After assuming office as CEO of the Bengaluru-based IT firm
Wipro in July 2020, Thierry Delaporte set his eyes clearly on winning large deals to get the firm on the growth track.
Delaporte, during the earnings call on October 13, laid out five priorities -- winning large deals, focus on scale, offerings, talent, and a simpler and leaner organisation.
Wipro announced its Q2 results on October 13.
According to two analysts, winning large multi-year deals is important for driving and sustaining growth. Wipro’s peers
TCS,
Infosys and
HCL Tech have a strong focus on the same, the analysts added.
Case in point are TCS' $2.5 billion Phoenix group deal, Infosys' Vanguard deal and HCL Tech's Ericsson deal. Over the last three months, Wipro, too, has been able to win a large deal. It won a multi-year automotive software engineering deal from Marelli.
The focus for Delaporte is to sustain this.
The road ahead
According to Delaporte, the company has built relationship and trust with clients, are striving to stay relevant to client needs. The company is well-positioned to win them, he said during the earnings call.
This positivity is what reflected in the Q3 revenue guidance. The company projected a revenue guidance and expects a 1.5-3.5 percent quarter-on-quarter growth for Q3FY21 at $2.02-2.06 billion.
“…in July, it was a particular context of crisis (that was) just unfolding. We are in a different situation three months later. We have good visibility on business in quarter 3 and 4, and the guidance of 1.5-3.5 percent seem to be the right thing to do,” he added.
The company posted $1.99 billion in revenue for the quarter ended
September 2020, up 3.7 percent quarter-on-quarter.
Wipro does not share the total contract value for the quarter. However, it said that the deal pipeline was strong and back to pre-COVID-19 levels.
There was a mix of large and small deals, said Bhanumurthy BM, COO, Wipro, in an earnings call. While the decision-making has improved, it continues to be slower for large deals, he pointed out.
Wheels start moving
According to analysts, this is a welcome sign of the company finally playing catch-up with its peers. Though it is yet to be seen if the new CEO’s five-point strategy would fructify, analysts added that the company is heading towards the right direction.
Over the last few quarters, India’s fourth-largest IT firm have been lagging behind its peers in terms of growth. Look at the three revenue outlooks the company gave for September and December 2019 and March 2020.
They were lower than than the 1.5-3.5 percent increase the company shared for December 2020, amid COVID-19.
Discontinuity in leadership one hindrance
The underperformance could be attributed to a couple of reasons. Sudheer Guntupalli and Hardik Sangani, research analysts from brokerage firm ICICI Securities, said in a note that discontinuity in leadership and strategy and execution challenges are the key reasons for the decline in growth.
The company has seen four CEOs in the past 10 years. Its former CEO Abidali Neemuchwala resigned in January, a year before he completed his five-year term, citing family commitments.
In an earlier interaction with Moneycontrol, an external consultant, who worked closely with Wipro, had said: “Over the last two years, the company’s internal technology transformation has been the cutting edge.”
However, it was a laggard in winning large deals due to a few reasons. For one, the company was unable to rightly position itself in the market. It was also not able to capitalise on key markets and solutions (it offered). “The leadership instability also affected growth,” the consultant added.
The consultant added that the company should go aggressive in winning large deals and that was missing in Wipro, compared to its peers. “Their peers are ‘hungry’ for large deals. They have sheer focus and commitment to winning large deals,” the consultant added.
This is what the company is focussing under the new CEO. Going by Delaporte's commentary, work has already begun and is moving rapidly as they could.
The next few quarters, for sure, would be telling.
