Wipro likely to miss $15B revenue mark by 2020

Wipro is unlikely to realise its ambition of achieving $15 billion revenue mark by 2020, a top company official said.

To a specific query from DH on $20 billion target, Wipro CEO Abidali Z Neemuchwala said it is an aspirational target and it will take longer time. “We are very much optimistic about our ambitious target and the way via which Wipro is transforming to become the provider of the future,” he said.

He said this is driven primarily transforming the core and focusing on digital, machine learning and emerging technologies. “So to achieve our ambitious target we might require longer time and this will be part of our strategy,” he said.

Neemuchwala, who joined Wipro as CEO in Feb 2016 after T K Kurien, had set the ambitious target for the company with operating margins of 23%. “On a full year basis, we grew by 4.6% in reported terms in FY 2018 and surpassed the $8 billion mark in IT Services revenues,” he said.

The company on Wednesday reported over 20% decline in its consolidated profit to Rs 1,800.8 crore for the March quarter, 2017-18.

Wipro had registered a profit of Rs 2,267 crore in the year-ago period.

On a sequential basis as well, the company's net profit dropped by 7% compared with Rs 1,930.1 crore during the third quarter ended December 2017.

On April 9, Wipro had informed stock exchanges that its profit may take a hit of 65-75 basis points in the March quarter as one of its telecom clients is undergoing insolvency proceedings.
Its gross revenue also declined 5% to Rs 14,304.6 crore during the fourth quarter, compared with Rs 15,045.5 crore in the corresponding quarter last year.

During the fourth quarter of FY18, the company’s bottomline fell as Wipro recognised provisions totaling Rs 208 crore (or $32 million) for an insolvent customer and an impairment loss in one of its acquisitions. Digital, which has become 27.6% of total revenues on a YoY basis, has become most attractive area where Wipro is investing massively for talent upgradation and inorganic growth. According to analysts, the all-pervasive nature of digital will help Wipro to maximise revenues.

However, the company is confident of returning to a growth trajectory from the second quarter of this fiscal year, as it has got strong deal wins and order booking. The IT company had to face surprises arising out of bankruptcies by two of its clients with a revenue run rate of over $50 million.

“We also had an additional impact in the HPS business as more clients exit the exchange market and weakness in our Communications BU,” Neemuchwala said, adding that its strong order bookings in the last two quarters are providing them the right foundation to grow. The company added three more accounts to its $75 million plus accounts portfolio, taking the count to 20 such clients now. Two of its accounts crossed $250 million mark on a run rate basis in Q4FY18.

Wipro expects the revenue from its IT services business for the first quarter of this fiscal year to be in the range of $2,015 million to $2,065 million. Wipro’s top 10 accounts grew 5.5% sequentially and 14.8% Y-0-Y in Q4. The company also closed its highest bookings till date on digital deals and in the last one year, it has won close to 70 deals over $5 million.

Talking about localisation, Neemuchwala said the company is continuing its localisation levels in its global markets and has over 55% localisation levels in the US. In APAC, more than three-fourth of its employees are local and in Latin America, almost its entire employee base is local.