 "We're seeing positive traction in demand: T K Kurien")
Wipro, India's third largest IT services company, like its peers TCS and Infosys, has signalled that growth is becoming visible. This was evident in the growth guidance provided by the company for the second quarter. T K Kurien, executive director & chief executive officer of Wipro in an interview with Pradeesh Chandran talks about business demand drivers, immigration bill concerns and the way ahead. Edited excerpts:
After a long time, Wipro's Q2 guidance of two-four per cent looks bullish. What are the drivers for such a growth?
We see a demand environment picking up post Q1. We are also seeing positive traction in the demand environment, with discretionary expenses in certain markets. The US economy is recovering strongly and we are seeing strong deal closures in the quarter and that is the reason for giving such a strong guidance. We believe the momentum would continue.
It has been almost two years since the company started its restrucuring. Can we say Wipro is back on track?
Do you think Wipro can maintain this guidance and manage to grow at a healthy pace?
There would always be demand and I am consistent about this. Our ability to capture the demand is going to be the most important question. So right now, in the last quarter, we have done a fairly good job in capturing deals. We expect to see that momentum continuing in the next few quarters. Our focus on disruptive technology would help us in doing this. If you look at the advanced technology group, it has grown sequentially well in the last quarters. It grew nine per cent sequentially. This would tell you how important that is. If you look at the analytics business, it has grown 6.5 per cent.
You mentioned discretionary spending is picking up in certain pockets. Which are the regions that would drive the growth?
It is partly based on the customer base we have and also partly based on what we see in the market. The US recovery is very strong. In the case of Europe, there is recovery in certain countries. For example, in the UK, we see a strong recovery in certain areas in batches, while in France, the recovery is not happening. But in the case of Germany, again it is slowly coming out of worries.
India continues to be volatile to any change in strategy?
India is hard for all of us. Given our mix of business, we have been hit quite badly. If you look at the India business today, the capital expenditure cycle is completely slowed down. That is a worry for us. When you go into a market, you don't look at it for a year or two, but for a long term. Our belief is that ultimately, there is enough value to be created in the market. We are not giving up on our market share, and we have been able to grow the market share. But we are not able to grow the size in this market. It is primarily due to the environment in the country right now.
You mentioned you are looking more at disruptive technology and non-linear growth. Can you elaborate on that?
Our business has two parts. We have a value business and an impact business. Impact business is not price sensitive, while value business is always price sensitive. In the value business, we have to use non-linear methods to take out cost. But in the impact business, we have to have more people in front of the customers. To create real business value for the customers, there is no pricing pressure, they pay me based on what they think in terms of value we create for them. If you look at our margin sentiment, it has not been very negative. Our belief is that we have enough levers to play that through. Our model is changing. If I keep focusing on a people-based business model, I would keep adding people, which actually, we don't have to.
Does that mean there would be a few additions of people going forward?
Yes, the hiring and number of people would come down. However, there would not be much impact on our campus hiring. We need the current generation of workforce. The way the current generation interacts with customers is very different from the way we have been used to. We won't hire in the traditional way. We would have natural attrition of 13 per cent and that would continue.
Has the immigration bill in anyway impacted business and what are the mitigation plans put in place by the company?
No, the bill has not impacted the business in anyway. As mentioned, it is too early to comment on the bill. But we have various plans on this, the only issue is when to activate this.
After a long time, Wipro's Q2 guidance of two-four per cent looks bullish. What are the drivers for such a growth?
We see a demand environment picking up post Q1. We are also seeing positive traction in the demand environment, with discretionary expenses in certain markets. The US economy is recovering strongly and we are seeing strong deal closures in the quarter and that is the reason for giving such a strong guidance. We believe the momentum would continue.
It has been almost two years since the company started its restrucuring. Can we say Wipro is back on track?
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I think Wipro has been back on track in the past few quarters itself. The problem is we have not demonstrated this in terms of results. The restructuring is complete and we are now executing our strategy.
Do you think Wipro can maintain this guidance and manage to grow at a healthy pace?
There would always be demand and I am consistent about this. Our ability to capture the demand is going to be the most important question. So right now, in the last quarter, we have done a fairly good job in capturing deals. We expect to see that momentum continuing in the next few quarters. Our focus on disruptive technology would help us in doing this. If you look at the advanced technology group, it has grown sequentially well in the last quarters. It grew nine per cent sequentially. This would tell you how important that is. If you look at the analytics business, it has grown 6.5 per cent.
You mentioned discretionary spending is picking up in certain pockets. Which are the regions that would drive the growth?
It is partly based on the customer base we have and also partly based on what we see in the market. The US recovery is very strong. In the case of Europe, there is recovery in certain countries. For example, in the UK, we see a strong recovery in certain areas in batches, while in France, the recovery is not happening. But in the case of Germany, again it is slowly coming out of worries.
India continues to be volatile to any change in strategy?
India is hard for all of us. Given our mix of business, we have been hit quite badly. If you look at the India business today, the capital expenditure cycle is completely slowed down. That is a worry for us. When you go into a market, you don't look at it for a year or two, but for a long term. Our belief is that ultimately, there is enough value to be created in the market. We are not giving up on our market share, and we have been able to grow the market share. But we are not able to grow the size in this market. It is primarily due to the environment in the country right now.
You mentioned you are looking more at disruptive technology and non-linear growth. Can you elaborate on that?
Our business has two parts. We have a value business and an impact business. Impact business is not price sensitive, while value business is always price sensitive. In the value business, we have to use non-linear methods to take out cost. But in the impact business, we have to have more people in front of the customers. To create real business value for the customers, there is no pricing pressure, they pay me based on what they think in terms of value we create for them. If you look at our margin sentiment, it has not been very negative. Our belief is that we have enough levers to play that through. Our model is changing. If I keep focusing on a people-based business model, I would keep adding people, which actually, we don't have to.
Does that mean there would be a few additions of people going forward?
Yes, the hiring and number of people would come down. However, there would not be much impact on our campus hiring. We need the current generation of workforce. The way the current generation interacts with customers is very different from the way we have been used to. We won't hire in the traditional way. We would have natural attrition of 13 per cent and that would continue.
Has the immigration bill in anyway impacted business and what are the mitigation plans put in place by the company?
No, the bill has not impacted the business in anyway. As mentioned, it is too early to comment on the bill. But we have various plans on this, the only issue is when to activate this.