Weak sectors turned positive

Wipro has posted a good set of numbers in the third quarter of the financial year 2010 similar to TCS and Infosys, signaling the return of normalcy to the IT sector, at least for big companies. Wipro’s joint CEO Girish Paranjpe shares his thoughts with Thanuja BM on the performance. Excerpts:

What would you say about the just-concluded quarter?
It was a pretty strong quarter, especially in dollar terms. The rupee revenue was hit because of rupee appreciation. We saw demand coming in for all our verticals and geographies. It was basically a groundswell. So we saw businesses such as product engineering, technology, telecom and manufacturing also turning positive, which used to lag earlier.

With the kind of guidance Wipro has given for Q4, how do you see FY10 overall?
When we started the year, there was lot of trepidation since we were coming off a bad quarter. Clients were sitting tight and 2009 was bad even from stock market perspective. It took 6 months for customers to take stock and start thinking of sending work. The period of stabilisation has definitely helped since we see lot more projects starting now. We can now expect uniform growth throughout the next year instead of the lumpy growth we did in FY10.

What kind of projects and in what areas?
We are basically talking of transformation contracts. Some of them have already started, mainly in area of M&As and regulatory requirements. In second half of 2010, I see discretionary projects which include streamlining of back offices coming in. And they are broad-based in verticals, be it financial services, energy & utilities or telecom.

Though the consulting segment has been growing, it hasn’t quite delivered in terms of revenue contribution to the whole company as a whole. What do you have to say?
The consulting business as a standalone has grown 6 per cent sequentially in Q3. As far as revenue contribution to company goes, the benefit is not just standalone. It has a multiplier impact. If you have upstream consulting capability, you can win change programme contracts successfully and deliver on downstream work also. For instance, we just won a $20 million plus deal from a US bank of which only 10-15 per cent of work is consulting. So, we are really looking at this as a force multiplier. It is important that while giving 5-7 per cent of total revenue as standalone in next 2-3 years, consulting unit should help bringing in change programmes/transformation deals. We are hiring senior consulting partners across the US, Europe and Asia to win and manage trust based relationships.

An update on non-linear activity in the company.
Non-linear initiatives of the company in past 18 months have helped us manage to deliver revenue growth despite headcount not growing. The three areas we are focusing on are — building platforms and IP, changing the mix of work to newer business models and delivery transformation. While earlier we used to just replicate client’s workplace and set up offshore development centres, we have now begun to create centres of excellence with best-in-class technology & tools and best practices in shared services format across multiple clients. This is proving to be a big lever for us and Wipro has set up half a dozen such centres already.

Wipro has been pursuing the string of pearls strategy. Why haven’t you looked at a bigger acquisition?
Our acquisitions so far have been in niche areas and not for aggregation. This automatically reduces the size of the buys. Also aggregation is not a proven strategy in the services business.

thanujabm@mydigitalfc.com