Bangalore: Software services company Wipro Ltd chairman Azim Premji spoke to CNBC-TV18 on the global economy and the future of the IT services business. Edited excerpts:
True speaking: Wipro Ltd chairman Azim Premji. Hemant Mishra / Mint
Would you agree that the worst is probably over for the sector?
That’s our judgement on the issue. Just looking at macro trends, revival and some confidence coming around the corner, and the fact that customers are now more settled. You know, I think they know more of what to expect, and the period of transition, the period of reorganization seems to be over.
We got the sense of quite a freeze in the October-February period. Has that thawed?
Yes, moderately. But the trend looks to be that it could improve further going forward.
Would that translate, you think, to budget spending going up immediately; or do you think that will happen only after a couple of quarters?
No, I don’t think we should be too optimistic. You know, let’s play it by the ear, quarter-to-quarter. I think we have learned one thing about this market: Let’s not get carried away. It then breaks your momentum in terms of all the work which you are doing to get leaner and more effective and closer to the customer.
So what would you say is a fair assessment of reality on the ground?
Well, I think almost certainly the US will start seeing some strong signs of revival by the last quarter of this calendar year. Europe will follow probably a little later. I think in India you are going to see revival happening quite quickly. Much before September, primarily because we have not been devastated by the financial crisis, with 70% of our banks being public sector banks, and our dependence on exports has been only 25%. Both these factors seem to indicate that the possibility of our revival seems to be much earlier than globally.
The first signs of recovery are visible in the US and India and elsewhere, but the bigger question is: Will it be a durable recovery?
You know, I suppose it depends on your definition of a recovery. I would put a definition of a recovery in terms of the world going back into positive GDP growth rates in real terms and that should be a reasonable definition of a recovery.
And what is your definition of a recovery for India?
I think we have ended the year with something like 7.1%, from what the RBI (Reserve Bank of India) governor said, and he is forecasting some figure like 6.5% for next year.
Actually 6%.
I think that’s realistic. It’s not unrealistic.
What’s the biggest risk to your assessment that things will slowly be on the mend in a couple of quarters’ time now?
My assessment is that things will be on the mend. My assessment is also all the rejuvenation packages of pumping money into the economy selectively will start to have some effect in terms of stimulating some demand.
So, it’s just a matter of time of things improving now?