After TCS and Infosys, Wipro came out with its Q3 earnings. The IT firm clocked a tepid Q3 but it has been in line with expectations. Dollar revenue rose 0.3 per cent, while profit growth has been flat. Speaking to Bloomberg TV India, Wipro CEO TK Kurien and Abidali Neemuchwala, the CEO-designate, explains how the company met the earnings guidance after weathering the Chennai flood impact. Wipro has decided to increase focus on the emerging markets, which are now starting to deliver, Neemuchwala said.

Last quarter has been pretty bad for Indian IT companies given the global headwinds, Christmas holidays and of course the Chennai floods. How has Wipro fared in Q3 in terms of operations?

It is pretty simple. I think the last quarter in many ways for us was a quarter of our people. If you look at really what happened last quarter, we began with headwinds, we have furloughs in Q3 and on top of that, we had the Chennai floods and the floods really affected us all. What happened to us was that 20,000 people got affected, we had 11 feet of water in our premises and we had to move close to about 7,000 people out of Chennai. We had to make alternative arrangements for 10,000 people and more. So it has been a significant quarter of disruption.

In spite of that if you look at our results, we have delivered at the midpoint of our guidance. If you remember we have made a statement at the end of December saying that we will be at the lower half. We have actually beaten that. To that extent I think it has been really good and it is the credit to the people in Wipro who have really worked hard and delivered. In terms of the next quarter and this quarter from the deal wins perspective it has been a decent quarter.

We have had six deal wins this time, and in many ways, this has been one of the best quarters we have had after a long time as far as deal wins are concerned. The momentum looks strong in our core business. In case of our infrastructure business, we continue to have wins even this quarter. More importantly, our digital and differentiated businesses have been doing well. If you look at our digital business it has grown roughly about three times the company average and is running at double-digit growth. So from that perspective, overall it has been a good quarter for us and that is what leads to the confidence part as far as the next quarter is concerned.

You have taken a 50 bps cut in margins. Will you say that this is entirely because of the Chennai floods or what exactly has happened in the margins front?

Margins picture is a pretty simple picture. We had a benefit of roughly 0.5 per cent, which came in from foreign exchange gains. We lost 0.5 per cent by way of utilisation. And, the utilisation loss was planned. We have been using hyper automation to drive productivity. We are right now using hyper automation and have taken about 4,000 people from projects right now. Those people have come on to the bench. Right now, we are retraining those folks on digital technologies. It will take another quarter or two for that to play itself out. So, we have taken a deliberate drop in utilisation. Our utilisation has dropped by three percentage points. So, whatever upside we have got by way of forex has been taken out by utilisation. The rest of it is purely the Chennai impact.

You are looking at a new role in just a few days. You have also made a few changes in the organisation while taking over the battle from Kurien. As a CEO, what is going to be your priority? What will the new MIT unit going to do?

We have had a very well-grounded strategy, which was forward looking and we will stay the course on our strategy. We will be cranking up our execution and that will be my focus. Some of these things we have already started doing in the past nine months through delivery realignment and simplification that we have done so far. We have decided to have a higher focus on the emerging markets, which are now starting to deliver. So, those will be some of the priorities that I will have. It is a privilege to lead this organisation. We have got a very deep leadership bench, this is a very stable organisation and we have a very well-planned and executed succession. So that makes me both proud of leading this organisation and I am humbled at the same time. So it is for sure going to be a privilege to lead.

Related Topics
comment COMMENT NOW