 "Discretionary spending up in US after many yrs: T K Kurien")
Wipro, India’s second largest software services company has continued to grow in the third quarter of the current financial year. The company has also given higher revenue outlook for IT services in the next quarter. The Bangalore-based company’s chief executive officer, T K Kurien, tells Bibhu Ranjan Mishra and Itika Sharma Punit he sees good times ahead and the company is prepared to capitalise on those. Edited excerpts:
You have shown two consistent quarters of strong growth? How do you foresee coming quarters?
We have a long way to go; there are still a lot of work to be done. Our aspiration is to report secular growth of 4-4.5 per cent quarter-to-quarter. The minute we hit that consistently for one year, I can declare victory. The first job for us is to get consistency back, and two quarters in our lifetime is hardly anything.
That’s what we are pushing for. However, that depends on how customers buy and how we service them. I am not bothered about the demand environment. The fact is that there is enough business in the market, and it’s for us to go there, grab share and execute well. So, the problem in many cases is not outside the company, it’s within it, and it’s true for all of us.
What about demand?
Discretionary spending is going up in the US after many years. Earlier, people used to give us discretionary spending for a quarter, but there was no continuity. Now, we know what it is going to look like for the next two quarters. Even though it is not common across all industries, we are seeing this trend.
So do you think FY15 would be a better year than the last three years when you have been at the helms of Wipro?
Absolutely. We are seeing far more confidence among the customers in the US. The UK is picking up. Continental Europe is also seeing a lot of activities in terms of deals, and we are going to gain a share in that market from the competitors. Thankfully, if we do well in these markets and India and West Asia continue to perform well for us, I would be positive about the next year.
But your Asia Pacific business seems to have declined, perhaps the only drag this quarter? What is the reason?
Singapore, Malaysia and parts of Australia have dragged us in the past quarter. I think there are two reasons. One is that we have got a specific client situation there. The client has cut back on its budgets. Secondly, our penetration in that market has to improve. But given where we are today, our focus is simple—we have to perform well in continental Europe, where we’ve got a separate structure running. We are creating local leadership and separate delivery mechanism for continental Europe.
Your India business growth figure last quarter comes as a surprise as one of your large peers has reported a dip? What aided the growth?
As far as India business is concerned, nothing really has changed for us. Last time we showed five per cent growth, this time also we have seen similar growth. We have remained quite selective in terms of picking the deals, especially the government contracts. We are really scared of doing business with the government.
In the past couple of years, you have made many structural changes in the company. Do you think you have now the fabric to drive to the desired growth levels?
As a company, we are significantly decentalising a lot of functions now. So the business unit heads and the vertical heads are going to be significantly empowered. Similarly, we are also empowering our service lines. My direct reports’ role would change to managing the capital and the human resources of the company. HR needs to be managed centrally because those are shared resources. So there are going to be structural changes which are going to happen.
What is your outlook on hiring? We are seeing companies growing, but headcount numbers are declining?
One has to be very clear about one thing. You can either be a company that adds value and differentiates itself in front of the customer, or you can be a factory. So it’s up to you to decide in which way you want to go and your DNA has to support that. For us, differentiation in front of the customer is where value comes from. We don't believe that we can run big factories and we don't have that mentality. So, what that means is recruiting a huge number of people from campuses is never going to be our forte, but recruiting quality people. We are changing our recruitment policies to tune up with that strategy.
You have added clients in the $100-mn and $50-mn brackets last quarter. Is it because of the account mining activity?
Our account mining has worked well. Out of our top 125 accounts, account mining has worked for about 60 accounts. We have a lot of work to be done with rest of the accounts.
You have shown two consistent quarters of strong growth? How do you foresee coming quarters?
We have a long way to go; there are still a lot of work to be done. Our aspiration is to report secular growth of 4-4.5 per cent quarter-to-quarter. The minute we hit that consistently for one year, I can declare victory. The first job for us is to get consistency back, and two quarters in our lifetime is hardly anything.
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Do you think this is achievable in FY15?
That’s what we are pushing for. However, that depends on how customers buy and how we service them. I am not bothered about the demand environment. The fact is that there is enough business in the market, and it’s for us to go there, grab share and execute well. So, the problem in many cases is not outside the company, it’s within it, and it’s true for all of us.
What about demand?
Discretionary spending is going up in the US after many years. Earlier, people used to give us discretionary spending for a quarter, but there was no continuity. Now, we know what it is going to look like for the next two quarters. Even though it is not common across all industries, we are seeing this trend.
So do you think FY15 would be a better year than the last three years when you have been at the helms of Wipro?
Absolutely. We are seeing far more confidence among the customers in the US. The UK is picking up. Continental Europe is also seeing a lot of activities in terms of deals, and we are going to gain a share in that market from the competitors. Thankfully, if we do well in these markets and India and West Asia continue to perform well for us, I would be positive about the next year.
But your Asia Pacific business seems to have declined, perhaps the only drag this quarter? What is the reason?
Singapore, Malaysia and parts of Australia have dragged us in the past quarter. I think there are two reasons. One is that we have got a specific client situation there. The client has cut back on its budgets. Secondly, our penetration in that market has to improve. But given where we are today, our focus is simple—we have to perform well in continental Europe, where we’ve got a separate structure running. We are creating local leadership and separate delivery mechanism for continental Europe.
Your India business growth figure last quarter comes as a surprise as one of your large peers has reported a dip? What aided the growth?
As far as India business is concerned, nothing really has changed for us. Last time we showed five per cent growth, this time also we have seen similar growth. We have remained quite selective in terms of picking the deals, especially the government contracts. We are really scared of doing business with the government.
In the past couple of years, you have made many structural changes in the company. Do you think you have now the fabric to drive to the desired growth levels?
As a company, we are significantly decentalising a lot of functions now. So the business unit heads and the vertical heads are going to be significantly empowered. Similarly, we are also empowering our service lines. My direct reports’ role would change to managing the capital and the human resources of the company. HR needs to be managed centrally because those are shared resources. So there are going to be structural changes which are going to happen.
What is your outlook on hiring? We are seeing companies growing, but headcount numbers are declining?
One has to be very clear about one thing. You can either be a company that adds value and differentiates itself in front of the customer, or you can be a factory. So it’s up to you to decide in which way you want to go and your DNA has to support that. For us, differentiation in front of the customer is where value comes from. We don't believe that we can run big factories and we don't have that mentality. So, what that means is recruiting a huge number of people from campuses is never going to be our forte, but recruiting quality people. We are changing our recruitment policies to tune up with that strategy.
You have added clients in the $100-mn and $50-mn brackets last quarter. Is it because of the account mining activity?
Our account mining has worked well. Out of our top 125 accounts, account mining has worked for about 60 accounts. We have a lot of work to be done with rest of the accounts.