Wipro ‘getting positive response' from clients for higher rates

Our Bureau Bangalore | Updated on January 24, 2011

Instead of selling skills the firm sells ‘value propositions.'

Wipro said on Friday it has started getting price increases from some of its customers in the range of 3 per cent and 7 per cent. “We did get some decent increases,” Wipro's Executive Director and the Chief Financial Officer, Mr Suresh Senapaty, told Business Line. “We are asking for price increases. And the kind of responses that we are getting from our customers has been positive.”

He said that this was primarily a result of moving up the value chain. “Right now, we are going to customers and saying, ‘This is costing you $100. Can I do it in a different way and give it to you at $80 for five years'? But earlier, we were not doing that. We were saying, ‘I can do SAP, I can do Oracle, C++, Java, etc.' In other words, earlier I was selling skills, now I'm selling a value proposition.”

He said the financial services segment, which has proved to be Wipro's Achilles' heel, should be looked at differently compared with the performance of its peers. “The others have a higher mix of business coming from financial services. We have grown 7 per cent in financial services, whose contribution to total revenues is about 27 per cent. They have 40 per cent of their revenues coming from financial services. So, when they grow that 7 or 8 per cent, the weighted average of that is giving another 1 to 2 per cent better growth rate.”

Enough clients

But he stressed that Wipro has several clients in this segment and hence doesn't have to acquire any more, but that it only needs increase its footprint with existing customers.

Commenting on the recent case in which Infosys has been asked to pay Rs 400 crore as tax by the IT department, he said that he didn't have the details and so would not be able to comment on it. “But I don't think that the IT department has a case,” he opined. He pointed out that there have been no fresh queries from the tax department for Wipro. A much older case, on similar lines, is currently being fought in the High Court.

Mr Senapaty said multi-million dollar, multi-year contracts could still happen. “They are not gone. But in the short term we have seen more and more smaller deals coming. I think the funnel has a lot of multi-million dollar, big deals.”

On currency fluctuation, Mr Senapaty said, “It has affected us positively. It has given us an advantage of about 0.5 to 0.6 per cent in Q3,” he said. “For us the realisation has dropped, but the cost has also dropped and the cost has dropped faster than the realization. Therefore, we get the advantage. Spot to spot, it dropped 1 per cent, but average to average, it dropped around 4 per cent. And our realisation dropped around 2 per cent.”

Published on January 24, 2011

Follow us on Telegram, Facebook, Twitter, Instagram, YouTube and Linkedin. You can also download our Android App or IOS App.

This article is closed for comments.
Please Email the Editor

You May Also Like