Deal volume remains strong but discretionary spending down: Wipro MD & CEO

Wipro’s sequential revenue growth guidance of -3.5 per cent to -1.5 per cent in constant currency for the quarter ending December 31, 2023 (Q3FY24), underlines the turbulence the information technology services firm as well as the industry is facing amid global macroeconomic uncertainty. Thierry Delaporte, chief executive officer and managing director, Wipro, talks about the demand environment, large deals pipeline, and acquisition strategy in an interview with Ayushman Baruah in Bengaluru. Edited excerpts:  

What is the reason behind the negative revenue growth guidance for Q3?

A trend we have seen in the past few quarters is that there is a significant uptick in large deals, but discretionary spending [by clients] has come down significantly. Therefore, there is not much growth and it is the same trend across the industry. Q3 is a seasonally weak quarter due to furloughs. So, typically, you have some bit of a dent in Q3 and that is reflected in the guidance.

Despite challenges, what factors are driving large deals and how is the large deals pipeline?

If you take a step back, you will see that historically large deals have been very rare for Wipro because we didn’t have anybody looking for them or chasing them. But we have built this team now by bringing in talent from various places where they have been successful. We have focused on it quarter after quarter and started to build the pipeline. These things take time; large deals are not something you win in six months. I am pretty satisfied seeing that quarter over quarter, it just becomes more like a machine driving a systematic type of volume of deals. So, we have not only increased the number of deals, but also increased the size.

Also Read: Wipro plans to join rivals in cutting new hiring as tech spending cools

What are the sectors that are driving large deals?

Some of the sectors are financial services, manufacturing, health care, and consumer.

Now that Europe is slowing down, will you be focusing more on APMEA (Asia-Pacific, Middle East, and Africa)?    

Europe has grown massively -- over 50 per cent in the past two years. So, as an organisation, we have a strong hold in Europe. We have won large deals and things have been good. But this quarter, we have seen a significant drop in revenue growth, declining 5.1 per cent sequentially in constant currency, more than what we were expecting. But we have a strong leadership team in Europe and a solid pipeline, and it will bounce back. APMEA is certainly a strategic area of growth for us. From low-cost body shopping, the region has shifted to more transformation-led and more value-added types of services with more complex programs. While it may not show growth now, it will, because the pipeline is in a better shape than it’s been ever before.

Also Read: Wipro posts flat Q2 profit, cuts Q3 revenue growth guidance on weak demand

What’s your acquisition strategy? Have you slowed down your pace?

We are doing acquisitions when they make sense from a strategic standpoint. Capco and Rizing are examples of game-changing acquisitions for us in the financial services and SAP consulting space, respectively. So, we are certainly not stopping ourselves from acquisitions. It might happen in the near future, but I am keeping a very cold look at it. I will never do an acquisition focused on the short term. I am very much focused on the mid- to long-term. The governance of Wipro allows us to be more focused on deep transformation to build the right company for the future as opposed to just being tactical.