Aim to grow higher than industry average in FY13: Wipro CEO

India's third largest software services provider Wipro disappointed the street with a muted guidance for the first quarter. However, the company endeavors to grow higher than the industry average in fiscal 2013, its CEO TK Kurien said on Wednesday. The company's confidence in itself is backed by a robust order pipeline. Wipro said it is also committed to a wage hike in FY13.

Industry body NASSCOM has forecast the Indian IT services industry will see a revenue growth of 11-14%  in the fiscal. Wipro's rival Infosys has guided for a 8-10% growth in US dollar revenue. Wipro doesn't give specific full year guidance. It expects revenue from IT services in the first quarter will be in USD 1.52-1.55 billion range, about 0.6% higher than that in Jan-March at the top end. The company's fourth quarter net profit rose 7.7% year-on-year to Rs 1,481 crore. Net sales were up 19% to Rs 9,836.3 crore. (For full result, click here). Below is an edited transcript of their interview with Udayan Mukherjee and Mitali Mukherjee. Also watch the accompanying video. Q: The street is a little disappointed with your flat guidance for Q1 over Q4. Why are you so circumspect about the guidance that you are holding forward? Kurien: When we started this whole journey about five quarters ago, we told ourselves that there were two areas we are going to focus on; one is customer satisfaction, the other one is employee satisfaction. If you look at customer satisfaction and the top two boxes that we have had, our customer statistics has gone up by 20%. If you look at employee statistics as measured by attrition, our attrition numbers have remained flat. Now what you see reflected in guidance is a reflection of a slowdown that we are seeing in our India business. We have factored that risk into our guidance. As far as our pipeline is concerned on a global basis, it remains robust. In Q1 of the calendar year which is our Q4, we saw a little bit of a slowdown in terms of proactive deals closing. But that is now behind us and we are seeing disclosures starting in our Q1. To that extent, on a full year basis, looking at our pipeline, we are not unduly concerned about growth. Q: You had your share of hiccups a few quarters back and the market has seen you in the light of a turnaround that you are trying to affect with the new management and processes. In FY12, you had dollar revenue growth of around 13.5%, which was lower than many of your frontline peers. Your investors would expect that you turn it around in FY13 by growing above that and well above the NASSCOM estimate. Do you think FY13, in dollar revenues, will be substantially better than FY12? Kurien: We don’t give full year guidance. Our endeavour would make sure that we grow ahead of the market, there is absolutely no question about it. That is the kind of game that we are playing; we are investing in customers and employees. There is no other reason to do both because ultimately we win and lose in front of the customers. It is not the absolute number that matters. But again, from a street perspective, it is important that we give you some sense to where it will go. Our endeavour would clearly be to grow ahead of markets. Q: For the quarter gone by, volume growth has not been extremely encouraging. What do you expect in terms of volume growth this year in terms of dollar revenues? Kurien: Our onsite pricing has gone up by 0.4% while our offshore pricing has risen by about 1.4%. Last quarter, a similar question was asked and our view was we see enough levers to drive productivity in the system and we continue to work on that. To that extent, we clearly see productivity being a massive driver for us. Going into next year, we see hiring numbers pretty much remaining in the same range or probably with a slightly upward bias as compared to this year. Therefore, we are not unduly worried about hiring. We already have offers in colleges and we will continue to hire based upon the offers that we have given. _PAGEBREAK_ Q: For your margin performance, what might those levers be and what is it that you are penciling in both in terms of volumes and pricing for the rest of the year even to keep margins stable? Senapaty: If you look at the Q4 performance, we have done well in terms of driving productivity whether it is a price realization onsite or offshore. The offshore mix is a little bit favourable there, utilization also held on. Foreign exchange, despite the kind of impact in the rupee-dollar depreciation, we still had a 10 bps improvement on the price realization, improvement to be on the operating margin. The Days Sales Outstanding (DSO) has improved, the cash flow is about 8% of the net income; overall on varieties of parameter, we have done well. However, there are some investments that we have done on an onsite basis to be able to have expert and more consulting driven people, domain-driven people to be able to get traction into the business particularly the kind of proactive deals that Mr Kurien talked about. In that context, there are a lot of investments that we have already obtained. Net-net, we are able to maintain the margin with about 10 bps change. As we go forward, the levers will continue to be the most of the same productivity driving non-linearity. While in a medium-term to shorter-term, there will be some kind of movement that could happen. But as we exit this fiscal, our expectation would be to seek an expansion in the margin from the current levels. Q: Your two peers have said very opposing things about wage hikes; TCS says about 8% up, Infosys says they are not doing wage hikes. What are you going to do come June-July? Kumar: Whatever we have initiated over the last few quarters in terms of our efforts, there is every indication that those seem to deliver and that’s reflected in what MR Kurien mentioned about our attrition numbers, our robust hiring pipeline which remains to be fairly intact. We also talked about previously about our salary increase cycle. We had gone out and communicated to our own employees that will happen in June and we are very much firm on the date. We are still a little over a month away from it so the exact range of increase, which we would be offering still needs to be finalized and determined. But our own take is pretty much going to be inline with what we have heard others talking about at least those who at least talked about going ahead with the salary increase. Kurien: Our point of view from the company perspective again goes back to the kind of strategy we articulated; employee satisfaction, customer satisfaction. We believe that when an industry hits hard times, leaders don’t head for the hills, leaders stay and live up to their commitments that they have made. We have made a commitment to our employees that we are going to give a compensation increase. We want to be a magnet where we get great people in; we want to make sure that we are the most attractive employer in the market. To that extent what Pratik said is absolutely right. In some segments, we will give compensation increases, which are higher than what you have heard. In some cases where we believe that there are commodity skills, we are going to ratchet down our compensation increase. But on an average, it is going to be in line with what the industry just declared. But for us, it’s critical that we differentiate more in front of the customer in terms of value addition rather than anything else. Q: On the India business slowdown, you said that is the culprit for Q1 tepid guidance, what is going on there, how long will it continue to be a hamstring? Kurien: We see that being a Q1 phenomena, we see that coming back in Q2. But there are two segments where clearly we have been affected; one is telecom and the other one is government. Q: BFSI (Banking, Financial Services & Insurance) is one vertical that you indicated that Wipro would want to focus on more aggressively. Even there, growth hasn’t been very special, which I admit, as being a trend across the sector. What do you see happening on BFSI over the course of the next few quarters and is that where you are seeing greater decision delays? Kurien: If you look at BFSI by itself, when you break it up into segments, there is investment banking and retail banking. We have been very consistent in messaging from the June quarter onwards that the investment banking sector has been stressed. We see nothing right now, which makes us change our point of view. I think that sector continues to be stressed and to be under pressure. Retail banking, on the other hand, we see tremendous opportunities. Especially with retail banking going through a huge technology change, with a lot of over-the-top players like Google coming into that space, we just see that the technology investments that will be made in that segment will be ratchet up significantly. The banking sector has got regulators, so technology adoption won’t be at the same pace as you have seen in the media area. But clearly, that’s going to be an area which will find significant new technology investments coming in. So we see that growing. We see investment banking flat to negative and we see opportunities in insurance even though our preference from the insurance segment is not at the level at which we would like it. So that’s broadly what we see in terms of banking and financial services. Q: One of your peers is talking about back ended growth for this year again and the other is talking about things looking fairly steady in terms of a reasonable performance every quarter especially on volumes and revenues. What is it that you are penciling in? How are you mapping the rest of this year? Do you see it again being one of those U-shaped recoveries or is growth and volumes steady between quarter as you reckon? Senapaty: Yes, I think when we talked about Q1, we talked about certain specific pockets because of some amount of decision making delay in Q4 reflecting in the Q1 numbers. But as we are entering into quarter one we think the decision making is sort of coming back. Q1 is not an indication for us in terms of the whole year. There are specific issues that we got into Q4 which is reflecting in Q1. But as we are approaching Q1, we think the decision making is returning back. Similarly, we expect the India geography to come back. I thought Q1 is not an indication for us in terms of the whole year. There are specific issues that we got into Q4 which is reflecting in Q1 but as we are approaching Q1 we think the decision making is returning back. Similarly the India geography also we expect it to be coming back.