Wipro is seeing a return to discretionary spending in North America: Kurien

Wipro CEO TK Kurien

Wipro CEO TK Kurien believes that despite analysts giving a thumbs-down to its US growth prospects and its uninspiring guidance, the company will grow at a faster pace in fiscal year 2014-15. In an interview with BusinessLine, Kurien spoke about the challenges in some of the company’s business verticals and how it is trying to move more into fixed projects. Edited excerpts:

This quarter, the India business has turned around. Does it have to do with the change in Government?

The India business has traditionally been a bugbear for us every fiscal year over the last few years. I am pleased that this quarter we have done better compared to the last quarter. Unfortunately, some of our other businesses proved to be a dampener. Having said that healthcare and life sciences, energy and utilities, along with BFSI, telecom have grown and we expect these verticals to drive growth. The healthcare business itself is about $700 million now. Overall, the demand environment continues to be steady and we are seeing a return to discretionary spending, especially in North America.

But in Europe, revenue from the top 10 clients and retail business are seeing stress...

We feel that continental Europe is a large market and companies are looking to cut costs. I believe we are strongly positioned in that market. The retail business continues to be under stress and we expect that to continue for another quarter.

Considering that there are no big-ticket deals in social, media, cloud, analytics (SMAC), what is the lure for IT companies?

At present it is small but nevertheless it is not an area that companies can choose to stay away from. While the bread-and-butter business will continue to be the mainstay, in the future it will look different.

Globally, open-source solutions are being adopted by a lot of companies. That is the reason we are investing in training talent. Ultimately, it is about how this talent can help us bag projects that can turn into big deals.

The share of fixed-price projects has gone up in the recent quarter. How did you manage to do that and what is your comfort zone in terms of fixed-price versus traditional outsourcing?

It has been something that we worked on over the last couple of years and our belief is that outcome-based pricing will be the norm in outsourcing. We managed to achieve that by executing existing projects in a different manner.

So, lets say, we got a project that involved managing servers; every time the server goes down, a ticket is raised.

When you are maintaining servers, there are different aspects of management, such as storage and software. So, when a ticket gets raised it gets routed to a team of say 10 people.

They, in turn, decide which aspects need troubleshooting. Instead of figuring out who will resolve the problem, we have used self-help tools that reduce the time to figure out who will solve the problem.

When that troubleshooting time goes down, we can handle more problem areas, which, in turn results in more business. Ultimately, we see 70 per cent of projects as fixed-price ones.

But don’t time and material kind of deals ensure more predictability?

The scenario has changed now. We are looking for long-term deals and we have actively been going after customers, converting them into fixed-price deals by lowering prices. In fact, fixed-price projects actually ensure a good pipeline and consistent delivery experience.

Published on July 25, 2014

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