When it comes to Wipro, many people think the company is all about information technology. But the over $5-billion business conglomerate is exposed to various other sectors such as consumer care, lighting and furniture, which helps it mitigate the risks of being over-exposed to a particular segment. Suresh C Senapaty, its CFO, tells Bibhu Ranjan Mishra the company's strategy in a slowing economy.
Is Wipro balancing between the new and old economy businesses to mitigate risks?
I think the plan is portfolio diversification for sure. We started with vanaspati, and now we are in soaps, toiletries, furniture and in IT. Earlier, we were in India for our non-IT businesses, and then we acquired Unza to foray into other emerging markets such as China, Vietnam, Indonesia, Africa and West Asia, which is doing very well.
Similarly, we are looking at infrastructure engineering in the European market after India. Hopefully, at some stage, we will be addressing North and South America and other markets. So, the objective is to grow all our businesses.
How do you think these businesses will perform in a slowing economy?
All the three segments we are focusing on are growth businesses. And even within the IT sector, there are a lot of sub-segments, which are growing faster. So, our objective is getting into those businesses and geographies faster.
Which among these are your focus areas now?
We think that opportunities are present in all these segments and our focus is to grow faster than the industry in each of them.
How does the business environment appear now?
I think from the medium to long-term, the economic slowdown is not going to have any impact in the segments we operate.
...But the slowdown has affected the BFSI segment for sure
Last quarter, we did not see any major impact. This quarter should be okay too. But believe me, the environment is very challenging. However, very few companies in the BFSI segment whom we serve, have been impacted by the slowdown. Some of them have been bought by good and healthy companies (banks).
When do you expect normalcy to return?
The economic recession may last. But that does not mean that our business will take three to four years to take off as we do not necessarily thrive on the overall economic growth in the US or in Europe. If the economy does well there (in the US), they will want more services from Indian companies. If the economy does not do well, they have to take out costs. And again, we have the best of the solutions available for helping them.
Any steps you are taking to address the present situation?
Basically, we are making sure that risk management is much more tightened; we do a proper due diligence with reference to some of the recent deals that we are making. When the pressure is high, it is possible that somebody could agree to anything that is not practical. So, from that perspective, the risk management strings are becoming more tightened.
Any cost-cutting initiative?
It's always been there. But wherever there is wasteful expenditure, we will try to restrict it. There will be some kind of productivity and exploitation of assets, which we will drive hard.
Similarly, we will ensure that there is a high level of optimisation in some of the discretionary expenditures.
You have recently forayed into renewable energy. Have you started seeing demand for such business?
Our plans are still on hold, and it's in a very preliminary stage. We are developing the capabilities, and talking to prospective clients. But we are planning to make it a big business for sure.
But you don't have any plan to get into production of solar or wind energy?
We are starting it as a consulting service. At this point of time, our thinking is not to get into setting up our solar energy plant or to get into solar energy business. But you never know what will happen eventually. This is a wide open area.
