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Wipro to get its new CEO by June; pegs coronavirus impact at $14-16 million in Q4

The search started after Neemuchwala resigned on January 30 due to family commitments

April 15, 2020 / 09:38 PM IST
 
 
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Wipro is likely to get their new CEO by June end, said Saurabh Govil, Chief Human Resources Officer, Wipro.

While announcing the company's Q4 result, Govil said search for the new CEO is on and is expected to conclude by June-end. The search started after CEO Abidali Neemuchwala resigned on January 30 due to family commitments, after completing close to four years in the company.

Impact of coronavirus

This comes at the time the industry is going through a crisis, which according to some could be worse than global recession of 2008.

Neemuchwala said if the pandemic continues beyond July, the impact will be much more drastic and will have significant impact on businesses.

The company is already seeing a reduction in client budgets reductions and a cut in IT spends. It is also staring at pricing pressure with customers looking at restructuring of current contracts and discounts. Some of the verticals are seeing a more immediate impact like aviation, manufacturing and energy verticals.

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Given the inability to predict, the company has withdrawn from offering a guidance until there is more visibility. The company estimates the impact of the coronavirus to be in the range of $14-16 million for the quarter ending March 31.

Neemuchwala said the priority now is to be a trusted partner; offer customised services to customers through process automation, cybesecurity, analytics; and gain market share in strategic accounts to drive efficiency and consolation of vendors.

As a result, the company expects its working capital to increase. However the leadership pointed out that the company has enough cash flows to look at M&A opportunities.

Work from home

The company has also been able to enable work from home (WFH) quickly to ensure deliverables on time in the last two weeks of March. Close to 93 percent of the company’s billable workforce is now working from home with client permissions. The managing is working with other clients for permission with regard to the same.

However, the BPO segment has been the most challenging in the current situation. The company has a significant BPO exposure, which directly impacts its business. The management has been able to enable only 75 percent WFH for its BPO employees due to client permissions and nature of the work.

BPO employees work in shifts. This means that a single system could be used by three employees. As employees handle live consumer data, hence clients are reluctant to let them WFH.

Outlook for the June quarter

In terms to how it will affect the coming quarter, Neemuchwala said the company expects discounts and deferrals in Q1. Jatin Dalal, its CFO, said the situation is similar to 2008 global economic crisis and could be worse.

Back in 2008, the company’s growth slumped. As the client’s budget began to freeze, its FY09 and FY10 revenue grew only 0.5 percent and 1.5 percent to $4323 million and $4390 million, respectively.

Wipro reported a 5.3 percent sequential fall in its consolidated profit for the fourth quarter at Rs 2,326.1 crore for the quarter ended March. The company had posted a profit of Rs 2,455.9 crore for the quarter ended December 2019.
Moneycontrol News
first published: Apr 15, 2020 09:38 pm

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