Davos 2020: Wipro Will Catch Up With Peers In The Medium Term, Says CEO Abidali Neemuchwala
“It is just a matter of time before growth catches up,” Neemuchwala said.
Wipro Ltd. Chief Executive Officer and Managing Director Abidali Neemuchwala has said that the software services company will be able to match the growth of its peers in the medium term.
“In the long term, I’m optimistic. Even in the medium term, I am optimistic about us getting to industry-matching growth,” Neemuchwala told BloombergQuint on the sidelines of the annual meeting of the World Economic Forum at Davos, Switzerland. “I’ve not defined a timeline. But you’ll see. Every quarter we declare our results.”
Neemuchwala said that the company has addressed some of the issues which were dragging it away from its IT peers. “First, were some Wipro-specific (problems) given our portfolio, client mix and business mix,” he said. “We’ve done a lot of plumbing work in that. It’s just a matter of time before growth catches up.”
WATCH | Neemuchwala on how Wipro plans to catch up to its peers.
Here is the edited transcript of the interaction...
How has your Davos been so far? What sense of confidence has it given you about economic growth and client spend here?
Davos has always been quite useful. I think three conversations have been very valuable which have been at the front of all discussions. The number one is climate change, the second is about trust around cybersecurity, data privacy, fake news, and the third, which is a sustained topic is industry 4.0 which is digitisation and how it creates value. Your question is more for the third one which gives me a lot of confidence that businesses are continuing to spend on technology and transforming themselves. Now it has become default and mainstay. We are seeing that these spends are the prime time spends. These are not separate digital projects. Whatever customers are spending they are spending on digital technologies. And the good part for us is that we are very strong, both in digital transformation and modernisation. For us, modernisation is a big area of focus simply because customers cannot just do a digital front-end for experience and design but they also have to modernise their back-end, that is the legacy IT systems, the data centres, moving to the cloud and automation. That has become prime time now. I am quite optimistic next year for technology spending. There is obviously discretionary spending which happens in the digital transformation which some sectors are soft while some are upbeat. For example, BFSI for us was for three or four years in hyper-growth, but we are seeing some softness in that. Consumer business is good for us but we need to be watching that. Health and other verticals like utility are only now coming in the prime time digital spend. As that increases, we’ll see growth in those areas.
Do you expect growth to be similar to what it was in the last calendar year or will it be a step up in growth or the other way round?
Right now I’m not seeing any difference in the demand environment from the last three-four quarters. So I think we’ll have to take it as it comes quarter by quarter. We have a very strong pipeline. If decisions are made on time I am optimistic about growth. The question is how fast these decisions are made. And how fast we can start and ramp up. In the medium term I am very optimistic. In the long term, we’ll have to see how this pans out.
For a time now Wipro has been lagging its peers whether its on margin or its ability to grow in size. What are you going to do to fix that?
So there were two kinds of things. First, were some Wipro-specific given our portfolio, client mix and business mix. We’ve done a lot of plumbing work in that. It is just a matter of time before growth catches up. The second part is the macro. We work in different industries. Some industries, in some years, do better and in some years don’t.
But that would apply to all your peers?
Sometimes the mix is different. We have big oil and gas and health mix. So if something happens there the impact we would have would be weighted more than the others. But I don’t see that is too different as others. In the long term, I am optimistic. Even in the medium term, I am optimistic about us getting to industry-matching growth.
How long will it take?
I’ve not defined a timeline. But you’ll see. Every quarter we declare our results. In the last quarter, we met the street expectations.
But you’re still lagging on both top line growth and margins?
We definitely have more to do.
So by when do you expect to bring Wipro on par with your peer group?
One quarter at a time.
One last question on the India economy. There’s a lot of conversation that we are only growing at 5 percent and that’s impacting industries across the board. What’s your assessment of the economy and what the government should be doing as a solution?
The numbers are out. The economy is soft. Two things are important from my perspective. Are we acting fast enough? The government has done a few things like the corporate tax cut. A budget is coming up and there are high-level consultations on. Hopefully some of the things the industry needs will happen through the budget. We still have some of the strong fundamentals, our demography and our large consumer side. Some of the things, if they get addressed, I think the economy will come back. I am quite optimistic about that. The second part is that obviously the fiscal space the government has, I think attracting from FDI, attracting more capital going into business will be important because we don’t have too much room on the fiscal side. We’ll have to be balanced. We’ll wait for the budget to see some of those things. In the medium term, some of the structural reforms like GST and bankruptcy law will help business.