing a platform for ongoing improve-
ment,” says Staats.
Initially, Wipro could not get to vis-
it a Toyota factory, Deb managed to
visit one of the world’s biggest en-
gine makers for tractors based in
Japan. “They were making 200 vari-
ants of engines on a single assembly
line—that’s unbelievable,” says Deb.
In another such visit to a Japanese
factory some five years ago, Deb
studied how a company was produc-
ing 3-4 variants of one excavator ma-
chine every eleven minutes.
Later, Toyota invited Wipro’s bil-
lionaire founder Azim Premji to vis-
it the company’s manufacturing
plant in India. “What we saw was
Corolla and Innova were mixed and
were being produced on the same
line, but the catch was that nearly
70% of both the variants are same so
you can use the same line,” he says.
Everything, except main engine
and chassis, including seat manage-
ment system, electrical system and
braking system are same for both
the variants. “One of the most bril-
liant things Toyota has done is that
almost 70% of all their cars are built
using standard platforms—they are
designed for Lean,” Deb says.
And while Wipro could draw paral-
lels between assembly lines for
Toyota cars and the steps involved
in writing software applications,
the company was still struggling to
find an expert who could help start
the journey. Having studied
Toyota’s Lean processes, Deb decid-
ed to meet somebody who could ex-
plain how to go about implementing
the system. He even met Hiroyuki
Hirano, the famous Lean expert
who was a part of the Toyota’s pro-
duction team in early years.
Finally, Deb went to propose to Mr
Premji that the company would need
to do it on its own. “I remember hav-
ing a debate with Mr Premji, and his
question was if we’re going to save
10x, then x doesn’t matter—we can
spend that x,” Deb recalls.
“Because even if you get twice the
return, or 2x, it still made business
sense,” he adds. This was not the
first time Wipro was looking to other
industries for solving problems
unique to the IT sector. In 1997,
Wipro was the first company to
replicate Motorola’s Six Sigma in a
software services business.
But even Six Sigma had its share of
failures and learnings for Wipro.
“We decided not to repeat all the mis-
takes we made during Six Sigma—it
was top down, big launch, and it APPLYING MANUFACTURING
came with targets,” says Deb. The PRINCIPLES TO SOFTWARE
biggest challenge with Six Sigma Wipro created an office for produc- eight projects didn’t take long, and says Deb.
was that it took long for gaining ac- tivity, which included Deb, Ravi- only six live projects ended up being
ceptance among teams and the par- shankar Kuni and other senior offi- successful.
ticipation levels were quite low.
Involvement from Mr Premji from professionals took one project each time, budget, didn’t get into trouble,” break tasks into categories of
the very beginning helped the cause for starting the Lean pilot and at- says Deb. One of these projects had ‘complex’, ‘medium’ and ‘simple’.
too. “He (Premji) was always aware tempts were made to involve project only one engineer who knew the job In Toyota’s dictionary this process
and was even part of the Lean brief- teams from the very beginning.
ing sessions, it really helped drive
this initiative,” says Staats.
THE ECONOMIC TIMES | MUMBAI | THURSDAY | 14 APRIL 2011
“After we reduced the project time,
the manager could go on his leave
Driving Performance Through Lean and when he came back he was more
than willing to take on other Lean
How Wipro Embedded Lean Methods In Its Culture And Daily Operations projects,” Deb says. Acceptance
from project managers helped
Number of Lean Engagements
Wipro spread the Lean initiative
Lean has historically been known as the manufacturing Continue To Increase At Wipro without forcing it upon the lower
philosophy developed by Toyota. The basic percept of ranks.
1,645
Lean Lean manufacturing is that any activity or use of CUMULATIVE LEAN Another manufacturing concept
resources that does not deliver value for the customer ENGAGEMENTS used by Toyota is what is called ‘sin-
SINCE INCEPTION 1,401
is wasteful gle minute exchange of dye’ or
SMED. Before Toyota came up with
Wipro’s Lean Overview SMED, most assembly line man-
1,044
Wipro has spen the last few years applying and agers kept the same dye running for
deploying the principles of Lean manufacuring to long in order to make the best use of
software development & management process 743 it because setting up a dye takes up
to 24 hours. By working backwards,
Toyota found that half the job could
Lean methods and Lean advisory services play a
315 be done offline.
significant role in Wipro’s successful implementation of “Anything that does not contribute
the Proces Excellence Services. Lean principles are to producing directly is a waste ac-
embedded in every Wipro engagement and allow the 54
cording to Toyota and should be
firm to help customers generate improvements in eliminated,” he says. The automak-
‘04-05
‘05-06
‘06-07
‘07-08
‘08-09
‘09-10
efficiency and effectiveness with IT departments er classified wastes as necessary
and unnecessary. While unneces-
Source: Wipro Technologies, Forrester Research, Inc sary waste should be eliminated
completely, necessary waste should
be squeezed.
In the software services world, ‘dye’
Segments Where Lean Methods Can Be Applied To Reduce Waste can be any process or line of code
that can be used over and over again
WASTE CATEGORY EXAMPLES IMPLICATION TO THE BUSINESS across different projects. Normally,
Transport Searching for required info at least 30-70% of work in most soft-
Changing/evolving requirements Capital Expenditure and Operating Expenditure ware projects can be standardised.
For instance, every time a compa-
Inventory Frequent task switching Productivity ny like Wipro tests software, a sepa-
Backlog Loss of context rate machine needs to be set up.
Over skill Costs Software testing in fact is a multi-bil-
lion dollar market today.
Motion Cutomer deliverable Productivity
Before Wipro applied ‘single
Frequent travel between location for reviews minute exchange dye’ to software
Waiting Customer feedback, information resources Revenue, Productivity & Cost testing, every time software had to be
tested, engineers had to set up the
Over-production Duplicate test cases, Extra unused feature Non-optimal resources utilisation
machine again according to different
Business & IT not aligned
projects taking up to four hours and
Over-processing Redundant reviews, irrelevant training Support & maintenance cost even more. After identifying com-
Job satisfaction mon processes using Lean, this set
Defects & Rework Defects, poor and incomplete documentation Customer service
up time reduced to an hour. “Now, no-
Customer experience body blocks the labs and nobody has
to wait long either,” says Deb.
However there were Toyota con-
cepts that posed significant chal-
lenges. For instance, Toyota’s con-
cept of ‘concurrent engineering’ is
about designing in parallel and not
sequentially. By doing this, Toyota is
able to launch a new car every 36
months compared to a General
Motor, which took 5 years on an av-
erage for launching a new vehicle.
But in software services business,
“the danger of designing in parallel
is that at the end of it, it may not
work together,” says Deb.
The Toyota Production System
(TPS) offered solutions to this prob-
lem too. After struggling for days in
finding out how to apply parallel de-
sign concept to software services,
Deb found out that an MIT professor
called Steven D. Eppinger had done
some research relevant to this con-
cept. “Eppinger’s algorithm helped
us scale this concept in a services en-
vironment,” says Deb. Also, with
more time available because of
eliminating non-core tasks, Wipro
was able to reduce defect rates for
every thousand lines of software
codes by half. The defect rates for
every thousand line of codes became
8% from around 18% earlier in a ma-
jority of Lean projects.
According to Forrester Research
analyst Alexander Peters, from
August 2008 to December 2009, the
number of Lean projects that could
demonstrate performance increas-
es by more than 10% based on pre-
specified metrics grew. For example,
it grew in the banking sector from
51% to 83% (large projects) and in
the telecom sector from 13% to 72%
(for medium size projects).
“Wipro’s example shows that Lean
GEETANJALI
can work and become a critical suc-
cess factor for organisations operat-
ing with projects to provide IT-based
services, where substantial vari-
1,645 project were live with Toyota’s aged to eliminate dependency on ability in customer demand, tech-
Lean principles. Picking the first him, freeing him from the task,” nology prerequisites, and human-
centric intervention is common,”
Following Lean, the first step said Peters of Forrester.
was to assess the amount of work During recession of 2009, Wipro de-
cials. This team of around ten “These six projects were ahead of needed on that project, and then cided to apply Lean across all appli-
cation maintenance projects and
squeeze the cost out at a time when
customers were asking for rate cuts
well. “This guy wanted to be away is called ‘line balancing’, which and do more with less.
During 2004-2005 Wipro had around from action because of personal actually means giving right job to During last year and half, Wipro
50 projects on Lean, by 2010, nearly emergency and using Lean we man- the right guy. has moved over 25 customers to the
Lean model. By using Lean princi-
ples, Wipro was able to transition
projects from rival vendors to its
own project teams in 100 days—a
process that used to take up to six
months earlier.
“Now, our projects, especially
where a transition is involved, are
becoming profitable much faster,”
says Deb. This is because the transi-
tion time is reduced—the period
when projects are not normally prof-
itable. One of the top worries for
any new outsourcing customer is
the cost of switching between ven-
dors. By using Lean, Wipro is now
able to bring down that entry barrier
and make it more attractive for cus-
tomers to switch.
Experts say Wipro’s case study is a
lesson for other organisations seek-
ing to start a similar initiative.
“Organisations embarking on the
journey to Lean should follow
Wipro’s staged approach centred on
the deployment of a Lean produc-
tivity team (or centre of expertise)
and unified Lean tool kit and per-
formance measurement system,”
says Peters.
While many financial analysts
have blamed Wipro for focussing too
much on cutting costs by chasing
more efficiency, the company’s
achievements with replicating
Toyota’s Lean principles for its soft-
ware business is now helping it win
consulting engagements against
McKinsey and others.
Even US auto companies
tried to copy Toyota, but it
kept getting better. So,
even for Wipro, Lean is not
like a cookbook for recipes,
it needs to be improved
continuously
BRADLEY R STAATS
Professor, Univ of North Carolina
BUT CAN LEAN HELP
WIPRO DIFFERENTIATE?
“Even US auto companies tried to
copy Toyota, but it kept getting bet-
ter. So even for Wipro, Lean is not
like a cookbook for recipes, it needs
to be improved continuously,” says
Staats of the University of Carolina.
With barely 20% of fresh engineers
readily employable, rising wage in-
flation and attrition rates, the
Toyota Production System being
used by Wipro could be helpful ana-
lysts say, but there’s a long way to go
before the company can claim to
have evolved its own ‘Wipro
Production System’.
“While proceeding by analogy to
physical processes has led Wipro’s
Lean initiatives to this point, they
will need to use knowledge gained
from their context to proceed fur-
ther,” Staats of the Carolina Univer-
sity along with David James Brun-
ner and David M. Upton said in a
report. For Wipro, it’s more critical
to fend off aggressive rivals such as
Cognizant and regain market share
against Indian and multinational
firms. “Wipro has always been at the
forefront of operational efficiencies
ever since they pursued Six Sigma,
but can they replicate what Toyota
achieved in ending the dominance of
Ford, others?” said the CEO at one of
the top 10 Indian tech firms.
“Wipro has started winning Lean
consulting projects with Fortune 500
customers. But it’s not over by any
stretch of imagination for the com-
pany yet,” says Staats.
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