Software services firm Wipro put up a decent show in the quarter ending September 30, 2019, after starting off the year on a subdued note.
The company increased its guidance from 0-2 percent to 0.8-2.8 percent, despite the macro-economic volatility. It is also stepping up its investment in building resources and digital capabilities.
Will the positive outlook translate to better growth for the rest of the year as well for the IT major?
In an interaction with Moneycontrol, Jatin Dalal, Chief Financial Officer, said it is hard to say. “Headwinds certainly are there. The environment is becoming tougher, especially in BFSI where we see that clients are more conservative vis-à-vis new project and it is also reflected in our performance.”
“In a nutshell, it is an environment to be watchful of,” he pointed out.
But, he added: “I don’t want to hazard a guess on quarter four. Things will change. So we should look at the (third) quarter and execute it well rather than making or predicting.”
Wipro’s increased revenue guidance for the next quarter is reflective of its improved outlook. This, Dalal said, will be driven by the closure of few deals in the second quarter that will give incremental revenue.
On the other hand, the company’s restructured India strategy is paying off. Rather than using the same strategy for private and public enterprises, it now has a separate focus on the two.
Its revenue from the product segment that caters to Indian private players stood at $45.8 million for Q2 and India business from state-run enterprises accounted for about $29.3 million.
It recently won $300 million digital transformation contract from ICICI bank.
Hiring and bench
The company has also increased its investment in people and digital technological capabilities, which the company believes is the future.
Though uncertainties prevail, Dalal said, “What we understand better is the long term technology trend. We believe that digital, cybersecurity and engineering will grow. So we should put our disproportionate resources behind those. That we are not holding back.”
It is visible in the growing sales and support staff and rising bench strength. For Q2 FY20, the gross utilisation stood at 71.4 percent compared to 74.5 percent for the same quarter in FY19.
When it comes to sales staff, the number of sales and support staff stand at 14,990 for Q2 compared to 14,116 in Q1.
The company has already recruited 9,000 freshers in the last six months from April 2019 to September 2019 globally. Dalal explained that the growth in the bench is also in line with the company’s growth outlook. “For us, it is important to be ready for the future. It is a flavour of what we see as immediate future,” he added. He argued that it is also important to have a global supply chain of resources.
“Global supply chain is more agile and makes an organisation nimble to cater to customer requirements,” Dalal said.
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