Wipro bets big on consulting, eyes $500-mn revenue by 2015

Wipro’s focus on consulting seems to be paying off. The company expects to have a $500 million (Rs 2,585 crore) consulting business in the next three years.

Kirk Strawser, the managing partner of Wipro Consulting Services, believes at the current growth rate, consulting would be a $500-million business within Wipro’s operations in three years. “It is not the raw size/scale that matters as much as the tight integration of front-end business consulting with distributed delivery that really will set companies like ours, apart. It is the wave of the future,” said Strawser.

Wipro began its consulting practice almost three years ago under the leadership of T K Kurien, the present chief executive officer of its information technology (IT) business. Since then, the share of consulting in their overall bouquet of offerings has been steadily increasing. At present, contribution of consulting units to the IT business is 3.1 per cent.

The focus has also meant the company has been hiring more consultants over the last two years. “We have been averaging more than 35 per cent compounded annual growth rate over the last two years. Whereas, traditional Western consulting firms are showing flat to low double- digit growth. So, by definition, we are taking market share from these competitors because we are growing at a more robust pace,” he said. In the next three-and-a-half years, Wipro plans to more than treble its number of consultants from 1,500 to 5,000.

Wipro started with a consulting-driven model of engagement with its mega and gama accounts almost 18 months ago, for better client mining. Today, the company says its average revenue from top 10 clients has gone beyond $100 million (around Rs 517 crore) as compared to $72 million (around Rs 372.2 crore) a year ago.

Strawser believes clients today are looking for “end-to-end” full life cycle capability from their professional services companies. This also means the need to be aligned to the business of the client.

For instance, Wipro recently worked with a global software and entertainment company that needed to adapt their global supply chain network to meeting customer demand. It was involved with the business case, operating model design, business requirements, organisation change and blueprint.

This exercise, in turn, is expected to increase the top line revenue of the client between $250 and $400 million and reduce obsolete inventory by $250 million. Of course, Wipro is not alone in eyeing the consulting pie of work. While MNCs like Accenture and IBM clearly have an edge over the Tier-I Indian IT services firm, the top four firms are gearing up to increase its revenue from consulting.

Also with Indian players penetration in the application, development and maintenance (ADM) almost 30 per cent, packaged implementation and consulting is the next growth area.

The systems integration and packaged implementation and consulting market is 1.5x the size of ADM market, said a recent report by Nomura Equity Research. This is still under penetrated with Indian IT firms cornering five-eight per cent of the global IT spends.