While the majority of the work can be done offshore, whatever work needs to be done at the client site can be done by locals and we will not look at deputation. That is the kind of model we are going for.— Suresh Senapaty, CFO, Wipro
Suresh Senapaty, CFO and member of board, Wipro, speaks to Business Line on a range of issues ranging from impact visa costs, increased onsite hiring and sustainability of margins. Excerpts from the interview:
A better quarter again. Will this continue?
We will continue the momentum going forward. The hard work done over the last two years is bearing fruit and gives us confidence. It is also reflected in our customer and employee satisfaction, which both have gone up.
Having said that we still have a lot to do.
For example, in the client mining front we have done well but only in certain pockets.
This has reflected in $100 million clients going up (from 10 to 11 this quarter) and the growth in the accounts has come at a higher average when compared to the overall company’s average.
Can you sustain margins at these levels?
If you look at the margin, efforts in terms of automation that we have put in to improve more on fixed-price projects side of things. We are trying to bring more applications management and such services into fixed price mode. Engagement models with customers are changing as more of them are talking about outcomes-based pricing rather than manpower put into projects. We think we can sustain margins.
What is your hedge book at present?
We have around $1.5 billion in currency hedges.
Have you made allowances of possibility of higher visa costs?
If it happens we have to pay, we have no choice. But going forward, we are looking more at local hiring on onsite and depending less on visas. While the majority of the work can be done offshore, whatever work needs to be done at the client site can be done by locals and we will not look at deputation.
That is the kind of model we are going for. We will be systematic, identify campuses and give career path to people onsite rather than constantly looking at visas.
Does it mean opening of more software centres abroad?
We already have and are open minded about opening development centres abroad.
What about the salaries?
No, in fact, when you consider that we pay comparable wages there is an additional cost of bearing expenses related to airfare.
So, it makes sense to hire a person locally. If we can get people there, it is that much better.
What is the mix?
In the US, about 43 per cent of our workforce as non-Indians (Wipro does not give out country-specific headcount).
Now that you have attained stability, will salary hikes be comparable to last year?
Salaries are not the lead indicators of growth like in the past. For example, we hired people, gave increased salaries of 10-15 per cent every year. Today that is not the case. In the same band, if someone got 10 per cent, others might get 15 per cent, yet another may get zero. At any point in time what kind of skillsets are in demand is what will drive worthiness in the future.
Are you comfortable with cash reserves?
Net of debt we have $2 billion in reserves and have declared an interim dividend of Rs 3/share. We have $2.9 billion on a gross of borrowing basis. Add to that we can sell ADR (American Depository Receipts) and if we have to make a large acquisition, we won’t struggle.