Q2 2023 Wipro Ltd Earnings Call
Ladies and gentlemen, good day and welcome to the Q2 FY 'twenty three earnings gone off literally limited.
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I now hand, the conference over to MS Upper Vice President and corporate Treasurer, Thank you and over to you.
Thank you and Bob So a warm welcome to our Q2 FY 'twenty three earnings call. We will begin this call with business highlights and overview by to teleport <unk>, Chief Executive Officer, and managing director followed by financial overview biopsy of food you named a lot.
Afterwards, the operator will open the bridge for acuity EBITDA management team.
Before PRT starts let me draw your attention to the fact that during this call. We may make certain forward looking statements within the meaning of the private Securities Litigation Reform Act 1995. These statements are based on management's current expectations and are associated with them so to the DS and risks, which may cause the actual results.
To differ materially from those expected.
The uncertainties and risk factors are explained in our detailed filings what do they see the pro does not undertake any obligation to update the forward looking statements to reflect events and circumstances. After the date of filing the conference call will be archived and a transcript will be made available on that site what would your acuity.
Thank you up on that.
Hello, everyone. Good evening.
Thank you for joining our Q2 earnings call and for those of you joining us from the U S are good.
Afternoon, I guess, maybe good morning for some.
Since.
The last time, we spoke in July .
You've seen the macroeconomic conditions across.
Almost all markets and sectors have changed I am speaking to our clients every day.
Being a change in the level of optimism.
Its business around the world are dealing with inflation pray Shaw with geopolitical turmoil with energy crises I'm.
I'm sort of rising interest rates almost every major economy used to experiencing economic deceleration.
And it's against this backdrop that we deliver.
Strong quarter, our business strategy is sound.
Our value proposition continues to resonate with clients across markets.
She was reflected in robust bookings healthy deal signings grossing revenues as well as operating margins.
It stops well all bookings.
Our bookings in total contract value terms grew 24% year on year in Q2.
Two of the four markets Americas, one in Europe grew more than 30% year on year.
We said in the past that large transformation deals are a key pillar of our growth strategy.
You did a deal with <unk> to demonstrate the true power and scalable services tenant and operations.
Large deals where we deliver maximum value for our clients. So.
I'm pleased to share that large deal wins continued to be a really strong.
In Q2, we signed 11 deals with a total contract value of 725 million U S. Dollar.
This actually flows an exceptional quarter in Q1.
When we clocked over $1 billion deal signing.
And this strong.
Bookings trajectory translating to a <unk>.
42%.
Yeah on your gross you know large deal bookings in the first half of this fiscal year.
Okay.
Over the last few years, we have steadily increased our win rates.
Proved the quality of our pipeline.
That's all for today.
Our pipeline has.
What I would say well balanced mix of transformation gross and cost takeouts engagements.
Now this.
This mix may change in the coming quarters based on the external conditions that I talked about earlier.
But we expect continued strong demand for our comprehensive portfolio of services.
We know.
The technology good times like in bad.
That's become the underlying success factor for any business.
Regardless of what the problem is increasingly.
Technology is the solution.
I believe we are better positioned than ever before to help our client stopping to the true power stick nugae, whether that's to drive growth and transformation well managed cost well build a sustainable future.
Speaking of sustainability, we continue to build sustainability into everything we do including across all fixed stack you'll.
You'll see us leveraging our sector domain expertise.
And a strong partnership with <unk>.
Develop new law.
Low carbon impact solutions for clients.
Our enterprise Skelley sustainability process experience is helping us stand out in the market and leading to strong client client demand.
Okay.
Well with all deep engineering expertise and comprehensive set of offerings, we all I know well positioned to be the partner of choice for our clients as they face a growing set of headwinds.
Now turning to our revenue grows we have recorded full 0.1% growth in constant currency terms sequentially.
13% on a year on year basis.
Translating to double digit growth.
Cross border.
All markets.
Business drove translating to gross all colleagues and I'm happy to share.
That's really rolled out quarterly promotions to all our employees in July .
And salary increases effective September .
And yet.
We've achieved operating margins of 15, 1%.
As we continue to enhance our both for you always do newer and more strategic service offerings.
Our clients are recognizing the value we deliver.
This is increasingly reflected in our improved price realizations.
These defaults combined with.
Operational excellence donation.
Higher productivity.
All the tea leaves for margin improvement.
And every quarter I'll now share some.
Final details on market service offerings and sectors.
It stopped please.
Our markets in the Americas one.
We grew 15% year on year in the second quarter and with Orange sectors, showing strong Rus.
During the quarter.
The fastest growing sector in the market with technology products and platforms, which grew 26% year on year.
Order bookings in total contract value terms grew nearly 74% in Q2.
Now moving to Amerigas too.
We grew 12% year on year.
Manufacturing and energy and utilities led to performance.
Recording a growth of more than 20% each.
You won't find insurance services.
He grew 17%.
Moving on to Europe .
European business delivered a year on year growth of 12% from Q2.
Most of the markets recorded strong double digit year on year gross with Benelux U K, and Ireland and South Europe , leading the pack.
Our order book in total contract value terms grew 36% year on year, which is quite massive.
Our app business grew at 11% year on year in Q2 regions that did particularly well during the quarter with South East Asia.
Australia, New Zealand and media.
So as you can see across all markets double digit Roes.
Strengthening client relationships remain a top priority for us as a result, we're gaining share email me teller counts all top five clients grew 19% year on year, all top 10 clients grew 17% year on year, both in constant currency terms.
Now moving to service offerings.
You know we have two global business line ideas and I call. Let me go through.
Each of these to.
Oh ideas global business line grew 15% year on year in Q2. This growth was led by cloud transformation says, which grew 26% year on year by.
<unk>, some data, which grew 21% John Yeah, and finally by engineering services, which grew 18%.
Now looking at I called you also global business line grew 9% year on year in Q2.
But he led by cyber security services, which grew 23% join you in Q2.
Yeah.
And as the speed of transformation accident rates, we are experiencing increased demand for our full suite of cyber offerings, while leveraging internal methodologies framework.
Intellectual property in collaboration with our technology partners to help clients manage a dynamic and complex risk environment.
In one recent example.
We helped.
A global communications organization, improving to automate compliance processes.
Leading to an end and risk posture.
We now operate and execute this program globally and have driven significant cost reductions in their security and in their compliance program.
Then talking about Wipro full stride cloud services.
No.
Which is more than one third of our business today continues to be a driver of our success and partnerships are at the center of these growths in fact.
In the second quarter bookings with hyper growth partners grew 24% year on year.
Working alongside our partners, we know we're creating industry.
Solutions and leading major transformation is designed to help clients unlock the value of cloud, but also realize new efficiencies.
In addition to modernizing applications, we see a great amount of interest modernizing data operations.
Immunization realize the power of data in gaining new insights into their business for example.
Our U S based <unk> diversified financial services group.
We are working on a did you tell transformation in death I'm with you on these Asian, Aiful, which actually involves building a next generation cloud analytics platform <unk>.
Heres two daily the Omnichannel experiences that help our clients get better real time insights into their business.
Mentally the transformation is helping our clients reduce time to market for new capabilities and deliver enhanced experiences.
In another example.
For a leading provider of industrial automation solutions.
We are working on the transformation program that will help them become more client and relationship centric. We are building a multi cloud solution that will transform the firm's marketing sales and services around the single client definition, creating opportunities for more.
Meaningful engagement with customers.
Yeah.
And we continue to double down on strategy investments in areas that we know will drive long term competitive edge for us and for our clients for example recently we.
We launched lab 45.
New brands for all C T organization.
Slide 45 is a new direction for our technology research and development unit.
The objective of lab 45 is to develop U S. Its intellectual property and products.
True client collaborations and partnerships.
I had 45 will help our clients build new business models enhanced user experience.
And drive growth through enterprise technologies.
In fact.
The opportunity to tap into our expertise in world class talent to lap 45.
He's already factoring into client decisions and making an impact on how we win in the market.
We're continuing to also expand our capabilities in strategic areas, such as artificial intelligence and data, but also five G metathesis Iot industry for the zero two O clock.
Client gained new compared to ebay age.
I know.
<unk> share of you of the talent and scale.
First happy to share that our attrition has continued to moderate for the third quarter in a row.
In Q2.
Attrition was down to 23% on a pure if youre looking at it on a trailing 12 months basis and all Walter.
Annualized numbers of training.
Even lower than that.
We expect a further moderation in Q3.
And like how you had shared last quarter, we are now offering promotions to our employees every quarter and in Q2 promoted about 10000 colleagues.
I'm also pleased to share that the annual salary increases were given to all colleagues across bands in Q2.
Was.
As you know our ease off you'll see those if he a steep differentiation you know he was fault up talent.
We also on boarded over 14000 phrase shows in H one.
Which is a well imagine 75% of what we added in the whole of last year.
And finally I'll share an outlook for the next quarter, we have guided for revenue growth of five 2%, which will translate to growth of 10% to 12% year on year.
Constant currency terms.
This guidance reflects the current environment in the quarter and seasonality.
The full year, we have sustained that's when we'll report double digit growth.
Our margin in Q3, we will have some headwinds just the impact of two incremental months of salary increase and yet we expect to hold our margin in a narrow band.
In the summary.
We have.
Delivered a strong performance against the backdrop of a mixed macroeconomic environment in Q2, Oh audio bookings in large deals reflect an improved market competitiveness and.
And prove that our strategy is working well.
We are experiencing a real shift in the market as clients increasingly turn to us to realize that bolus ambitions.
And based on all these factors, we remain confident of gaining market share.
In the coming quarters.
What was that.
Well go to Jeff email. Please go ahead.
Thank you Thierry.
Good evening good morning, good afternoon, everyone.
We had a solid quarter there'll be delivered safely.
Slightly above the midpoint of our guidance, a full 0.1% sequentially, which was 12, 9% while you'll like.
We delivered operating margin.
We just slightly higher than quarter 115.1 person.
We had.
M E T. R 22, 5%, which was again, one plus and also better than what we had for quarter one.
And as a result, our net income grew three 7% sequentially.
Fourth quarter two.
We had robust full month in cash collection and overall improvement in bookings like working capital cycle management.
We therefore have full stay at a very robust 180% ratio of operating cash flow through net income.
At the end of quarter, two we had $4 $3 billion of gross cash and $2 $2 billion of net cash on our balance sheet.
We had a good football London Forex, our realization rate was $79 90 N V at three $8 billion of Forex hedges at the end of the guar.
Oh guidance remarks.
For quarter three is in the constant currency view are mentioned in our press release and it is 0.52%.
We'll be very happy to take your questions.
Thank you very much.
Ladies and gentlemen, we will now begin the question and answer session.
Anyone who wishes to ask a question may and does star and one on the industrial in California.
If you wish to remove yourself from the question queue, you May press star two.
Disappoints are requested to use handsets when asking a question.
The one who has a question may Andaz star and one.
Ladies and gentlemen, we will wait for a moment to another question.
Yeah.
Okay.
We will take the first question from the line of Sandeep Agarwal from Edelweiss. Please go ahead.
Yeah, Hi, good evening and thanks for the opportunity to ask that question again.
I wish the whole management Hefei festive season, well I have a small question from Kansas City and.
In all your discussions with the clients right now.
Are you getting any kind of course shed this from any of the clients in any of the vertical that you would've made regarding this macro or it is more of a preventive step that they don't want to say right now if they wanted to be careful and watch the environment. How it plays out and if so what kind of trends you are seeing that they did that but yeah, let's take pressure.
Which is leading to some kind of cautiousness and it is more likely to get car audio teams that it isn't just kept preventive step from them right now where they wanted to wait and watch the macro number one number two.
The guidance right and you know I understand that.
The environment is very volatile and because of that probably you have kept things that will pick up things like what is I'm glad you're guiding but it still looks little low water given the kind of demand environment. What we are hearing from the industry, but we're hitting some back on but it does so what is you know if I think that's more than their that's can you elaborate a little bit on that thank you.
Yeah. So sandeep. Thank you. Thank you for those questions. So let me let me take them.
One by one why do you use the talking about the market environment.
I. Thank you Hugh.
Yes, it was almost embedded into your equation doesn't ante Ts that you know I think we all are connected with the you know a market use.
No.
It's quite interesting to see every single day all year every single day, what's happening in the whole world macro.
Environment Whizzo, each you know what's happening in Ukraine, whats happening with the Oh.
Oh, Gee, sorry, what's happening with you know market conditions and America already most of the countries. I think you know people to see that people hear that and there is a certain evolution of the climate that is certainly.
The confirmation that we have the market has changed the market should conditions change.
We are no longer in the same market condition that we were you know 99 months ago or 12 months ago.
That's a reality, but you.
You know the Big question is is this.
Context going to impact our industry and end and frankly speaking.
I'm not sure.
That's that's why you know I see a certain level of uncertainty today does a beautiful and sometimes he because you know in talking to clients.
All are assuming that at some point in time. This will have some implications for them and I think it's.
That would be.
Naive on our side to not hear what they'll say so so that's probably what he is and I'm moving to the equation too that's probably what's leading to our.
Guidance.
No.
This is good I mean, we've been growing well over the last quarters, we have been performing wells on bookings. So theres no sign on outside of any particular slowdown.
Except that the market has changed except that they are uncertain environment of uncertainty that is impacting all our clients.
And then you know obviously Q3 is also a quarter where it is you know fellows.
Do we have more fellows down the producers I don't know I.
I don't know, but they are we know that there will be furloughs and so.
I I I I realize that you know you might see a point of caution and it may be the case, but I think we've tried to be cautious cautiously optimistic.
I want to also give a best speak to even come off you know the tragic to either gross tragic doing right.
Look at Q2, we do full 0.1% of group's we choose no sign of you know very strong performance all of our markets have grown double digits, you're on you know not to one crew Lisbon.
At 10%. So we see this trend now if you take even more a step back and look at you know we propose trend.
And all of last year, where.
Our industry leading.
Gross right this year double digit growth and we and we are only halfway through the year, we know that will be double digit growth.
This company will have grown to 40%.
In two years, that's still heavy team that's doing it.
And then again you know the performance in bookings.
The impact we have in the market gives us great confidence that we'll continue to grow well you know and shut in need gained market share in the next quarters. That's the mindset mindset that we have right now.
Okay. Thank you that's very helpful and I wish you best of luck for the current quarter Oh. Thank you. Thank you. Thank.
Thank you.
Thank you our.
Next question is from the line of.
From Nomura. Please go ahead.
Thank you for the opportunity a theory I have two questions. One is more from a near term at Midas more medium term.
The first one as you know in the backdrop of volatile macro which you have been alluding to multiple times in your press conference and even in the recent lossmaking minutes I'll address some of your old annuities and consulting equity since you don't play golf, especially copco and rising if you could share. Some trains are with it and also from a pipeline perspective do you see.
Any kind of change you know coming towards these two particular subsidiaries.
Okay.
Makes sense. Thanks for those two questions. So the first one about consulting.
Our consulting business and has been a massive driver of growth for us over the last two years. We've you know I was you know.
Talking about capital we've grown more than what we had in the plan every single quarter now there's no doubt there's a slowdown okay do we see it. It was it was actually forecasted for us and we see a slowdown for.
This consulting business. We also know because it's a you know a reality now industry that consulting tends to be early cycle. So we first wanted to slow down the first one to exit rate.
And extremely agile to adjust to market evolution. So that's for your first question you can come off you know as you said looking at the pipeline.
Our pipeline is stronger than ever we have a solid very solid pipeline that you see supporting old rules.
If we look at the nature of the pipeline he yeah. They they they there might be a certain evolution of the type of deals.
One they are.
Definitive.
Sydney, if he can drive Alif goes we see it.
We'll come to you to grow unless you before us in each of the third of our business.
Security will continue to grow also you know a large double digits.
Engineering is growing very well as well.
In terms of type of offerings those those out here, but I think even if we look at the cloud I think it is.
The type of deals with placebo.
I'm being cautious in my assessment, because you know.
Is.
To be observed over.
A longer period of time, but I think it's.
It's we should certainly expect that a lot of the investments that our clients need to doing technology.
Will require a business case, and therefore, you know we'll have a stronger focus on cost optimization on productivity gains and so on that's possibly way and I see it in the evolution of the of the pipeline.
Thanks Yeti advocating my second question you said the more you know.
On the margin side.
You know more of a medium term perspective, nobody's going to stand in the current context.
That is around 200 basis point impact of the acquisition, which is continuing but if I look at the gap between our margin and you know I'll be affect margin that gap as you know widen quite a bit. So maybe if you could elaborate some of the medium term steps you think you could take.
To go back to good levels of margin in all the levers of margin.
19%.
And do you think the current you know softening of the supply side issues.
If you achieve a bit faster than what you would have thought maybe six months ago.
That'd be shakes. So so so wanting to most margin. Yeah. You you said it certainly you know there was a it's a strategy choice that we've made to make some significant investments in this business to make us stronger in the future and you're right to point to not only look at <unk>.
Short term, but also meet them, where all of these investments you know clearly strategy move with some of the acquisitions. We've made with all the acquisitions. We've made they are all.
They've all been driven by your strategy objective.
And you know significant investment into talent significant investment into our operating model and into our you know operational excellence significant investment into our efficiency our market impact. So we have been.
Significant investment as well in ratios, you know, where I think we spend more time explaining this.
A quarter or two ago, but you know we didn't have a phrase show strategy until a few quarters ago eat at Wipro that was all that was a bar if you like with some of our colleagues the market and so we've decided to go.
You know ambitious and really build this freshers.
Our strategy.
And indeed requires investment.
Because as you know frasier's are an investment that delivers over time and so we've made those conscious choices knowing that that would knock down a little bit. The margin. We also knew I'd be shake that in a market, where we're growing and it wasn't said 40% of our you know.
Eight quarters.
In a high demand environment with cost off you know.
And people.
Being you know higher would have this impact but that is also a conscious now.
What did we say.
A quarter ago, We said you know 15% to use our floor.
We are building from here.
Are going to progress.
We will not guide as you know beyond the current quarter, but it's clear that we all up we do not see the end of the road, where we are absolutely not.
And so what are the levers.
Continue to drive you know a fresher strategy continue to progress on the automation, where we've also made some significant investments.
Continue to go for larger deals continue to go for deals delivering more value and not only going after volume.
And finally, I would say continue to work on our efficiency. We've made some significant progress there still.
More to do ahead of us So you know.
Not worried at all about our ability to to continue to improve margins and close the gap with some of our colleagues.
Thank you Carrie and you know we show a great anchor liquidity, if I need to talk to you. Soon. Thank you. Thank you I'd be shocked with you soon.
Thank you. Our next question is from the line of Nathan.
Please go ahead.
Yeah, Hi, good evening.
Hi, two question.
If you could throw some light on the restructuring.
That is impacting this quarter and I think it's around 130 because what.
What does that potentially we could get some color there.
Second I just wanted your thoughts.
From a vertical perspective.
In terms of how you see demand on a going forward basis.
For instance, I think capital market.
Particularly in any capital markets retail.
And the high tech side of things and manufacturing so some color on those as well.
Yeah, absolutely so I'll take the first one and I'll ask <unk> to build on it so on the restructuring. So this is you know it's it's a one off okay. So this is not something that you know is a to be to be done repeatedly you'd said it was needed I think hadn't been done for a long time and it's.
Absolutely quasi exclusively focused on Europe .
And that was really to address some you know inefficiency that we were carrying for for a long time.
Chad do you want to say more.
No. It is it does have it sitting in reconciling item because it's a corporate action, which are which we took at the company level and as Eddie mentioned it was it is it is a it does you do the one off that could be probably a small tail spend that in quarter, three but nothing beyond that.
Now your second question was about sectors, Alright industries, and an outlook for for the industries.
No.
We are obviously observing.
The evolution of the market industry by industry in such a knee or.
I mean, one there's different kinds of challenges.
You could you could imagine your U I believe actually the banking sector should be holding pretty pretty well. They are you know.
They wanted so it's a sector that is used to adjust rapidly to market changes, but also each.
It's an industry, where you know a lot of defaults will have to be done on their own you know driving simplification alignment streamlining.
And and compliance is also and those are important.
Topics for full banks going forward.
No.
Sector that has been growing tremendously over the last year and certainly as slowing dummies.
I've taken allergies, if you look at the large take a look at you know what what Theyre doing hiring has been slowing down and sometimes they are even reducing head count and I think that is.
It is in.
This possibly a more slow down to expect in this industry going forward.
Our nose, and one where I could potentially see you put your insured slowdown economy Wilson is a sector like retail right. So we'll see we'll see a need.
Just a follow up on our I D a restructuring cost.
Both the restructuring do you think that improves the margin profile in Europe , and you know should we anticipate that it will be a tailwind on margins.
From a European perspective after the restructuring.
Yes, certainly than it is it is right that we have done this to reflect.
What we need from technology standpoint, all future.
But I don't think it would be right to equate this number with the reduction in spend going forward because as you know in Europe .
As some of these restructuring costs do many yourself a P. So I would I would regret to not to equate this with the reduction in in Spain, but that would certainly be a danger then wed be O a reduced emplacement.
Sure. Thank you, so much and a little bit.
Thank you we'll take our next question from the line of Ravi Menon from Macquarie. Please go ahead.
Hi, Thank you congrats on excellent revenue growth this quarter Terry could you give us some color about how you're thinking about the demand environment in the U S and Europe I was hoping you called out the macro uncertainty does not apply equally in both geographies are okay.
Yeah, that's an interesting equation Ravi.
What should I say I mean, what we've observed in the past is that typically.
When there is a slowdown a rotation.
Steeper in America, but it's quicker as well right in Europe it tends to be.
A little coming a little later, but it's it's it takes more time to to bounce back.
So you know we will see I you know.
Today today the performance you know, what's what's clear is if we look at our own business you know the growth we see in Americas and Europe are.
I dunno used to comparison help but are you seeing they are.
In the ballpark there see me at all so there's no market that is growing faster than another but if there is a slowdown.
I'm guessing it could potentially come from them right. Now there is something that is specific to Europe , which is more of these energy crisis. Okay.
So he also theres a bit of uncertainty here it doesn't necessarily impact us directly, but certainly impact some of our clients I'm guessing.
In our industry like manufacturing for example.
Our crude Avenue went on you know Europe , if not in Q3 and Q4, we will see.
Thanks, Eric and you spoke about how.
There's almost a sense off.
Sure.
To accelerate this transformation and set the company on their journeys.
So do you think that that makes our technology spending a little bit more resilient in this downturn compared to walk through you've seen in the past like either the GSE or in 2001.
I am convinced that indeed, you are right technology.
Technology services company, a lot more resilient than they were absolutely no doubt because.
Technology is not a scene as a cost to reduce but seen as a mean to transform organizations and that is <unk>.
Systematically what I'm hearing from from clients systematically.
Fact, Ravi that when you are connecting with the CEO He's talking about technology. It's bottom fees you know priorities was not the case in the last.
So I couldn't be cycles.
So it is definitely different and there's no doubt that you know when you're working on you know topics like security you take take the topic of security I don't see this market slowing now.
If you look at you know.
What we are doing in cloud.
Definitely not slowing down even though now for sure. It will have to be in tobacco business cases, right, but I think it's clients are very natural indeed, India and they are they know they know what technology can bring to them and they know why they are investing in technology.
To your questions and absolute and trunk Es.
Great. Thanks, so much and best of luck.
Welcome.
Thank you. Our next question is from the line of <unk> Garg from multilateral financial services. Please go ahead.
Thank you.
Yes, let me go follow on the consulting business.
It kind of sounded that.
And would you expect to be a bit slow in the near term.
Will it demand environment.
How do we think about the profitability of this business in the near term.
Well, it's one of those business usually has a very high operating leverage.
The slowdown kind of impact your profitability meaningfully so how should we think about the buffer.
And consulting engender love I'll have a follow up question on this.
Okay. So so first talking about the consulting business one point interesting to note.
<unk> consulting is slowing down from where we were.
Growing some quarters ago, it's true.
But what's interesting is that consulting continues to drive growth in our business. If you look at our banking.
Sector for example.
Cap coals girls has been slowing down the impact of capital to us winning large deals.
In the U S. In the financial services sector is higher than it was we win more synergy deal, we more and more deals that we wouldn't have won and those deals drive more value there.
Our more strategy and so from that standpoint, you know they they continue to drive positive impact for us from a profitability standpoint, youre, making a good point yes.
Absolutely right. They are a Jai de of you know, it's part of their DNA to react and adjust to the demand rapidly and that's exactly what we are seeing actually why as they are slowing down.
Margins are improving.
Oh, Okay. So you expect consulting margins to improve as the growth the mortgage so not the other way at all.
Yeah, that's that's what I'm seeing for Q2 Q3.
Understood.
Second question was also on the profitability side.
Well if you look at the.
The net adds this quarter Andy.
And the company using utilization.
Can you just share some thoughts on how we should look at the growth versus profitability tradeoffs.
Over the next two quarters, so while I understand you have scope and you will.
Improvements in both of them.
Is there are some.
And where do you think.
You need to prioritize one over the other.
Well, okay. So so so.
It's.
If I look at the situation from a client to another you may have different situations, where sometimes you know.
There's a bit of a trade off to do between margin and volume, but I think as an organization, let's be clear on the margin side.
We will not go down from where we are okay. So that is that is a clear position on margins. Okay object you just to continue to grow certainly.
And drive profitable growth. Okay. So that's continued its its we are no doubt balancing growth and profitability.
When you are you are referring to head count evolution and so on what what we had said in Q1, if you'll remember is.
You know we have made the conscious decision to make.
Hum.
Quite a material amount already significant amount of hiring.
Knowing well that we could end up the quarter with a little more head count and become aged unexpected and I'm. Excluding trade shows in my statement.
Because we needed to get ready for the demand that we were seeing in our business but.
But we also made a concerted decision comes shows decision to invest in our ratios and so we've just put out this strategy. We havent changed we have a high in H one.
As many freshers as no actually 75% of the total number of ratios we hired last year.
Well the 12 months.
And those are investments because we knew we needed it to continue to improve our operating model, while being able to deliver and to respond to the demand. This quarter. You know you should look at the utilization part of the utilization to use abuse impacted still by the volume.
Ratios, but we've continued to optimize our capacity and managed to deliver a significant increase of the revenue.
Without.
I mean, a significant increase of our rig count it's it's it's actually a deep.
Me.
Meal off what we had said that of course that would go.
Sure.
But can I just add to your point, which did he made very safe we continue to utilize the talent that we hired.
Yeah.
While it may not reflect in the numerical utilization number that you are seeing in data sheet because it has.
Actually the more experience or lateral banks has got to utilize that got replaced by higher Fisher bank. So economically we have got an upside in quarter two out of utilization, but it is not reflecting yet in the numerical number.
Understood.
Then they signed me I'll ask one question.
On capital allocation.
You all have impulse mentioned about Oh.
Cause kind of moving towards acquisitions.
The environment in which we do think we need to take a step back from an acquisition point of view from an organic growth point of view.
You know kind of the move.
Move to more of a cash return to shareholders.
Is this the time to Chris excellent on that.
So somewhat because you have always mentioned that acquisition remains the core part of our strategy. So there is no change in that position.
You also mentioned that 50% of the cash that we generate and that didn't come to equity Genvec will return back to shareholders and that goes on we will consistently maintained we had one of our especially the dividend that we announced in in Q4 FY 'twenty two.
It is very much of it acquisition decisions are a factor of many things, especially apart from the apart from the attractiveness of the asset. It's also a factor of you know willingness to sell price correction in the market and so on and so forth.
But overall our position remains.
On the acquisition as well as on on cash distributions back to shareholders consistent with what we will say it didn't before.
If you'd like to add.
Thank you you say to what I would what I would remind is.
Cool is that you know what which we've always said is that acquisitions, we do them.
<unk>.
For strategic reasons Okay.
So you know we do not have a number like you know we need to do X number of acquisition in the given you.
Okay, what he's driving a decision is really what does it makes sense is it is sound decision from a strategic standpoint.
And so that's that that approach doesn't change for US no no of course.
You shouldn't will never be used.
Upset organic focus organic focus is you know what's driving all day today the strategy the acquisition sorry.
You really got to get us to reinforce our position.
In a place where we have already a strong position of strengths and but but but we believe we can accelerate and have a bigger impact.
Or are actually acquire a.
And you get maybe D D or a set of newer technology or you know new relation with clients. So clearly strategy.
Drive the decision.
It's never tactical and insulin point cool is we do not have a number to feel so it's there's no such thing as you know we have to do an acquisition we do it when it means.
When it's right for us.
Understood. Thanks, a lot for them. So my question.
Youre welcome.
Thank you. Our next question is from the line of monarch.
Please go ahead hi, Thank you for the question he can't eat I Wonder if <unk> about that.
Like you mentioned.
<unk> been investing in our talent supply chain.
Generally but they.
And then what is the northern new here it is.
So it is scarce and you have seen margins navin.
At least if.
It's not on fiber being lower than pre COVID-19 levels and that's the case, what FASB life are somewhat flat global.
Competition both.
So on the European experience as well as Oh has it as a U S. A.
In that case, we haven't seen any margin deterioration. So if you could help us understand what do you think essentially explains the disconnect in terms of the margin per claim or the impact on margins for Indian companies, Let's say the global peers.
Okay.
You asked me to commend the margin trends of my my colleagues is that what you're asking me to do.
Hum.
I have much respect for them to do that.
No I'll just repeat my question.
All right all the players have.
Yeah.
Okay.
Yeah, I get that they make I'll try I'll try my best Okay, but don't hold me against that Okay I'll try.
So what happens is that why out of the Cosco why as the margin being.
Impacted because.
The evolution of the cost of employees why the cost of the employees have gone up because you know in a high demand market attrition has gone up.
And I appreciate you need to be backfield and backfill was with more expensive resources I see kids, what anybody you know industry has experienced but also our clients I've experienced in the last 12 months now.
It is a reality that is uneven from one market to another one market, where it's been extremely true is India.
And so the companies that have the biggest part of their head count in India.
The most impacted.
I think it's you'd say to reality.
Yeah.
That's that would be my my explanation Julian you have anything else to add no. Okay. All right are you, okay with that Mike.
Sure. Thank you peony.
I also wanted to get the same store and how do we think about this over the next six to nine months given the macro wise, it's easy to take.
But I think we just still continues to be a margin lift Florida for the industry.
Over the next six to nine months.
Yeah.
You know.
Over the last quarters. It is been the case, okay, we've been able to raise prices, whereas a lot of our clients and we've really driven unconscious a focus on that just to make sure that you know obviously all client understood that.
Given the ability of the supply pressure if you like you know it was the.
The same way you know they see inflation you know, we also where it's supposed to be the same situation a lot most of our clients want.
[noise] want us do not want us to be you know pressure from that standpoint, So I think we've been able to work on it.
Well quarter after quarter.
Will it continue that's you know we are assuming for the time being that yes. It should continue but you know market can change to a point at some point in time, where it becomes more difficult I don't see it that for the time being I believe that we should continue to expect price increase from our clients.
Certainly our R. R.
Do you.
Sure. Thank you all the best in the future.
Yeah.
Thank you. Our next question is from the line of Sandeep.
Please go ahead.
Oh, hi, thanks for the opportunity.
Apologies. If this question has already been asked.
But net utilization ex trainees. It has dropped almost 100 basis points any any plain drop off or any project.
That is causing this.
Addiction.
Uh huh, thanks for asking that question no there is no such drop off.
These are you know I I would just define it well I don't thing.
The.
The net utilization excluding trainees that trainees.
The Fisher love getting trained in the organization. So that's a very limited board that it is not a Youtube fish I mean, you'd play vision, excluding ratios will come on board. So it's one of the very limited video that they had in training for a couple of months there do we exclude it.
So as they have completed their training and they're gone on on project and they're becoming productive during that period of time. They come in this definition of overall bench and that's why you are seeing a reduction however, as I mentioned before.
The economic utilization of quarter, two has very clearly improved compared to quarter, one and that is giving us benefit. So I would request to for this quarter not worry about the numerical aspect of utilization.
Sure Jason just to follow up so as these resources.
Stop getting back.
But the projects are you should see a sharp increase in that utilization in the coming quarters is that kind of thing.
Yes, we will see an improvement in utilization as we move forward as they become a more and more revenue generated.
Oh certainly.
Yes.
Thank you.
As there are no further questions I would now like to hand, the conference back to Mr. <unk>.
For closing comments.
Yeah before but now goes on behalf of a T. I D myself sorrow, but stefanie and anti though the pro team. We wish you a happy Diwali and a brilliant new era for those who take it as New York and alert weapon.
Thank you all for joining the call.
Couldn't take any of your questions. Please do feel free to reach out to the Investor Relations team have a nice day and happy Diwali Okay.
Thank you.
On behalf of Wipro limited that concludes this conference. Thank you for joining US and you may now disconnect your lines.
Okay.