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Growth is the biggest lever to protect margins: Wipro CFO Jatin Dalal –

Wipro, India’s fourth-largest software exporter, just reported its best quarter in a decade and has projected double-digit revenue growth for the current fiscal year as it banks on large cloud-transformation deals from clients and momentum from its recent acquisitions of Capco and Ampion. Wipro’s mojo has been more visible in the last few quarters after Thierry Delaporte took charge as CEO.

 In an interview with Moneycontrol after releasing Wipro’s fourth-quarter earnings on Thursday, CFO Jatin Dalal spoke about the company’s renewed thrust on consulting, its plans to combat margin pressure, and the growth trajectory. Edited Excerpts:

 Take us through your plans for consulting, especially after Wipro’s acquisition of Capco. 

Certainly consulting is one of our core thrust areas. You have seen Capco as a consulting acquisition. Of course, they have revenues on the digital and technology side as well. But that acquisition was about blue-blood consulting in the banking and financial services domain. The business was built on that strength. So, it will remain a core thrust from our side over the next few years and Capco was really about taking that very definite step in consulting.

Have you made changes internally to push consulting?

Consulting we will continue to build organically. Of course, Capco is an inorganic play but certainly, there is a strong emphasis on building an organic consulting layer. We had hired a senior leader at the head of consulting under our IDEAS (Integrated Digital, Engineering, & Application Services) global business line. His charter would really be making consulting a big differentiator and capability for Wipro in the coming year.

Wipro is looking at 11-13 percent year-on-year growth in Q1 FY22. What are the key factors driving this growth?

The 11-13 percent really is converting our 2-4 percent guidance for Q1 FY22 on a sequential basis to a y-o-y basis. This guidance just reflects the sort of recovery we have had over the last couple of quarters. Overall we have been on a good trajectory of growth and we have once again guided 2-4 percent for Q1. It is reflective of trends in demand, bookings that we were able to close, and the volume growth we have seen in Q4 and expect in Q1.

Given that digital is clearly the growth area, are you looking at more metrics to measure digital?

We are quite pleased with the performance of all the digital technologies that we have seen playing out and we will continue to push that lever. Our order book in modern digital practices like digital experience, digital interactive, and cloud transformation has collectively grown over 40 percent on a full-year basis. Cybersecurity has grown upwards of 25 percent. All these digital technology services individually are doing fabulous growth, in the order book and revenue terms. We will continue to think about it if we come out with a new metric and that is a part of our deliberation.

Given the growth momentum, what are your hiring plans?

We have not shared those numbers but this will be significantly more than what we have done in FY21. Even in the March 2021 quarter, we had added around 3,000 people and had similar additions over the last three quarters. So, you can certainly expect more in FY22 given the demand environment we are all witnessing.

 What pressure do you see on margins going forward on the back of interventions to retain talent, such as wage hikes, promotions, and bonuses?

We will talk about it once we finalise and hand it over to employees. We have budgeted it. However, we are in the middle of April and increments are effective June 1. There will be deliberation between now and the actual finalisation. So I can’t talk about the actual cost impact we have seen and the actual increases we have given. I will articulate that at the end of Q1 rather than giving you an expected number and revised number.

And what are margin levers to offset the impact?

Growth itself is the biggest lever. Growth means that you will have better utilisation like campus freshers you have hired over the last 9-12 months becoming part of the project, or improving the rotation of your senior employees. So, growth comes with its own levers. Another is the operating lever on fixed costs. My facilities or support staff cost is not going to rise just because we have higher growth. You will see some leverage coming from there.

That will have to offset the increased pressure on the talent side, where we will have to do the right thing to make sure that we don’t lose demand, talent, and don’t lose marquee assignments. We will have to remain proactive and stay ahead of the demand. We will have to invest in the right way.

Wipro signed 12 deals with a total contract value of $1.4 billion during the quarter. Tell us more about the nature of the large deals.

Large deals are an important aspect of the overall growth story for the industry and generally for Wipro. We continue to participate in large deals. Of the $1.4 billion we signed, there was one deal which we internally call the mega-deal, which is $500 million. We will continue to work hard to win as many as we can. But it is very difficult to give any outlook around that.

If you look at our profile of the $1.4 billion, if you take out the one deal that was large, the remaining deals were good, chunky deals that are very valuable to us. We are seeing large deals, but we are also seeing momentum in mid-size deals.