Wipro won’t buy revenue by sacrificing margins: CEO Abidali Neemuchwala
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Bengaluru: Abidali Neemuchwala, who took over as CEO of Wipro Ltd on 1 February, has focused on six broad themes to achieve his ambition of reaching $15 billion in sales by 2020. The themes include focusing on digital technologies, improving the ability to generate more business from existing clients, hiring more local talent in markets where it operates and hyper-automation. Edited excerpts from an interview:
What, according to you, is the growth band expected from Indian IT firms in the short term as they go through a transformation?
I certainly think there is addressable market opportunity. Growth will happen for those companies that are able to demonstrate with speed that they can transform themselves and they can disrupt their own business. So, I won’t rule it out. If you look at the spread of Internet, mobile phones, more and more businesses are using technology in products. So, overall spend in technology will increase. So, Apple with Apple Pay may do more banking kind of work than traditional work. So, technology is creating a lot of opportunities. So, from where I see, technology will become a bigger part of the world of what it was historically. So, I can’t imagine why that work won’t be done by Wipro and other companies of the industry.
With slowing revenue growth, IT firms, especially Wipro, are seeing downward pressure on profitability. What are the future prospects for margins for a company like Wipro? Can we see benefits of automation being embraced by Wipro to negate any loss in pricing pressure on commoditized outsourcing deals?
I’m not worried about either falling revenue growth or profitability. I’m excited about profitable growth. I think we will not buy revenue by sacrificing margins. Now, there is clearly a path charted out to improve profitability. So for example, the acquisition of HealthPlan which we made, we can do the work from India. So offshoring can be deployed and that will improve profitability. We are already working on hyper-automation.
Now in the short term, there could be an impact on profitability because we are making investments. But as per our 2020 vision, I believe we will achieve what we have said of profitability of 23%.
You want to make Wipro a $15 billion firm by March 2020. Now, two growth engines of IT firms from service line offerings—application development and maintenance and infrastructure maintenance—are struggling for growth on account of disruptive technologies such as cloud computing. What, according to you, will be one or two new service lines which will help Wipro scale its $15 billion vision?
Digital is a huge bet and in digital, we have identified a lot of themes—mobile, Big Data, Internet of Things, cyber security... Digital is a significant component. There is a good component of mergers and acquisitions. There is also a good business from core business. We cannot share publicly the details of this.
You’ve been the CEO for over five months, and, earlier, were chief operating officer for 10 months. So, by now, you know both the delivery side and sales engine of Wipro. You were with Tata Consultancy Services for over two decades. How different is it working in a company like Wipro and what, according to you, explains Wipro’s underperformance against its larger rivals?
Lack of adequate amount of annuity business is one issue at Wipro. Then, Wipro has been focused or organized based on service lines. So, we could not offer an entire basket of our service-line offerings to our clients. So, we could not capture testing, applications, infrastructure, BPO offerings. Now, we are integrating them.
Then, Wipro made certain bets strategically, like energy and utilities verticals. Now, oil prices have remained low for so long, so the growth has got impacted.
You have prescribed six broad themes to help revive Wipro’s sub-par growth. Any kind of timelines on each of these measures before they start reflecting on the growth of Wipro? Also, by when can we expect Wipro to have a meaningful impact on its profitability because of hyper-automation or, say, by when can Wipro improve its client mining ability, say, of its largest clients?
We have started. You have got to wait for at least three quarters to see the improvement. You need to have three dots to draw a line. So, we have started on a note and we should gradually see the benefits. So, absolutely—some of the six themes which we have outlined should start reflecting by the end of the financial year.