 "The way IT is bought is going to be very different: T K Kurien")
Despite reporting growth, Wipro's information technology (IT) services business again disappointed on the revenue guidance (forecast) for the next quarter. T K Kurien, chief executive officer of the IT business, tells Bibhu Ranjan Mishra it is not the guidance but how the company performs that matters. Edited excerpts:
The numbers delivered by the top Indian IT players are mixed. There are companies delivering good numbers and more optimistic about growth. Wipro seems to be in the second category? Why?
You are seeing two kinds of performances. There are competitors who are primarily very big in technology infrastructure and are really driving their businesses like crazy. Some others are more broad-based in their approach. The broad-based competitors are mining their real estate far better than the others.
We have taken a very different approach. Our view is that technology is going to be everywhere and we need to participate in the technology play, rather than in the infrastructure play. So, in our case, growth is going to be more patchy because of our focus on newer areas. But in the medium term, our view is more positive than those stuck in one particular area.
The changes Wipro made two years ago, after you took charge, have really not started delivering results.
The pipeline of deals coming from that change is what is giving me the confidence. Our exit order book (orders from clients) at the end of the last quarter is much better, though we don't declare that number publicly. We are seeing increased deal conversion. Our annuity mix has changed significantly over the past year. There is a better stability in the business stream today, though it's not still reached the place where it should have.
But that does not reflect in your guidance for the first quarter of FY14. You have given a revenue guidance of a negative 0.6 per cent to growth of 1.6 per cent.
What we perform has nothing to do with the guidance. We will remain within the range that we have guided. But our ambition is very simple. We are going to create world-class companies in each of the segments we play a role. If you look at energy & utility, we are the third largest player in the world today.
How is deal conversion happening now?
Clearly, more positive than last year. But the industry is not going to grow at the same scorching space it used to be in the 2005 or 2006 timeframe. The way technology is bought, managed and used is going to be very different from what it was earlier.
But this is not true in financial services. Your competitions are doing much better in the BFSI (banking, financing services & insurance) segment.
In financial services, the game is very different. We have grown quite well in the retail banking space, whereas we have been hammered in investment banking. Investment banking is about a third of our financial services business, a significant portion of our total portfolio. But we continue to stay investment in that segment.
In Europe, you have reported a decline in revenues as compared to the competition. How are you going to grow that region?
Europe has grown for us on a year-on-year basis, though it has declined sequentially. However, our growth in the US has declined marginally on a year-on-year basis. In Europe, we are growing in most of the markets, including the UK and Germany. But France is an area of concern. The biggest thing we are doing is that we are focusing on the US and working hard to bring growth back in that geography. This is one place which will help us to win the game.
How is deal conversion happening now?
Clearly, more positive than last year. But the industry is not going to grow at the same scorching space it used to be in the 2005 or 2006 timeframe. The way technology is bought, managed and used is going to be very different from what it was earlier. My own sense is that CIOs (chief investment officers) are no longer going to be the sole decision makers on technology spending. That is going to be divided between the CMOs (marketing chiefs), COOs (operations' heads) and, to some extent, the CFOs (finance chiefs). So, that means the solutions you need to build for them are going to very different as they look at the quantum impact on the money spent.
In the past quarter, we saw many Indian IT companies are changing their campus and fresher hiring strategy. Most are talking about changing the mix and hiring based on the demand. What is Wipro's strategy on this?
We will continue to hire from campus. We have always stuck to our dates in terms of campus hiring and it is not going to change. There could be some staggered onboarding, as it depends on how much our training facility can handle.
The numbers delivered by the top Indian IT players are mixed. There are companies delivering good numbers and more optimistic about growth. Wipro seems to be in the second category? Why?
You are seeing two kinds of performances. There are competitors who are primarily very big in technology infrastructure and are really driving their businesses like crazy. Some others are more broad-based in their approach. The broad-based competitors are mining their real estate far better than the others.
We have taken a very different approach. Our view is that technology is going to be everywhere and we need to participate in the technology play, rather than in the infrastructure play. So, in our case, growth is going to be more patchy because of our focus on newer areas. But in the medium term, our view is more positive than those stuck in one particular area.
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The changes Wipro made two years ago, after you took charge, have really not started delivering results.
The pipeline of deals coming from that change is what is giving me the confidence. Our exit order book (orders from clients) at the end of the last quarter is much better, though we don't declare that number publicly. We are seeing increased deal conversion. Our annuity mix has changed significantly over the past year. There is a better stability in the business stream today, though it's not still reached the place where it should have.
But that does not reflect in your guidance for the first quarter of FY14. You have given a revenue guidance of a negative 0.6 per cent to growth of 1.6 per cent.
What we perform has nothing to do with the guidance. We will remain within the range that we have guided. But our ambition is very simple. We are going to create world-class companies in each of the segments we play a role. If you look at energy & utility, we are the third largest player in the world today.
How is deal conversion happening now?
Clearly, more positive than last year. But the industry is not going to grow at the same scorching space it used to be in the 2005 or 2006 timeframe. The way technology is bought, managed and used is going to be very different from what it was earlier.
But this is not true in financial services. Your competitions are doing much better in the BFSI (banking, financing services & insurance) segment.
In financial services, the game is very different. We have grown quite well in the retail banking space, whereas we have been hammered in investment banking. Investment banking is about a third of our financial services business, a significant portion of our total portfolio. But we continue to stay investment in that segment.
In Europe, you have reported a decline in revenues as compared to the competition. How are you going to grow that region?
Europe has grown for us on a year-on-year basis, though it has declined sequentially. However, our growth in the US has declined marginally on a year-on-year basis. In Europe, we are growing in most of the markets, including the UK and Germany. But France is an area of concern. The biggest thing we are doing is that we are focusing on the US and working hard to bring growth back in that geography. This is one place which will help us to win the game.
How is deal conversion happening now?
Clearly, more positive than last year. But the industry is not going to grow at the same scorching space it used to be in the 2005 or 2006 timeframe. The way technology is bought, managed and used is going to be very different from what it was earlier. My own sense is that CIOs (chief investment officers) are no longer going to be the sole decision makers on technology spending. That is going to be divided between the CMOs (marketing chiefs), COOs (operations' heads) and, to some extent, the CFOs (finance chiefs). So, that means the solutions you need to build for them are going to very different as they look at the quantum impact on the money spent.
In the past quarter, we saw many Indian IT companies are changing their campus and fresher hiring strategy. Most are talking about changing the mix and hiring based on the demand. What is Wipro's strategy on this?
We will continue to hire from campus. We have always stuck to our dates in terms of campus hiring and it is not going to change. There could be some staggered onboarding, as it depends on how much our training facility can handle.