T.K. Kurien, CEO, Wipro Ltd. Photo: Aniruddha Chowdhury/Mint
live Mint :Anirban Sen : Fri, Apr 19 2013. 11 22 PM IST
T.K. Kurien talks about Wipro’s investment priorities and the progress of the turnaround plan
T.K. Kurien took over as Wipro Ltd’s chief executive officer (CEO) after India’s third largest software exporter abandoned its dual CEO model, putting in place a turnaround plan as the company struggled to regain its past glory, losing market share to the likes of US-basedCognizant Technology Solutions Corp. and HCL Technologies Ltd. On Friday, Wipro posted a 17% increase in quarterly profit, helped mainly by increased spending by clients. It, however, gave a weak revenue forecast for its IT business, which now trades as a stand-alone entity. In an interview, Kurien spoke about Wipro’s investment priorities and the progress of the turnaround plan. Edited excerpts:
We’ve been hearing different commentaries about Wipro’s growth plans. What’s happening at the company?
When we started this game, there was a volume play and a value play. One of the big things we started was that ‘Let’s get whatever business we can get on the volume play and drive efficiency like crazy.’ That was one part of the strategy. The second part of the strategy was what we can do in terms of value. And value from a technology side—we looked at the whole social, mobile, analytics and cloud as an area of growth. We had some presence in energy and utilities, and we tried to figure out how to make it big. If you look at the entire portfolio in terms of the industry perspective, we’re one of the top three in the world as far as energy and utilities are concerned. Ultimately, the view is, in that business we’ll have a leadership position. If you look at banking, we’ve traditionally had a very poor footprint, being late to start off in the game, and I think some of the fact that our footprint and some of the customers that are doing well or not has been reflected in our topline growth. And we were overweight again on investment banking, which has been under pressure.
How much of whatever steps you’re taking today is going to reflect in regaining growth in terms of industry standards? When do you think that’s going to happen?
It’s very difficult to predict how other people are growing, we have an answer as to what we’re going to do. Unfortunately, we don’t give yearly guidance, so I can’t tell you what it’s going to look like for a full year. The way we’ve seen it, the first quarter, primarily because of our India business, has traditionally been soft. In the second quarter, we expect growth to come back.
Investors don’t seem to be convinced because of what they see in terms of growth ahead...
If you look at investors, ultimately what they’re interested in is EPS (earnings per share) growth. For EPS growth, there are parameters—one is topline and other is operating expenses. So while we were getting into a situation of topline remaining more or less where it is two years ago, we wanted to create enough elbow room for ourselves to manage our sales and marketing expenses, where we kind of overinvested. If you look at last year, our gross margin went up by 1.5%—that entire amount has been eaten up by sales and marketing. So what we’ve got in terms of gross margin and efficiency, we’ve reinvested in that. We continue to do that going forward, we’re not going to cut back on our salary increases.
What are your key investment priorities for this year?
Our priorities are deepening and getting into the energy side, getting growth back in our telecom segment, which dragged last year, making sure that healthcare goes back to normal industry average growth and deepening our footprint in BFSI (banking, financial services and insurance), not using traditional, but non-traditional methods.
Will telecom see a revival this year?
We’re hoping that the decline we saw last year won’t happen this year because most of the headwinds that we had last year are pretty much done.
Over the last two years since the transition started with your turnaround plan, where are you now and how should we progress going forward?
Basically, the cornerstone of our strategy was, ‘If you don’t have satisfied customers, you’ll never have a business.’ You can call us a technology company, but fundamentally we’re in the client service business. Secondly, look at our employment. We’ve had the lowest attrition rate in a long time. We’ve significantly reduced that.
