Large deals help create a revenue momentum, says Wipro CFO Jatin Dalal

Overall, we are quite happy with our order book momentum as well as the quality and type of deals we are signing, he added

Wipro’s numbers missed Street estimates but its management exuded confidence on improvement in performance during the coming quarters. Wipro Chief Financial Officer Jatin Dalal tells Debasis Mohapatra and Yuvraj Malik that the margins will improve as it sees sound demand in the market place. Edited excerpts:

Wipro had bagged a multi-billion dollar deal after a gap of two years. Do you see Wipro coming back to the large deal space in the coming quarters?

We announced a big deal this quarter. Overall, we are quite happy with our order book momentum as well as the quality and type of deals we are signing. We are offering services in both legacy as well as the digital services space, both of which are important for us. You need to change your service offering to today’s service offerings if you want to capture the incremental growth coming into the market. Large deals also matter a lot to create a revenue momentum. To that extent, we had a good quarter as we signed a big deal and our digital revenue grew 13.4% QoQ. 

Large deals these days are coming at a cost. Your margins are more on the levels of mid-tier firms. With the Alight deal, you are rebadging close to 9,000 people under your BPO unit. Will margins further contract?

You have to see this in context. The context is, where have you taken these people. Even now also, around 65-70 per cent of our staff are based in India. If I am taking over this (Alight) staff in India, every employee should feel good that they will get every a bit of opportunity as any other fresher that we recruit. Most of these 9,000 people who are joining us from Alight are based out of India. 

What is your margins outlook? When will you be able to post margins of 20-22%, like larger peers?

There is a positive bias as far as overall direction is concerned. In Q1, I said we will improve (margins) and we did. Our adjusted margins (after accounting for losses towards settlement with a client) was 18.1 per cent. 

Roughly, 180 basis points of benefits came from operational improvement while 70 bps was because of forex. Overall margin improvement was 250 basis points, and that gives us confidence that we should keep our heads down and continue to execute. In the near term, we are maintaining that we’ll keep it (margins) in a narrow-range in Q3 because there will be an impact of client furloughs that will impact revenue. 

What is your hiring outlook given that you have just rebadged around 9,000 employees from Alight?

We continue to add freshers through the year. Few thousand people get added every quarter. We’ll continue to hire people but we will focus a lot more on non-linear, automation and AI-driven growth. Our trajectory for revenue growth has to be higher than our trajectory of employee growth.