Wipro, Bangalore-based business conglomerate which derives slightly over two-thirds of its revenues from IT, has not only met its quarterly targets but the company's chairman Azim Premji has also raised hopes of an early recovery in the global economy.
Among Indian IT outsourcing companies, Wipro is the first company to give a flat to 2 per cent growth expectation for the July-September 2009 (third) quarter. Joint CEOs Girish Paranjpe and Suresh Vaswani spoke to Bibhu Ranjan Mishra on the company's growth path. Edited excerpts:
Even though you mention signs of recovery, the number of active clients have reduced considerably as compared to the year ago period.
Vaswani: The overall number of customers may have come down from last year to this year, but the relative size of the customers -- number of $20 million, $50 million customers -- has gone up. That's the conscious part of our strategy -- making sure we focus on our customers; working closely with them and providing the multiple service lines we can offer.
But the revenue from new clients is a mere 0.5 per cent as compared to 3.2 per cent in the trailing quarter.
Vaswani: It's not that we are not hunting for new customers. In fact, we have announced a lot of deals in recent months.
Some of these are quite large and absolutely new customers with whom we had not done business before. So, what you see in terms of data is a bit quarter-specific.
But from our perspective, we are focusing on both. One is growing our existing customers and then expanding our market range, but selectively. We are going to customers where we believe that we can scale up.
Paranjpe: Our revenue contribution from top customers has grown. Many of the deal wins last quarter will only show up in the revenue in the next two to three quarters.
So, top client management has become crucial.
Paranjpe: We are investing in strengthening our relationships with top clients -- whether at their executive committee level or through our standard relationship programme.
We have invested in senior people who are based onsite in the roles of client partners and client managers.
We are also investing in consulting capabilities, which is always the need of such clients.
In terms of pricing models, we are much more flexible, and working out strategies beneficial for us as well as the clients.
With talk of stability in the air, what kind of deal pipelines are you seeing?
Paranjpe: The pipeline is quite decent. The deals we are working on now are at least 10 per cent better than what we had seen in the beginning of the quarter.
But the purse strings are still tight. I think it will only be in the first quarter of next financial year or the last quarter of this calendar year that we will see some spend taking place.
We still don't know whether the spend will regain the 2006-07 level or not. But the need is there, which is driven by three things -- new regulations, M&As of recent days and the new environment which requires launch of new products and services.
Many of the new deals you are signing are a mix of BPO and IT services outsourcing.
Vaswani: Indeed. Customers are increasingly looking at us both for their ITO and BPO needs, and some of the deals we won in recent days have BPO and IT components, as they are looking for integrated offerings.
Does it mean that going forward, the focus and investment is going to be more on BPO?
Vaswani: We certainly want to grow both our businesses (IT and BPO), not one versus the other. However, the BPO market is projected to grow faster than the IT market.
We are trying to stitch these together in terms proving a unified proposition for our customers. While so far our BPO offerings were more focused on providing horizontal processes in terms of finance and accounting and procurement, the thrust going forward will be building up specific vertical processes to deliver more value to the customers.
The M&As and new environment has made many clients go for vendor consolidation. How are you placed to tackle the situation?
Vaswani: Vendor consolidation is happening, particularly in case of large customers who work with many partners -- some of them have 30-40 IT partners.
There is a move towards streamlining that and getting down to narrow a few and then building the scale and size of those partners. That places us in a better position, as we have the capability in terms of width of services.
The number of sales, marketing members has gone down at a time when competitors are building this up.
Paranjpe: We are weeding out the bottom 10 or 20 of the team to increase efficiency. Besides, we are hiring more senior level people who are mostly locals for sales and support.
Photographs: Suresh Vaswani (left) and Girish Paranjpe
