Bengaluru-based IT major Wipro reported $10.4 billion in revenue for FY22, up 27.3 percent from the previous quarter and expects to close FY23 with double digit growth.
This comes on the back of high demand as clients continue to invest in technology services. It has guided for 1-3 percent revenue growth for the quarter ending June 30, 2022.
However, the war for talent will continue to be a huge challenge. But the company is prepared, says CEO & MD Thierry Delaporte. According to Delaporte, the company is better positioned to attract talent now than it was two or three years ago.
This confidence comes in the wake of the restructuring that came into effect last year that made the organisational structure simple and focused on growth. However, there are still concerns around the sustainability of this growth and its acquisition spree.
In this interaction with Moneycontrol, Delaporte answers these questions and more.
Edited Excerpts:
You took over the reins of Wipro in July 2020, when the firm was lagging behind its peers in terms of growth. With the growth of 27 percent in FY22, you are catching up with your peers. Between restructuring plans and accelerating growth, what would you say are your hits and misses?
I'm never satisfied, so I'm constantly pushing the team to do better. But I am proud of several things. We have built a very energised and high-performing team. One, there has been a lot of work not only to bring talent, but also promote and elevate a new generation of talent and leaders. Second is the growth mindset, the absolute focus on customers. Third, I think we've become focused and disciplined. Focus in terms of strategy, offerings, and markets. In terms of sectors, BFSI (Banking, Financial Services and Insurance) is 35 percent of our business, where we can play a very different game with customers.
In terms of misses, that is a difficult one, because I am never satisfied when we lose a deal. I'm always frustrated, I am competitive, and I like to win. I think that attrition is annoying, because it feels that we should be able to handle it. However, we still have attrition, and that bothers me because we are investing in our people, but we don't always find a way to retain them. I am restless in that, trying to see how we can be closer to our people, more human, more real. That is certainly a point where you cannot be satisfied when you have this level of attrition even if it has been moderating from the previous quarter.
If you look at Wipro’s strategy, apart from simplification, and revitalising the sales engine, acquisitions have also been a strong focus area. You have acquired about 10 companies for close to $2.5 billion. It is almost like Wipro’s pearl of strategy is making a comeback. But there are concerns that growth is being driven by inorganic rather than organic means…
We are in a market where there is a lot of demand, there's a lot of growth and we must be in the market. Grabbing market share must be an obsession. For many years, Wipro has lost market share. It is time for us to really regain part of what we have lost. So I'm convinced that we need to continue to go and grab market share. That comes from an aggressive push organic, which is what we do every single quarter, but that also from inorganic (push). We could decide to build it (organically), but it would take years, and the market will not wait for us. We are in a market where technology is evolving rapidly and the understanding of the business of our clients is critical. You cannot only sell technology; you need to understand the business challenges of your client to understand how to leverage technology to provide solutions to them.
Does that mean you will continue to look at inorganic growth, through acquisitions?
Yes, but only when it makes sense from a strategy standpoint. We do not have a number in mind. Rishad Premji, chairman, and I are incredibly aligned on everything. But on that (acquisition) strategy, it's very clear for us that, it is not that we need to hit a particular amount of inorganic (targets), but we look at what makes sense. When it does from a strategic standpoint, we are considering it.
Can you also share more on the headway you have made in consulting? You acquired Capco, which is your biggest-ever acquisition, which specialises in BFSI consulting. How has this helped? If you look at Accenture, it clearly shows you how consulting is really giving them a big shot in the arm…
If you remember some of the comments made by some analysts two years ago, when we did this acquisition, there was a bit of suspicion about our ability to integrate a company like that. The reality is, it has been an absolute success. I think the recipe for me is, you need to make sure that you are not merging the consulting business with the technology business. Those are different families, but working for the same accounts, and so the alignment should be around the client. We have maintained that. That's why we continue to operate with Capco as a global brand for BFSI. We have continued to do the same strategy CAS (acquisition) in the communication market, where we are bringing consulting capabilities in this domain that allows us to have a different type of discussion with customers, and it is working well. Our client's need is not to explain to them about the technologies they know, but they need ideas on how to improve their business. That requires domain and consulting capabilities to play a key role at the beginning of the discussion with clients. So, there is demand, and I do not see it slowing down, frankly.
As you had pointed out earlier, gaining market share in the IT sector has been a key focus. With this focus on consulting, how do you see the balance tilting between the market share game and value driven play?
Okay, it is not a volume game. Let's be clear, I will not be acquiring a large company with a lot of revenue but low margins and undifferentiated offerings. I would never do that. Because that would not position us better in front of the client. So, I'm actually more inclined to look at, obviously, market share gain, for sure, but combined with selling value.
Can you share the quantum of revenue you get from consulting?
What I can tell you is that, it has now passed a level of materiality, and it is an important practice for us worldwide.
Will you declare consulting something at some point?
Why not? This is my answer right now. Next time we speak, I'll give you a more precise answer.
Do you see attrition numbers moderating at some point? Is it something that you will have to live with, at least for the next financial year?
I think a discussion of attrition is linked to the question of growth. As long as the market is hot, with high demand, there’s going to be high attrition. The day it (demand) slows down the attrition will slow down. What I said two quarters ago is that attrition is here to stay. I still believe that it will continue to be a challenge for us going forward.
The war for talent has been a concern since 2021, with inflated salaries and dropout rates. Going forward, do you also see this intensity continue or taper to a certain extent?
Our attrition has gone down 500 basis points. That's a lot. Is it a trend? If in one or two quarters, we are still at this level, then I'll be able to tell you if it is slowing down. But I think it's going to continue to be rather hot. The war for talent remains a reality. The difference for us between today and two years ago is our engine to attract talent. The volume of talent that we attract every quarter now is four or five times bigger than what we used to do two or three years ago. So, we are more equipped to go and attract talent.
What is the impact of the Russia-Ukraine crisis in terms of decision making? Are clients forging ahead with their plans or are they still in wait-and-watch mode with IT budgets on a pause? And the second part of my question, do you have any employees in Russia, serving global clients?
We don’t have any employees in Russia, Ukraine, or Belarus. We have employees in neighbouring countries like Romania or Poland. From that standpoint, do we see a slowdown in demand in Europe? Too early to say. For now, I'm not seeing a change in pattern. But it could happen. Let us look at the macro environment; if the war continues, if there are more restrictive measures imposed on Russia or from Russia, gas prices will continue to rise. At some point, if inflation continues to go up, it will possibly backfire.I’m not seeing it now.
Wipro grew 27 percent in revenue in FY22. How long do you see this momentum sustaining? Your revenue guidance of 1-3 percent for Q1 FY23 is already lower than the 2-4 percent guidance of the last couple of quarters…
For the next year, I am seeing double-digit growth. We’ll continue to keep you posted on how the year is unfolding. But I think, not necessarily at this level of the performance we have done last year.
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