Wipro’s fourth quarter results have been a mixed bag. Earnings have beaten estimates but guidance has not. In an interview with Business Line , Wipro Ltd’s CFO Suresh C. Senapaty talks about the reasons for the rather muted guidance and where the pain points are.

The guidance hasn’t been up to expectations despite a good show on the earnings front.

If you look at the number we had guided for to the number we have delivered, it’s about 1.4 per cent sequentially in a constant currency. Despite the headwind we had on the currency, we lost about 70 basis points. The margin drop was only 60 basis points. Therefore, the operational improvement was 10 basis points.

We got decent Indian growth in Q4. As far as guidance is concerned, which we have given for Q1, the India piece of the business in Q1 tends to get diluted because of the Q4 growth. Also, some of the discretionary spends kind of projects which got pushed out are expected to get closed in the current quarter. Therefore, we will get a better Q2. Look at it another way. If the deals had closed in Q4, we would have got a better Q1. Having said that, what gives us the confidence is that the customer satisfaction survey done internally and externally when compared with the global peers indicates that we are doing good if not better.

Wipro had put up a hunting engine to mine new clients sometime ago. How has it panned out?

The hunting engine we put up in the last six quarters is building a lot of funnel. Our top 10 accounts have grown well and we need to replicate it across. The top 125 accounts are managed by global client partners or client engagement managers. They manage them with specific empowerment. The fact that there has been price realisation improvement on a full-year basis which becomes more repetitive than any one particular quarter has been a major plus. We have got onsite price realisation up by 4.2 per cent and offshore by about 2.7 per cent which is good despite the depreciation of the rupee. We think we have been good about taking control on multiple such elements which we think will start delivering as we get into Q2.

What are the road blocks you encountered last quarter?

Certain discretionary spends were held back, which sort of hit us. The India growth is dropping whether it is government procurement, telecom procurement … Some of these issues dragged us down in terms of overall growth. But we have used this opportunity to make some changes, whether it is hunting or client mining, uplifted the sales quality of the people in the front, created this technology in the delivery engine as well as global transformation trying to create non-linearity tools, process tools which we can re-use to drive productivity much more. All this has helped us but has not translated into revenues because we had a leaking pool in terms of the telecom OEMs, semiconductor and India business which have not done well. While we may have not have had good growth, we have not declined, but have achieved modest growth.

If you look at our current portfolio of clients, the mix of the top 10 of our clients is quite different from what it was three or five years ago. Earlier, there were a lot of tech companies and now we have financial services, oil and gas, utilities companies. What it has done is that top 10 accounts have grown 17 per cent.

What are the takeaways from the kind of numbers you have realised as far as European and US businesses are concerned?

Europe has fallen a bit as far as Q4 is concerned. On a constant currency basis, it has fallen under 1 per cent but year on year has grown 8 per cent as compared with the overall growth of 5 per cent. Therefore, Europe has fired, but US has not fired much. So, theoretically, it has been a drag as far as real estate (regions) is concerned. But America should pick up. We want America to bounce back. If we are able to increase the business by 2, 3 or 4 per cent from the 50-odd per cent we have from there, it will help us to gain overall momentum.

What is the kind of cash you are sitting on and what are you going to do about it?

Net of debt of about $1.8 billion. I think part of it will go towards acquisition. If the business is cash-generating enough for normal capex and assuming it is about $1 billion, we will need some more to be able to do an opportunistic acquisition. There are lot of opportunities in the oil and gas, banking, healthcare, life-sciences and in countries such as Germany, France, LatAm, South Africa. Or one can look at analytics space, solutions around platforms. Some of them can be investment in organic or inorganic opportunities.

More than a decade ago, you had invested in a start-up in the software product space. But nothing much came of that. Are you now looking at doing something similar?

When you talk about products, it is primarily people in developing usable tools but not the off-the-shelf kind of products. We could look at a minority or a strategic stake in alliances, partnerships, as opposed to trying to own a software product company.

What kind of numbers we can expect in hiring? Are you looking at pay hikes?

We would be more biased towards campus hiring which may be 60-70 per cent of the total hiring. Last quarter, we did 60 per cent. We will announce wage increases in June. We have been able to achieve stability in attrition, we will give good hikes and we will also take into consideration meritocracy as well.

> giriprakash.k@thehindu.co.in

> venkatesh.ganesh@thehindu.co.in

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