Bangalore: Wipro Ltd chief executive T.K. Kurien is the first to admit that one swallow does not make a summer. He says that while he is satisfied with Wipro’s performance in the second quarter, there is a lot of work left to do, particularly in the front end with clients. As the information technology (IT) services business changes, the front end is where he says the differentiation happens, with a high degree of standardization at the back end. While Kurien is emphatic he will not sacrifice margins for growth, he did not rule out a downward shift from the 22% range Wipro has operated in. Edited excerpts from an interview:
Good revenue numbers, but there are issues with margins and offshore realization. What fell into place in the second quarter and what are the remaining challenges?
We focused on execution. The strategy is in place. Right now, the entire organization is focused on the rigour of execution. As for challenges, the first is mindset, like everything else. Nobody wants to be placed on a weekly schedule in terms of execution. That is behind us. Our customer satisfaction numbers are now up. Attrition numbers are down. The dip is the best we ever had. And when I compare ourselves with some peers, we are doing better. That is due to employee engagement and changed policies. Customer satisfaction is the gate. Growth in sales and profitability are the next two things. The significant movement in attrition is because of the management engaging with people. I am satisfied with our performance, but (there is) lots of work to do.
What areas have you identified?
Couple of areas. Sales and marketing, the way we address out customers… I believe that this business is evolving to where we have a high degree of differentiation in the front, and a high degree of standardization in the back end. In the front end, it is not just the sales guy—it is sales, programme management, delivery management, technology architecture, business architecture and consulting. All of it has to come together to make an impact.
But all that suggests that margins are on the way down.
I would not completely believe that. Some competitors are running at a 14% margin. The sacrifice is for growth. I will never go there. But will I reinvest more in front of the customer, reinvest in the customer? The answer is yes. In my top customers, we are reinvesting 1% of the top line back into the customer in terms of joint innovation projects. And standardization at the back end can reduce cost. We are working on both.
So your 22% range will shift downwards?
I can’t comment on that. But don’t look at us in the short term whether we are doing well or not. In a two- to three-year time frame, we have picked areas we want to be the best at in terms of qualities. Sales and value addition capability in the front end, delivery and execution in the back. I want to be great with one and good with the other.
Front-end strategy: Kurien says sales, programme management, delivery management, technology architecture, business architecture and consulting all have to come together to make an impact.(Aniruddha Chowdhury/Mint)
Your analytics and consulting practices have been doing well.
Consulting has seen a huge uptake in margins; they have doubled their margins. In business process re-engineering, the pipeline has gone up by 50%. We are the world leaders in that business.
But this practice can be difficult to scale?
Consulting is a front-end business. As your business scales, you have to be ready to shed those pieces that don’t remain consulting and move them into the normal business. You have to keep the consulting business as the eye of the needle. If you bring the factory to the front end, you will destroy differentiation. The factory is about consistent delivery, but you have to bring in creativity and then back that up by consistent delivery. You need to make the front end very different and very differentiated.