Wipro’s annual revenue run rate crossed the key milestone of $10 billion, adding $2.4 billion in the past 12 months and closing in on rival HCL Technologies.
Asked if the Bengaluru-based IT company would soon overtake HCL Tech (now at $10.2 billion for FY22) to become India’s third-largest IT services company, the usually candid CEO Thierry Delaporte didn’t give a timeframe straightaway.
“I’ve always been cautious about when it will happen. But I think we are progressing along the same line,” he says.
Delaporte, who took charge in July last year, has made significant changes to Wipro’s structure, focusing on large deals and the talent pipeline. The company reported $2.58 billion in revenue, up 6.9 percent sequentially, in the quarter ended September. It added 11,475 employees even as its attrition rate zoomed to 20.5 percent.
In this interview with Moneycontrol, chief financial officer Jatin Dalal talks about aspects such as the demand environment and supply-side constraints. Edited excerpts:
The $10 billion annual revenue run rate is a great milestone. CEO Thierry Delaporte was very confident about it last quarter…
We are very pleased. I would rather say we are crossing or surpassing the mark than barely reaching that kind of number. It’s been remarkable. So, we are quite pleased and it is a solid reflection of things on the ground on growth.
Thierry spoke about $8 billion in the cloud pipeline for the current quarter. Can you share more on the duration and nature of these contracts and the company’s road map?
The pipeline of $8 billion is really about working closely with the hyper-scalers to help our customers who could be in any of the spaces of transformation, migration, re-architecting any of the applications or infrastructure portfolios for our customers. So this really is the reflection of the full stride cloud strategy that we spoke about in the second quarter and the reflection of the market attraction that we are generating on that. It would typically take the next four to six quarters in terms of culmination on decision-making on this pipeline. It has been rapidly growing for us compared to where it was a year back. Overall, this is a reflection of our strategic investment and early execution vigour that we are able to demonstrate in our cloud strategy.
Wipro has won $3 billion in total contract value, which was the highest in recent quarters. Can you share more on the deal sizes you are seeing and the duration?
The 18 months (duration) that Thierry mentioned was the reflection of the duration of the deal.
But yes, it is fair to say that they are not mega-deals even though they could be multi-year deals. Total contract values may not be large. But they still will be somewhere between $50-100 million and $100-250 million, and the $150-200 million sort of ranges. These are not mega-deals that will be upwards of $500 million. So to that extent, yes there are plenty of medium-sized deals. This is the reflection of today’s market.
Attrition shot up to 20.5 percent for Wipro. Both TCS and Infosys too saw their attrition increase to 11.9 percent and 20.1 percent, respectively. When do you see the pressure on the supply side coming down?
In the next couple of quarters, the pressure will be there. But it is difficult to comment on the number. Pressure on attrition and supply chain will persist because of the gap which is there inherently between supply and demand. As the industry adds more and more freshers, I think you will see it sort of aligning over the quarters after that. But we believe that this current trend could continue for the next couple of quarters.
Any special incentives that you will roll out to retain talent, considering the current environment? You will also have to compete with innovative incentive structures from startups and SaaS firms.
You have to look at the total package and the total package that you offer to an employee starts with the kind of work that he or she will do. Then the career growth, the sheer scale one can achieve in a larger organisation with a diversity of work, as well as the depth. All of these factors are still very relevant factors.
I wouldn’t say that one specific intervention could make a big difference. When you are looking at both attraction and retention, you have to look at the overall package of what you offer to an employee.
Yes, attrition rates are high but at the same time we have added more than 10,000 employees net of attrition, which means that we are able to comprehensively attract new talent to join us even as we are losing some of our existing employees.
Does this mean you will be increasing the fresher-hiring number from 12,000 you had shared in the last quarter?
We will go up to 16,000-17,000 freshers in the current year.
Has the pricing environment changed with demand high and supply-side challenges?
Pricing is stable at a portfolio level. But there is the risk that there is definitely some premium for skill sets reflecting the scarcity of talent in those areas. There is also pressure on commoditised services. So you take both of them in your stride and manage the pricing at a portfolio level.
If I have to make a commentary at the portfolio level, I will say it is a stable pricing environment and there will be pockets where you have some premium and there are pockets where you have some sort of commoditisation.