Despite a better than expected performance by its IT services business, Wipro has given a muted guidance for Q4. In an interview with Bibhu Ranjan Mishra & Pradeesh Chandran, Wipro’s IT business CEO T K Kurien says the company’s guidance is a reflection of what it sees on the ground and realistic. Edited excerpts …
How has been your experience in 2013?
If you look at the overall environment, 2013 is looking quite positive compared to last year. Our focus this year is going to be in hunting more and win more.
In the Q3 of FY13, you improved from where you left in Q2 and met somewhere the middle of your revenue guidance. But your conservative revenue guidance for Q4 is something which is puzzling many?
Actually, in the third quarter we managed to meet somewhere close to the upper end of our revenue guidance. We have won quite a few good deals this quarter. But to translate those into revenues depends on the ramp-up cycle. And when the ramp-ups would start, is a little uncertain for us right now. Secondly, we see discretionary budgets are starting to open up, but when those would translate into revenues is another question. Besides, the fiscal cliff issue in the US is still not over. We don’t want a shock coming in because of that. We expect that to be sorted out by the end of February. All those elements have been factored in our guidance.
So are you saying your guidance is a reflection of the volatile market conditions?
Until now, we have a track record not missing the guidance. We want to make sure that we never miss. We are conservative at one end and realistic at the other end. What we see is what we guide.
But it is not just in Q3 you have added 50 clients, even in the previous quarter you added 53 and a quarter before that around 35. Have those not started generating revenues so far?
You are very true, but we are also shedding clients. So if you look at our tail accounts, it has now come down 20 now from 89 three quarters ago. It is a big drop as we rebalanced our portfolio. In the last nine months, we have lost $52 million in topline in areas we didn’t want to grow our topline. So that is reflected in some form or shape in our last quarter results and guidance.
So is the focus shifting to larger accounts now?
We are focusing a lot on our top 10 accounts. Six quarters ago, the number of our $100 million client was just one which has now gone up to 10. That is a big change. Today if you look at my competitions, we are not very far from them.
Looking at your Q3 performance and the macroeconomic environment, do you expect FY14 to be a better year for Wipro?
We have remained optimistic, but cautiously. Ultimately, it is the portfolio that we have will determine the growth. The customers who are growing ahead of the industry will spend more with you. There are other customers who are stressed in terms of relationships. So it is the portfolio mix that you have which determines the bullishness or cautiousness.
But despite the uncertainties, there are certain verticals where you have done quite well; for eg. Healthcare & Life Science?
Healthcare has done well for us so also Energy & Utility. We have done extremely well in retail banking. The vertical where we have to get growth back is in Telecom. We have seen a negative growth in product engineering services business. It’s because we do a lot of works in areas around silicon and people are cutting spends in that area because of the standardization that is happening now.
You are perhaps the only company among the Indian top-tier IT services company who has seen a drop in volume. Why is it so?
Our volume growth in Q3 was negative one percent. But we have offset that with increase in pricing realisation. Our pricing realization is one of the highest in the industry today.
What is going to be your approach hence on?
I think the key for us right now is that we need to get hyper growth and hyper growth means eating somebody else’s lunch. That is where the whole organisation is going towards and that is where the DNA of the organisation is getting built.
When you expect this to happen?
I am always trying. I think it will take one or two quarters more to achieve that hyper growth. I can’t predict exactly when it will happen. But as you know when you want to eat somebody else lunch that person will also try to eat his lunch.
The drop in your employee utilization indicates that you have now built a huge bench (employees who are deployed in any project). Is it not an added cost for the company?
The mix of bench has change considerably now. A year ago, about 60% of my bench was having experienced people. Now, 70% of the people who are on the bench are freshers. So that means my bench cost has not gone up. We will also not change our fresher hiring policy and will continue hire them.