In the last nine months, Wipro, India’s third-largest IT services exporter, has done the turnaround act by delivering consistent growth numbers, and it is confident of continuing the momentum in the current fiscal. TK Kurien, CEO, in an interview with Sayan Chakrabarty and PP Thimmaya, said the demand pipeline remains strong, the conversion rate is high and the company plans to expand further in the US, its largest market. Excerpts
How do you see the overall demand environment?
I remain bullish. I see significant demand in the pipeline. The last quarter was, probably, one of the best we’ve ever had, with many deals coming from new accounts. Companies with a huge focus on the infrastructure and BPO segments are saying there's no doom and gloom. They say so because infrastructure services form a large part of their business, apart from BPO.
We are not seeing huge demand in terms of application services. There’s is secular demand, but it is not big. But, in infrastructure, we have seen huge demand. And that's a big positive for us. In BPO, if you hit it, you hit it big.
In terms of growth, which geographies are key?
I see the US coming back very strongly in terms of manufacturing. For us, that's a big opportunity. Because, even today, our coverage is low in the US. Our whole emphasis is on covering the US completely. Similarly, we see enough opportunities in continental Europe. It's not reflected in our numbers, but we had a few good wins there in the last couple of months. The big bets are on the US, continental Europe and the UK.
How do you plan to expand presence in the US?
There are large swathes we don't cover. For oil and gas, the place to be in is North Dakota. But we are not there. If you look at the mid-west, which is where manufacturing is, we are in some parts, but not all. We have to adopt an approach where we are geographically closer to the customer — both in terms of sales and delivery — rather than scattered. The real focus is to be where the customer is. That does not mean opening more centres in the US, but more people solutioning, programme-managing and selling in front of the customer.
How strong is your order pipeline?
The pipeline is strong and the conversion rates have really improved. There's a 50% improvement in conversion rates from FY13 to FY14. I think our execution is better and we are learning to sell. We are not far from the top quartile in terms of conversion. As we build more pipeline, it will get better. The pipeline is decent now. I'm not losing sleep over it. What I am losing sleep over is providing better customer experience and automating more. We want to take customer experience to a different sphere.
How is the India business shaping up?
I hope demand comes back. And I hope that sentiment changes and people start investing here. In India, we have very poor consumer demand. The IIP numbers will never go up if you have this kind of demand.
Demand has a couple of characteristics. In India, rural demand has been better than urban demand for three years. It has grown 16.3% against 14% growth for urban demand.
Urban demand is not growing because even if the savings rate is high, people don’t necessarily spend if there is no economic stability. So, consumer confidence, which is an indicator of economic stability, is a little iffy. Growth rates have come down significantly. It will take some time for them to come up. And if they go up too fast, you have inflation. Then you have other issues.
Would you say your efforts over the last three years are finally bearing fruit?
We should absolutely be doing more. We are not yet at a stage where we can pop a champagne bottle. We are far from that. The real test will be four to five quarters of 3% and greater growth on a secular basis. At that point of time, I can say my job is over.
For now, our second quarter is going to be better than the first. And I want to remove lumpiness in terms of growth. Growth of 4-5% in one quarter and 2% in the next doesn't help. I want secular growth. The external market will always have demand. It is about how we perform in the external market that makes an impact.
Is automation a strong differentiating factor for Wipro?
It's a huge differentiating factor. We will continue to hire, but we will also continue to rebalance our workforce. The things we are going to do will be more intellectual property heavy, rather than labour-heavy. We believe the real value of what you do is in creating intellectual property that will make a difference.