Wipro is seeing a rebalancing of its portfolio: CEO

Bangalore: More than two years after Wipro Ltd ditched its joint-chief executive officer model and mandated T.K. Kurien to lead an organizational overhaul to revive its fortunes, the company still finds itself struggling to recapture double-digit revenue growth and lags larger rivals such as Tata Consultancy Services Ltd and US-based Cognizant Technology Solutions. In an interview, chief executive Kurien talks about the progress of the turnaround, what the future holds for the company and the changes being effected in Wipro’s overall employee strength. Edited excerpts:

add_main_image Wipro has its aspirations of posting industry-leading growth. When do we see that get reflected in the numbers?

If you look at the guidance we’ve given for Q2 (second quarter of 2013-14), that’s pretty much in line with what we think the industry will guide. Q1 for us is always an aberration, the reason being the India business, which between Q4 and Q1 always de-grows for us. We don’t see the India (business) coming back very quickly in terms of buying and the capital cycle starting in the short run. Our India business will continue to be stressed.NextMAds

On the other hand, we see the global business actually picking up more and more. Overall, we’re quite confident that our vertical strategy is playing itself out. Yet there will be a portfolio re-balancing that we’ll go through and when that happens, our growth would suffer—in the past, it hasn’t been equal to the industry, but going forward we believe that our aspirations are really to catch up and move forward. It’s taken us a little longer than expected, frankly.

Like I said, our India business has de-grown and we have a large component of the India business. So the currency has really gone against us. If you look at our cross-currency change, the impact we’ve taken this quarter is $15.8 million. You add that to our organic growth and our growth would go back to 1.2%. And that has been a big impact. We have a lower component of the US business compared to the rest of the industry. We’ve a larger Europe, Asia-Pacific and India business.

A lot has happened and worked well for Wipro since you took charge. But there’s little to show for it as far as growth is concerned.

Absolutely. There’s no question about it. What’s happening is that there’s a portfolio re-balancing that you’re seeing right now. In any company when a portfolio re-balancing happens, it’s painful.

We’ve been hearing lots of different commentaries on the demand environment and what’s happening with Wipro. What really does the future hold for Wipro?sixthMAds

If you look at the traditional business that we have, the only way we can remain competitive in that business is if we move to outcome-based pricing. And that’s been the endeavour over the past couple of quarters. In our traditional business, technology infrastructure services has really grown and there, both in terms of pipeline and order book, we look very healthy. The areas where we need to accelerate growth in that side of the business is our BPO (business process outsourcing) business…

But if I look at what’s happening in the economies of the US and parts of Europe, we’ve clearly seen demand environment improving, we’ve seen closure rates improving. And as the capital cycle comes back and sustains over a period of time, our own sense is that the demand environment will remain bullish, more bullish than it was last year.

As far as manpower addition is concerned, Wipro seems to have done far better in managing that than other rivals in the sector. Is there a conscious decision on that front?

Absolutely. At the bottom of the pyramid, we believe that what will happen is we have to have consistency in terms of the way we hire people and the kind of people that we hire. In the middle, what will happen is, people who are handling jobs that are traditionally back-office jobs, that number is going to see a contraction because ultimately there are only three stages that you go through in any process.

The first question is: why can’t you automate the process completely and remove all humans from it? The second one is: even if you have human intervention, how can you minimize the human intervention to only decision-making roles? And the third is: where will you have people who have got hired where you need higher customer touch? Fundamentally, what we’re doing is moving more people in front of the customer, typically people we call value creators…

On the other end, what we’re doing is downsizing our factory significantly because we believe if you don’t have an efficient factory, you never will be competitive globally.