Wistron ITS (4953): Pursuing Excellence Through a Commitment to Delivery
CDRC Corporate Development Research Center / Board Review
Over the past 20 years, Wistron ITS has grown from just 200–300 employees to 11,000 worldwide, an increase of more than 30 times. Annual revenue rose from approximately NT$100 million to over NT$8.8 billion in 2023. Earnings per share (EPS) also climbed from NT$0.36 in 2015 to a record NT$8.49 in 2023. Behind this impressive performance is Chairman Ching-Chih Hsiao.
Wistron ITS (WITS) was originally established in 1992 as a software company founded by employees from Taiwan's Institute for Information Industry (III), IBM, and other organizations. Its main business was localizing IBM software. After facing financial difficulties around 2000, the company received investment from Simon Lin, Chairman of Wistron Corporation, in 2002, driven by his commitment to Taiwan's software industry.
However, continued losses led Lin to invite his former university classmate, Ching-Chih Hsiao, to lead the company in 2004. The company was renamed Wistron ITS, with hopes that Hsiao could turn its business around.
Following two years of restructuring, WITS became profitable in 2006 and has remained profitable ever since. Ten years after Hsiao took leadership, the company was listed on Taiwan's over-the-counter market in 2014. In 2018, WITS launched its five-year WITS 2.0 strategy, achieving a compound annual growth rate of 23%. In 2023, it introduced WITS 3.0, centered on the principle of "Enabling Clients' Success Through Delivery Excellence," shifting its focus from business expansion to overall quality improvement.
Driving Growth Through Three Ecosystems
"Few people in Taiwan truly understand what WITS does. Most people approach us with a hardware mindset," Hsiao explained during an interview.
Unlike traditional technology companies, WITS does not offer its own products. Instead, it provides customized outsourcing services, building virtual IT teams for its clients.
Hsiao compared the company's role to mining: "We are neither the shovel (technology) nor the minerals being extracted (the final product). We are the miners who use the shovel to extract the minerals."
As industries become increasingly digital and AI-driven, this analogy highlights the enormous opportunities in the global IT outsourcing market. Hsiao sees international companies such as Accenture, with annual revenue exceeding US$60 billion and approximately 730,000 employees, as well as Infosys and Tata Consultancy Services, as benchmarks for WITS.
Building long-term client relationships is WITS' core competitive advantage.
"We don't call them customers. We call them clients because we aim to build long-term partnerships," Hsiao emphasized.
In fact, WITS' top ten clients account for more than 50% of its total revenue, while approximately 40 clients have maintained partnerships with the company for over a decade.
To strengthen these relationships and ensure excellent service delivery, Hsiao is developing three key ecosystems: the Global Talent Ecosystem, the High-Tech Innovation Ecosystem, and the Client Value Ecosystem.
WITS' ability to respond quickly and deliver results is remarkable. For example, the company assembled a 2,400-person team within a short period to provide IT outsourcing services for an overseas client across more than 100 cities.
"Meeting client needs is our most important competitive advantage," Hsiao said.
Attracting Key Talent and Expanding Globally
"We don't lack market opportunities. What we lack is talent," Hsiao said when discussing the global IT outsourcing industry.
Currently, mainland China accounts for approximately 70% of WITS' global revenue, followed by Southeast Asia, managed primarily from Taiwan, at slightly over 10%, Northeast Asia, led by Japan, at around 10%, and the United States at a single-digit percentage.
Hsiao compared the company's business structure to a table with four legs, one of which is significantly thicker than the others. His goal is to achieve a more balanced global business structure, making international talent recruitment, particularly at headquarters, an urgent priority.
Of WITS' more than 10,000 employees worldwide, only around 1,000 are based in Taiwan, roughly reflecting the region's share of revenue. Mainland China has the largest workforce.
Hsiao attributed the growth of mainland China's revenue contribution from zero to 70% over two decades to the outstanding local team he brought into the company and their strong performance.
Meanwhile, the U.S. IT outsourcing market is comparable in size to China's, making it a key area for future expansion.
To attract and retain talent, WITS has established a strong human resources department and employee service center. Hsiao is personally leading an initiative to establish 50 key talent pools to support more balanced global operations.
Despite being established more than 30 years ago, WITS maintains a relatively young workforce due to its rapid growth and continuous recruitment. The average employee age is just 28 in mainland China, 32 in Taiwan, and around 40 in Japan.
Women account for more than 50% of managerial positions and 32% of the total workforce. The number of female employees in Japan has also increased significantly in recent years.
At 71, Hsiao joked, "I may be the oldest person in the company, but I certainly don't have the oldest mindset."
All in AI: Embracing New Opportunities
As generative artificial intelligence (AI) transforms industries worldwide, is it a threat or an opportunity for IT outsourcing companies?
"Both!" Hsiao replied.
Drawing on his 50 years of experience in the technology industry, he explained:
"Over the past 50 years, technology has advanced rapidly. If n represents the number of technology professionals and p represents productivity, the product of n × p is enormous. Yet market demand (d) has always been greater. I believe this will remain true in the AI era. The key is whether we can stay one step ahead of our clients."
To meet the demands of the AI era, WITS has introduced an internal "All in AI" strategy built around three priorities: internal digital innovation, company-wide AI learning, and stronger client success.
The strategy aims to enhance employees' ability to use AI tools while identifying new business opportunities arising from the rapid development of artificial intelligence.
Wistron ITS: An Industry Leader with an Undervalued P/E Ratio
WITS has continued to deliver strong earnings growth in recent years, with revenue increasing by 18% during the first seven months of 2024.
However, Hsiao believes the company's market valuation has yet to fully reflect its business potential.
He suggested that investors may not fully understand WITS' business model, resulting in a price-to-earnings (P/E) ratio of approximately 14 times. In comparison, similar companies in the United States trade at around 20–30 times earnings, while mainland Chinese peers trade at approximately 30–50 times.
This suggests that WITS may be undervalued compared with its international competitors.
Despite expectations of market volatility worldwide, including in mainland China, during 2024, Hsiao remains committed to driving WITS forward through uncertain conditions.
With its focus on building strong client relationships and delivering excellent services, WITS is well positioned to establish a stronger presence in the vast global IT outsourcing market.
As the company continues to grow, the market may eventually recognize its value through a more reasonable valuation.
