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How Wipro plans to make profit

Last updated on: April 28, 2011 13:02 IST

How Wipro plans to make profit

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As Wipro enters the new financial year, fresh after the organisational restructuring, it has given a muted revenue guidance for the next quarter, which has not gone in well with the market.

In an interview with Bibhu Ranjan Mishra and Pradeesh Chandran, the CEO of Wipro's IT business T K Kurien says the company is investing in the present, and will reap the benefits in the future. Edited excerpts:

How different is Wipro's structure now when compared with the same a quarter ago?

It is very simple. We brought in a concept of single-axis instead of the three-axes model that existed. Earlier, when a customer placed an order, and till the time we delivered it, it used to go through seven hubs. Now, it goes through two hubs. This makes the entire delivery process easy and simple.

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Image: T K Kurien,CEO, Wipro.

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How Wipro plans to make profit

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How are the customers accepting the changes after the restructuring?

I think the customers are not worried about Wipro, they are worried about themselves. And as long as Wipro can be relevant to them, they have no reasons to be worried.

However, I may say, the customers are generally excited about the changes in the company as they will be the real beneficiary.

Is this the reason why you added a record number of clients last quarter?

I cannot comment specifically on that. But we are trying to go out and win as many customers as possible. Customers are coming to us as we are able to deliver better value to them.

We are also focusing on mining the existing accounts to make them grow larger for us. That is why we have been able to grow the number of our $100 million plus customers to three this quarter from one in the previous quarter. One of these accounts, which is in the banking, financial services and insurance (BFSI) space has even grown to $172 million.

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Image: Wipro employees.
Photographs: Reuters.
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How Wipro plans to make profit

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Does the BFSI segment continue to be a problem area?

Our growth rate in this segment last quarter has been fairly good, and I think in the next few quarters we should see some growth coming back.

In the long term, we expect the segment to contribute significant amount of business to the company.

Traditionally, you had been quite weak in the banking side of the business in the BFSI space?

Yes. But, we have to make sure that in the weakest segment we put our best effort and investment for tomorrow.

So, we have gone into a partnership with Temenos, a provider of packaged banking software to deliver core banking service to our European clients. The idea is to offer core banking as a utility model.

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Image: Wipro office.

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How Wipro plans to make profit

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Your employees seem to be worried after the restructuring, which has resulted in high attrition. How are you addressing that?

A majority of our employees belong to generation Y. The problem with GenY is, if you can't communicate with them properly, you are nowhere. We have stepped up our communication with them, but I don't think we have done the best. We have to do much more.

You have announced to increase salaries from June, and also plan to increase the bench. Will this not affect your margin?

I don't think we can hold back employees' salary to mitigate margin pressure. I strongly believe, when you come to work, you give your best to the company.

If the company, in turn, doesn't give its best to you, you have no right to be an employer. The new Wipro will be pro-employees and pro-customers; nothing else matters.


Image: Wipro office.

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How Wipro plans to make profit

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Many of your peers seem to be thinking of either going with volume or with high margin business. What is your plan?

We believe the game is going to change soon, and if we are going for the old game, we will lose. The new game is all about analytics, information and taking control of customers impact. It will be a very different game.

Your utilisation had come down last quarter. What are the reasons?

The main reason is we are creating a bench (reserved staff) as we expect that growth is coming back, and the pipeline is healthy. We want to prepare ourselves for the future.

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Image: Wipro office.

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How Wipro plans to make profit

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But the macro environment continues to be challenging.

Uncertainty prevails, and the world we see today is different from what we saw over the last quarter. On top of that, the whole world is sitting over a huge debt.

The US debt is going to be in the range of $14 trillion as against the gross domestic product (GDP) of $13 trillion. The euro zone does not have the flexibility of currency float.

But these kinds of situations also throw up opportunities for companies such as ours. For example, with the energy price is going up and natural resources are getting scarce, we are focusing on that area.


Image: Dollar notes.
Photographs: Reuters.
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