‘We are not in the race of how much is the revenue, but how good is the revenue.’
Wipro CEO Abidali Neemuchwala, tells Debasis Mohapatra and Bibhu Ranjan Mishra that the company’s order book is much higher today than what it was a year ago.
The focus, he says, will now be on execution and improving the quality of revenues.
Despite the better-than-expected numbers in Q1, you have given a relatively subdued revenue guidance for Q2. Is it not quite conservative?
We have given a revenue growth guidance 0.3 to 2.3 per cent, and if you look at the upper end, it does not show in conservatism.
We are an execution company.
We give guidance based on what we see (on the ground) and will work through the quarter (to achieve it). But, we see a good order booking as well as demand momentum.
How robust is the order booking?
In terms of large deals, it has significantly gone up. Overall, the order book is also good, especially from the digital side of the business.
We don’t give total contract value of those deals as we give revenue guidance which is a lot more granular. But I can say our order book has grown in double digit compared to the previous year.
But growth in Q1 was driven by BFSI and North America. Others are still declining?
Most of our strategic business units have grown positively.
The only thing is communication (vertical) is getting impacted by (em>slow growth) on India and healthcare by healthplan services.
In manufacturing, we had a couple of large projects which have ended and it would take a couple of more quarters as we build the new book of business.
In Europe, you saw a QoQ drop in growth?
It’s a one quarter phenomenon. Otherwise, Europe overall has seen a year-on-year 8.7 per cent growth. It happens when some deals get over in a particular quarter.
Compared to your larger peers, your growth in digital seems to be rather subdued. What’s your take on it?
If you compare our digital revenue growth, it was among the industry best over the last quarters.
Digital services already account for almost 28 per cent of our overall revenues.
We would likely to take it up to up to 50 per cent in the coming quarter as a majority of our deal wins are coming in the digital space.
Your (profit) margins do not reflect the boost from digital business. Why?
We don’t provide guidance on margins. But if you see our margins in the first quarter, it has improved. In the medium term, we see an upside to our margins.
While you derive more than 28 per cent of your revenues from digital offerings, is it also helping in improving the quality of revenue and revenue productivity?
That’s what we are focusing on.
We are not in the race of how much is the revenue, but how good is the revenue.
For example, what’s the digital component; what’s the consulting component and so on.
We have divested our data centre business to rid of the low-end commodity business.
We are restructuring our Indian business where we are getting out of all kinds of low-end works.
You were in the process of restructuring some of the businesses, including in India and the Middle East, and healthcare. When is this likely to be completed and to pay you dividends?
India and the Middle East will take at least two quarters (to get completed).
In healthcare, it will be difficult to give any timeline. As the US sorts out Obamacare, we will be able to give a view on that. We have to live with these uncertainties like Obamacare and H1B.
Where do you see Wipro five years from now?
I see it as a completely different, a very consultative- and domain-led organisation, and a leader in the automation space.
You have announced an investment of $117 million for the strategic alliance with Alright. Why are you investing in them?
It’s a large strategic deal, as a part of which we have taken over their people and will be transforming their business.
This is highly strategic for us as we will deploy Holmes (Wipro’s automation platform) to automate their business processes, and will help them with digital transformation for employee experience.
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