Attrition peaked in Q3; see sustainable margin at 17-17.5%, says Wipro management
To gain more insight into Wipro’s Q3 numbers and also understand where it stands in terms of attrition, CNBC-TV’s Reema Tendulkar spoke to Thierry Delaporte MD & CEO, Jatin Dalal, CFO, and Saurabh Govil, President and Chief Human Resource Officer of the company. According to Dalal, the company can see a sustainable margin at 17-17.5 percent. Meanwhile, Govil believes attrition will moderate out. He explained that the figure peaked in Q3.
IT giant Wipro, on Wednesday, reported its third-quarter results with the numbers failing to meet Street expectations on all fronts. The company's net profit came in flat at Rs 2,970 crore for the quarter ended December 31, 2021. In the corresponding quarter last year, the company had posted a net profit of Rs 2,968 crore. Its revenue from operations for the period under review grew nearly 30 percent to Rs 20,313 crore from Rs 15,670 crore in the quarter ended December 2020.
To gain more insight into the company’s Q3 numbers and also understand where it stands on attrition, CNBC-TV’s Reema Tendulkar spoke to Thierry Delaporte MD & CEO, Jatin Dalal, CFO, and Saurabh Govil, President and Chief Human Resource Officer.
According to Delaporte, Q3's constant currency revenue growth of 3 percent was within the company's guided band of 2-4 percent. He explained that the company has in fact added one-third of its revenue base in the last 5 quarters.
"We had guided for the quarter between 2-4 percent sequentially. We are doing 3 percent sequentially. In the last five quarters, we've added a third of our revenue base to the revenue of Wipro," he said.
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On margin, Dalal said that he sees a sustainable range between 17-17.5 percent.
"We see 17-17.5 percent margin guidance as a sustainable range," he said.
On attrition that's been plaguing the IT sector, Govil said that the numbers peaked in Q3 for the company. He expects it to moderate, going ahead. Additionally, to tackle attrition, he mentioned that hiring went up by 70 percent in the current fiscal. He expects fresher hiring to be 80 percent higher in FY23, as compared to the FY22 number.
"Attrition is a concern not only for us, but across the sector, given that there is a huge deficit between the supply side and demand. We have stepped up our hiring from engineering schools, campuses, that's gone up significantly- 70 percent more in this fiscal year, and nearly 80 percent more in FY23," he mentioned.
"Looking at 30,000 plus, that's the highest ever Wipro would have hired in a particular fiscal. Our belief is that this quarter, it peaked, and we will see a moderated attrition, going forward," he said.
Also Read: Wipro Q3 Results: Net profit flat at Rs 2,970 crore, revenue up 30%; declares interim dividend
On deal win ratios, Delaporte mentioned that he has noticed a 300 basis points (bps) improvement as compared to what it was two years back.
He mentioned, "As we are closing Q3 and starting Q4, we have the biggest pipeline we've ever had. Second, we have a better win rate than what we had a few quarters ago and third, we seem to have a good market where clients budgets will continue to increase. So you know, I'm looking at the next fiscal year with confidence for sure."
Dalal added that he is seeing an improvement in pricing, driven by portfolio shift towards high value services. However, he cautioned that it might be premature to call it a trend.
He said, "We certainly are seeing a small positive improvement in pricing and that is driven fundamentally by two things - the overall portfolio, the way it is shifting towards high value added services like cybersecurity, digital, cloud and so on and so forth; it is reflecting in overall higher value and therefore, overall higher price realization."
"Also there are pockets where there is scarcity value around a particular skill set. And if Wipro has invested and created visibility of a skill set being available today, making an impact in a client situation, the customers are open to invest for that. So overall, we are seeing a small positive step up. It's too early to call it a trend, but I think it's a step in the right direction," he said.
Watch the video for the full interview.
(Edited by : Dipikka Ghosh)
First Published: Jan 13, 2022 3:31 PM IST
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