‘Wipro will not chase margins at the cost of growth’

Bengaluru | Updated on January 23, 2018


Jatin Dalal, CFO, Wipro, is clear that revenue growth is the top priority for the company and is confident that the tide would soon turn in its favour. Excerpts from his interview to BusinessLine.

Given the euro’s weakness, are you having conversations with customers for some rate negotiations or changing billing currency to the dollar?

It may not be fair to reassess a contract midway just because of adverse currency movement.

But we are nonetheless talking to customers indicating that over time some benefit needs to be given to us due to the currency weakness. They too ask us to pass on some gains when the euro was strong and appreciating against the dollar and the rupee.

Are you looking at deploying more workforce overseas?

We continue to be bullish on the US as well as Canada. Wipro has a large centre in Atlanta and a number of small centres across the US. Even in FY15, the US has grown faster than the company at over 10 per cent. So, we will hire based on business traction.

Your utilisation has improved substantially and there has also been greater focus on fixed-price projects.

Yet the margins have not improved significantly. Why?

We are not satisfied with our current operating margins. Many of our peers are ahead of us. Having said that we are in a phase where growth is our priority. So, we will not chase margins at the expense of growth.

Growth in itself will be a great lever. We will be able to optimise sales and marketing expense, which is fixed in rupee terms.

It would also help deploy younger staff into newer projects. A virtuous cycle is thus created. So, we are looking at growth. Margins will automatically follow.

But CEO TK Kurien told the media that he is looking keenly at quality of revenues and effective cash generation. How do we reconcile this?

We will not do deals just for the sake of it to help us for two or three quarters and then expose the organisation to large receivables or undue risks. So, we will not do stupid deals to generate growth. That is what he meant by quality of revenues.

We will not say no to a quality deal just because of margins. I can take a deal at 18 per cent margins, which lower than the company’s 22 per cent levels. Within a year, in this business we can use the right levers to get the margins from the deal back to 22 per cent. So, we will reconcile growth and margins.

There is still a huge gulf between your growth and the industry’s (5-7 percentage points). When do you hope to bridge the gap?

After doing well for three quarters, we were struck with adverse currency and weakness in the energy vertical where we have a large presence.

We are going through interesting times. There is no perpetual winner or loser in this industry. Hopefully, all the steps that we are taking will take us in the right direction.

Published on April 22, 2015

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