Now, Wipro taking aim at industry-level growth by January-March quarter

Two years after restructuring, Wipro is finally seeing gains translate into the highest growth in seven quarters in July-September and above industry estimates in terms of profit margin despite wage hikes. However, Wipro is still trailing its peers by a mile and some. What’s the action plan to close the gaping gap between Wipro and its compatriots?
Our focus on mining and hunting has resulted in revenue from our top 10 clients rising 4.1% from the previous quarter, faster than our overall IT services sales growth of 2.7% – which was our best performance for seven quarters. We bagged one more $100 million account this quarter – taking the total number of $100 million clients to 11, and won two more $50 million clients in the quarter as well. However, we still have to do more on the hunting front and also some gaps need to be closed in specific verticals – like, for example, insurance in our BFSI vertical needs to improve. We also need to supplement the organic approach with an inorganic one. All these steps should help us re-align with our peers, and we are hoping to reach industry-level growth by Q4 (January-March quarter).

Despite bagging a majority of Middle East deals in the quarter compared with your peers, Wipro’s Middle East growth was the slowest among its geographies of operations…
The deal wins in the Middle East among some others will reflect in the next quarter’s revenues, which is why we have guided for 1.75-3.5% revenue growth in the third quarter, despite fewer working days and operational furloughs.

Telecom as a vertical has been de-growing for a long time for Wipro. Any positive growth outlook expected soon?
Our global media and telecom as well as our telecom original equipment manufacturer (OEM) has grown better in the second quarter compared with previous quarters. However, the decline is more from a service provider space. Still, considering the recent deal wins in the telecom vertical, we expect better growth for it in Q3.

Despite lower hiring, utilisation for Wipro – while marginally improving in July-September – is still much lower than its peers. How do you plan to lower your bench size?
Our cost per person is higher than our peers, which needs to come down. We are also hiring less, on a need-basis and freeing up resources from various projects to improve utilisation. Our strong non-linear approach, in terms of automation, will also aid in improving utilisation, by cutting down hiring.

So, will the drive towards automation result in a loss of jobs?
No, this will not happen as people will be better trained to take on different roles though new hiring will steadily come down. Automation will also aid in reducing costs of delivery, enhancing quality and mitigating risks.

How has the shift from fixed pricing to an outcome-based pricing model helped Wipro’s margins?
Outcome-based pricing model has helped in substantially improving margins and bagging deals. While we expect stable pricing going forward, there is more pressure on coupons rather than price realisation, which gives us a benefit – to negotiate better, with proven results of better productivity for the asking price.

Healthcare has been your highest growth vertical in July-September while US continues to be your highest revenue market. In this light, any concerns around Obamacare?
While we are participating in the Obamacare measures, we do not see any major negatives to our healthcare business due to this step.

What about the US shutdown and the impact of the US Immigration Bill?
While there are no concerns on the US shutdown front, we are closely monitoring the Immigration Bill and working with US Congress and staff and our clients organisation to lobby against the Bill, which will jeopardise not only Indian IT vendors’ business interests but those of US clients for whom India has always been a key IT destination.