The result of Wipro’s information technology (IT) services for the quarter ended June failed to enthuse markets, yet again. The company’s dollar-term guidance was also flat, which the company attributed to concern in the domestic market. T K Kurien, chief executive of Wipro’s IT services business, in an interview with Bibhu Ranjan Mishra and Pradeesh Chandran, says it may take a couple of quarters for the company to return to a path of strong growth. Edited excerpts:
Your wait to return to strong growth seems to be taking longer than expected.
We carried out restructuring in March 2011. The first quarter of 2011-12 was the worst. However, we delivered the industry’s best performances in the next two quarters. Our results for the fourth quarter of 2011-12 were average. The fundamental change happening now is in the market. So, right now, we are going through that phase. All we need is one or two large deals to change the game.
But large deals have become scarce in this environment.
We are seeing a lot of large deals. Conversion is an issue, but we are after such deals proactively. We are approaching customers and telling them how to make their business efficient. We are seeing large deals across all the sectors.
Why do you think the benefits of restructuring have started showing?
Talk to our people. They are showing more confidence than a year ago. Our customers are also showing a significant rise in the confidence on our ability. Our customer satisfaction rate has risen three per cent. This shows things are working for us. My own sense is it (the real benefits of restructuring) may be delayed by a quarter or two. At the end of the day, when your path is clear and your actions are clear, you are pretty sure the results will follow.
When restructuring was carried out, you also wanted to offer more value-added services like consulting, application development and maintenance. However, these segments have fared poorly in the last quarter.
Don’t read too much into it. Consulting has declined 17.9 per cent in reported currency terms. But it would return to growth in the coming quarter.
What pulled back growth in consulting services?
We saw cancellations of some large deals across sectors, mostly in the investment banking segment, which is clearly under pressure. I would not read too much into it.
Excluding emerging markets, which account for a tiny part of your business, you haven’t fared well in most regions.
We have to compete in the Europe and the US markets. We can’t stay where we are; we need to grow. We have lost some grounds in these regions, but we will get it back. That is why we have set up a hunting team — basically sales people with the mandate of adding new logos.
Why is your guidance flat, despite the second quarter traditionally being one of your strongest?
We have given guidance in the range of 0.3 and 2.3 per cent. Typically, in the second quarter, we see an upswing of 0.2 to one per cent in our India business, which we have not seen this year. The reason is most of our business in India is system-integration business, which is highly skewed towards the capital cycle.
Your volume growth in the first quarter is one of the lowest in the industry. Is that a concern?
We are focused on productivity, and that is why our pricing is stable. We will continue to drive productivity. We are probably one of the few companies that have not stopped the intake of freshers.