Jatin Dalal, President & Chief Financial Officer (CFO), Wipro Limited, talks about Constant Revenue in Q2FY22, IT services margin, attrition, acquisition strategy and market-wise growth potential among others during an interview with Swati Khandelwal, Zee Business. Edited Excerpts:

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Q: Constant Currency revenue growth has been 8.1% QoQ. What were the key reasons for this and going ahead what kind of trends are visible?

A: The numbers have been good and our guidance stood at around 5-7% while the actual performance stands at 8.1%, so, we beat the upper-end guidance in the second quarter. The performance has been across the board and if you will have a look at our Banking, Financial Services and Insurance (BFSI) has grown 12.5%, the consumer has grown 7.7%, health has been at 5.5%, communication has grown by 8.9%, so, overall, the performance has been secular and we are quite happy as we have been able to achieve a broad-based performance.

 

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Q: IT services margin has fallen by 1%. What have been the reasons for the fall and what's your outlook going ahead for the next few quarters?

A: Our second-quarter margin stands at 17.8% and if you have a look at our first-quarter margins stood at 18.8% and this 1% difference is not operational, in fact, we received a 1% benefit of our two investments, which were disposed of strategically in the first quarter. Of course, the benefit that we had in the first quarter was not seen in the second quarter. Operationally, the way we performed in which we had seen an impact of three-month salary increase on the margin would have reduced our the margin but the way we worked in terms of realisation, utilisation and other operating levers has helped us in covering the adverse impact that would have been there on the margin. And, our margin has been stable at 17.8%.

Q: We have seen attrition levels rising across IT companies, and it has been similar for your company as well. By when do you see this easing and what's your strategy to control it?

A: Our strategy does not live on a single dimension. Our strategy on retention and career-building always remains in multiple dimensions. So, salary is one component and the kind of work we are being able to provide to our employees is the second dimension, career growth in the third dimension and a global career is the fourth dimension in which today you are working in India, the other day you would be working in the Middle-East and someday in the US. So, the overall package of a large company and a brand like Wipro is helpful to us in terms of retention. The ongoing attrition is an industry phenomenon as you have said and I feel it is here to stay for the next two to three quarters after this, when the industry will add more freshers next year, the attrition pressure is likely to drop.

Q: What are your acquisition strategy for the rest of FY22 as good start-ups are there and where do you see opportunities in the tech play, do you have something on your radar, if yes, please update us on it?

A: If you will have a look at our strategy then acquisition is a strong pillar of our growth strategy. Capco, which was our biggest acquisition to date was completed in April. Its performance for the first five months is very good, we are quite encouraged by the way Capco has performed. Going forward, we will try to acquire good companies, if we can. We have three gates in cultural fit, strategic fit and financial fit and if any acquisition candidate stands firm in these three gates then, of course, we will proceed with that.

Q: Market-wise, where do you see maximum promising growth and how Europe and America are panning out at present and what would be your outlook and expectations from them?

A: Our second-quarter performance has been across the board. In the second quarter if you have a look at our performance in Americas' then on an average it has been at 20% YoY in Americas-I and at 30% YoY in Americas-II. So, overall on average, the whole of the Americas has shown a 25% YoY growth. Our performance in Europe has been at 48%, so, it has been a good performance, interestingly, we are getting benefits of our acquisition of Capco that we did but if you ignore it for a time, then also our domestic performance in Europe has been quite good, it has been slightly low in APMEA at 8% but we are confident that even the Asia Pacific and the Middle East will perform well in the second half.