Wipro is tweaking its revenue model apart from linking employees' incentives to customer wins and their retention.
The Wipro Ltd Chief Financial Officer, Mr Suresh Senapaty, told Business Line that from now on budgets will be based on how each of the verticals are performing. For example, if four verticals are growing well, they will get a disproportionately higher capex than the rest. “We are putting our money where our mouths are,” Mr Senapaty said.
Performance measures
Similarly, nearly two-thirds of the employees will be measured in terms of their variable salaries and incentives will be linked to the performance of the customers. “This is a big change. All our incentives are based whether the x, y, z accounts are doing well (or not),” he pointed out.
“Because if client wins, client will give you business and our revenue will go up and so will our profitability and therefore we have no problem in sharing them with our employees. This is in respect to when you are creating deals rather than responding to deals,” Mr Senapaty said.
Capex
He said as far as capex is concerned, FY11 is almost similar to FY10 and “you know 2010 was pretty muted. But as go into the current year, there will be volume growth, we will build capacity. Capex will come. These are not the industries which are capital intensive. There will be Rs 50 crore, Rs 100 crore, Rs 200 crore here and there.”
He said Wipro continues to study the market for acquisitions. He disclosed that the company has identified gaps and is “working on various transactions and has a pipeline which it is working on. We can't specifically say whether we will do it (acquisition) next quarter but we are definitely working on that,” he said.
He said margins have held on and the company had a positive momentum on the offshore and on the rate realisation but there were some downsides on the subsidiaries and in terms of extra cost it incurred onsite.
Agility
He pointed out that Wipro has to be faster as far as response time is concerned, more nimbler and as well as quicker.
“Some of the older models failed us particularly during the last two three quarters as we did not capture the growth momentum we did not capture. Therefore we need to be agile,” he said.
Mr Senapaty said changes in the organisation has meant that there is no overlap of functions apart from the fact that employees are able to get budgets quicker than earlier.
He said these changes will start impacting the financials towards the end of the year.