Wipro put in a tepid performance for the first quarter of FY15 with revenues growing sequentially by 1.2% in US dollar terms, but the IT major is quite hopeful that the situation would turnaround for the better in the remaining part of the fiscal with growth from sectors such as life sciences, retail and energy. Wipro CEO TK Kurien says the company needs a deal flow of $800 million to $1 billion to maintain the momentum in an interview with PP Thimmaya & Sayan Chakraborty. Edited excerpts:
How do you see the overall demand environment?
The demand environment is okay. It is not any different from what we saw last quarter. We are certainly seeing demand stability in North America and Europe. In Europe, the business is coming more from large cost-driven initiatives while in North America there is more discretionary spending around newer technologies. Social, mobile, analytics and cloud (SMAC) is becoming a very big thing. In the Asia Pacific region, we are small and it will not change Wipro’s financial numbers. In India we are seeing demand coming back and I am fairly bullish.
How do you see performance of the various business segments during FY15?
The one area we have done badly in the last quarter and another where we will do badly in the next quarter, are going to be oil & gas and retail, where there are specific customer issues. But then, we will come back in the next two quarters. Our year-on-year growth for IT services has been 9.6%. There is growth coming back.
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Are there any large $1-billion deals in the offing for Wipro?
We need new deal flow of roughly $800 million to $1 billion on a regular basis. The deal pipeline is healthy and we remain focused on converting these opportunities. Within our SBUs, we see strong demand in healthcare and life sciences which grew 20% y-o-y in revenues this quarter. Business momentum is improving in manufacturing and hi-tech.
Is Wipro turning cyclical while reporting the financial numbers?
The industry is not necessarily cyclical but we are, that’s our problem and that’s what we have to fix. In terms of automation, we have some work going on there. Let the work finish. One would see the same level of automation as last year and the same impact on every other component of our business including headcount.
Will infrastructure services business continue to deliver a strong performance for Wipro?
We have to continue our thrust in infrastructure services but also get our other engines firing, especially the application business. Infrastructure services is going to be huge for us and the heritage of Wipro from being a hardware player helps us. We always had a strong position in this but we have to get preeminence in the newer areas. We have to build a portfolio to make sure that we are tackling today and also building for the future. The future is going to be mainly around digital and open source.
What steps have Wipro taken to strengthen foray into digital space?
We announced the digital unit last quarter. We have also closed three large deals and expect to see more customer interest. However, the real value is going to be in two areas. Digital has fundamentally changed the way you work, which means the back office function, where the first level of disintermediation is going to happen, not necessarily the marketing function, that’s the first focus of the business. We also see open source technologies coming in a very large way to cut cost, because it is becoming more and more prevalent right now.