Bengaluru: Wipro Ltd’s chief executive officer (CEO) Abidali Neemuchwala, who is based out of Dallas, US, believes that his year-long strategy is progressing well.
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Neemuchwala, the former Tata Consultancy Services Ltd veteran, who joined the company in April 2015 as chief operating officer and took over as CEO in February last year, remains confident that by March 2018, the company will be able to match industry growth numbers. Edited excerpts:
You have outlined a weak Q1 guidance. Is a strong operational performance in this quarter a one-off thing or can it be sustained from the second quarter onwards?
I personally believe that this quarter’s show in BFSI (banking, financial services and insurance), manufacturing and retail and energy is sustainable. Now I get the confidence from the six themes which I had first laid out. So, one of the pillars was client mining. We are seeing good traction. Another theme is digital. Digital deals sizes are going up, and once you become a digital partner to a client, you can easily do the downstream activity. So, based on the visibility we have, and the way we have been making investments and working on our execution, I remain confident about having a sustainable performance from the second quarter onwards.
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It’s been a few quarters when all IT firms have reported subdued growth along with declining profitability. Now most large firms have started laying off people. The way technology is changing the traditional business model, is it fair to interpret that there is more pain or things will turn worse before they get better?
I won’t call it a pain. We are in transition times. I have already outlined and shared in detail my six-pillar strategy. Now, we have said that we expect to be at industry growth rates by Q4 FY18. India restructuring should be done by Q1. Now, when it comes to hiring, I have hired more people in the US than ever before. When I had not joined Wipro, we used to have about 30% of our total workforce in the US as locals. By the end of first quarter, 50% of our total workforce in the US will be locals. Hiring in India may not be at the same level as before. This is because of automation, and the way the business models are changing. So this inference of more pain for us is not a right observation.
Last quarter, we spoke where you mentioned how in 3-4 quarters or by March 2018 Wipro is to come back to industry-matching growth numbers. Today again, you have reinforced that. Now, can you share what is this kind of growth you are looking at, considering industry body Nasscom itself has not outlined a growth for industry?
I cannot give or quantify a guidance or range because we do not give a full-year guidance. But the way I look at it is that the growth of Wipro depends on two things. First is Wipro’s own context and the second is external environment. If you look at last eight-10 quarters, there were certain headwinds in Wipro’s own context, which slowed us compared to the industry. Some execution or portfolio issues. The industry growth rate is determined by the environment. Now, we have been executing very well, and I’m confident. The worst will be behind by Q4 of this financial year. ENU (energy and utilities vertical) growth has happened before. India restructuring should soon be completed by Q1. So we are progressing well.
On the profitability front, Wipro’s margins have fallen from over 22% in 2015 to 18% now. So, even as you try to get back to industry-matching growth by the end of this fiscal, can you help us with the trajectory on the profitability?
All I can tell us is that we will not (be) shy of making investments because this is a transitional time and we need to be making investments in newer technologies. So, our need for profitability will not compromise our growth or need for investment.
In hindsight, do you see Healthplan Services acquisition as a bad buy and has it been a setback to company’s M&A strategy?
I’m very positive about the acquisition and the strategy behind it. It has a deep expertise in a particular area. Of the 350 million people in the US, there is a segment which will not be an employer-provided insurance and they will have to do self-insurance. So, its just a matter of time before a new policy is outlined and we will get business. It’s like oil and gas space. When oil price was volatile, most companies stopped investments. Now with stability, we are again seeing growth.