Q1 2024 Wipro Limited Earnings Call
The.
questions after the presentation concludes.
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Please note that this conference is being recorded.
I now hand the conference over to Mr. Deepak Kumar Bora, Senior Vice President, Corporate Treasurer and Investor Relations. Thank you and over to you, sir.
Thank you Ashutosh Sri. Warm welcome to our Q1 Financial at 2024 earnings call. We'll begin the call with the business highlights and overview by Thierry Delbert, our Chief Executive Officer and Managing Director, followed by a financial overview via CFO Jatin Dadal.
Afterwards, the operator will open the bridge for Q&A with our management team.
Before theory starts let me draw your attention to the fact that during this call we may make certain forward looking statements within the meaning of Private Securities Litigation Reform Act 1995.
These statements are based on management's current expectations and are associated with uncertainties and risks, which may cause the actual results to differ materially from those expected roles.
The uncertainties and risk factors are explained in our detailed filings with the SEC.
Wipro does not undertake any obligations 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 available on our website.
Over to you Thiruv.
Deepak, thank you. Hello everyone.
Welcome to our first quarter earnings
Joining Jatin and me today, we have our Chief Growth Officer, Stephanie Trotman. We have our Chief Human Resources Officer, Serab Goveel.
our Chief Operating Officer Amit Choudhary, and our Chief Technology Officer Subal Tathavarthi.
I'll start today with an overview of our financials for the quarter, moving into some details of our business, the main environment.
and some direction for the coming quarter, okay?
then Jetin will go into greater detail of our operational metrics and of course we'll be happy to answer your
So Q1 was,
another quarter of robust deal closure for us
In total contract value terms we closed large deals to the tune of 1.2 billion dollars, which is a 9% year on your gross and actually the highest bookings in 8 quarters.
During this quarter we booked 10 deals in the greater than $30 million dollar TcV range.
Total bookings from a TCB standpoint.
Standard USD 3.7 billion.
We added two new accounts in the greater than 100 million dollar revenue bucket.
taking the count of businesses that contributes more than 100 million in revenue to 21. So the number of 100 million dollar accounts has more than doubled from 10 to 21 in the last two and a half years since we started on this transformation.
all around us in almost every industry
We see businesses that have been reducing these questionnaires' spends in response to the weaker macro environment. That has had an impact on our revenues as well.
In constant currency terms Q1 revenue grew 1.1%
This translates into a growth of 6.1% year-on-year in rupee terms.
It's very much within the previously guided range, but yes.
We are seeing some softness in revenues.
in revenues. Despite that,
We have held margin steady.
Operating margin for the first quarter was 16%.
This is 112 basis points to be precise, higher than our operating margin in the first quarter of last year.
We maintain margin by...
Mostly three points, improving productivity in our fixed price project, a better utilization of talent and finally by managing our fixed costs.
At the same time, we continue to invest in people and in technology to build a more agile and efficient organization.
This margin resiliency is especially significant.
Wipro has undertaken one of the largest enterprise-wide transformations in the industry, starting November 2020.
We are proud of the progress we've made since.
The success of this transformation becomes clearer when you consider the magnitude of this change, and when you see that we have continued to perform while we continued to transform.
The success of this transformation becomes clearer when you consider the magnitude of this change and when you see that we have continued to perform while we continued to transform. One hand.
We were aligning to market needs.
needs. And on the other,
undergoing a deep internal transformation.
Our focus on accelerating this transformation along with maintaining undivided attention on client experience and delivery excellence.
will progressively translate into improved growth and margins.
We have recorded an 11.5% growth in Earnings per share year on year.
Cash flow has remained strong.
cash conversions too that 130% of net income
And finally, this quarter we closed our largest ever buyback.
allowing us to return 1.5 billion USD
to our shoulders.
Now...
Our industry, like every other, is undergoing a seismic shift with the advancement of artificial intelligence.
AI can and will fundamentally change
every aspect of business.
Anticipating this revolution, Wipro had started investing and building AI capabilities over a decade ago already.
We have delivered over 2,000 global AI engagements
during this time. In fact, today
We are using generative AI for multiple use cases.
like enterprise knowledge mining.
Enterprise Knowledge Mining, Virtual Assistance
content creation, automation in software
and for synthetic data generation.
But to accelerate innovations in this space, yesterday we announced a $1 billion investment in AI and launched a new
AI-first innovation ecosystem called Wipro AI-360.
This ecosystem basically will bring together Wipro's full range of capabilities.
including solutions
services, platforms, research and intellectual property as well as partnerships and talent under one umbrella.
with additional funding and resources to fuel our growth in this area.
We are also placing responsible AI operations at the heart of all our AI work. Luminar C
is meant to empower our talent pool and be ubiquitous across all our operations and processes and our solutioning for clients.
AI-first approach will unlock more value
and commercial opportunities for our employees as well as our clients.
But first, we need to train our people in this fast-moving field. Over the next 12 months...
We will train our entire workforce, nearly 250,000 employees in AI.
From hackathons to challenges on our Talent Crowd platform topcoder to dedicated trainings
We will leverage our blockchain-based DICE-ID platform to become D.
industry standard for AI skills credentialing. Demand for AI specialized talent will grow exponentially over the coming years, we know that, and we'll be prepared.
Suba is here with us today to share more on this.
to share more on this.
I like to talk through our strategic market unit performances as always.
In America has won. Order Booking Symptom of Total Contract Value grew 37% year on year.
Revenues for the quarter grew 1.5% year on year in constant currency terms.
This revenue growth was led by healthcare and medical devices at 9%, followed by consumer goods and life sciences.
was led by healthcare and medical devices at 9% followed by consumer goods and life sciences at 7% each.
High tech and BFSI are the two sectors that were impacted the most due to softer discretionary spends. As a result, our Americas to market declined 2.7% year on year in Q1.
High tech and BFSI are the two sectors that were impacted the most due to softer discretionary spans. Our results are America's two market decline 2.7% year on year in Q1.
Our European Business Unit delivers the year-on-year revenue growth of 4% in Q1.
This revenue growth was led by Southern Europe and Norlix, which grew 26% and 14% respectively in the first quarter.
In our APMEA business, bookings in total contract value terms are looking healthy.
with a 23% quarter-on-quarter growth. Revenues for the quarter grew at 3% year-on-year. Within this SMU our Indian business grew 7% and our Middle East business grew 6.4% year-on-year.
In Q1 we also completed the transition to the four global business line models that we had announced earlier in the year. This is aancha Standing by year 2019 else everapo
is actually already showing up as faster time to market.
but also more inclusive one-way pro customer and delivery wins. Whatever challenges our clients may have.
The solution exists within our global ecosystem and we are tapping into the talent.
Education exists within our global ecosystem and we are tapping into the talent, the capabilities.
and the solutions from every corner of our firm. We are increasingly able to build bespoke solutions for clients and that's what is setting us apart. Ultimately our focus is and always will be.
on serving our clients with greater innovation, with attention to detail, and with excellence.
serving our clients with greater innovation, with attention to detail and with excellence. Great example of this.
is our recent win with global digital interactive entertainment leader
Wipro will modernize their network infrastructure, delivering improved responsiveness and user experience.
We will drive scalability to handle increased workloads and reinforce end-user security.
All the while creating a platform that supports the client's expansion plans.
This project brings together Wipro's architecture, consulting, cloud migration, implementation, and managed services capabilities.
between is also a good example of how we can bundle solutions from multiple partners
to deliver a wide range of capabilities that are tailored to our clients' needs. In terms of the demand environment, in some ways we are seeing tech investment normalize after the sharp acceleration in spending during the second part of the pandemic.
More and more, clients are expecting faster return on investments and optimizing costs.
through increased use of automation and vendor consolidation.
In parallel we continue to see solid demand in high-growth areas like cloud transformation.
Clients are seeking out Wibro's full stride cloud capabilities for the next phase of their cloud strategy. We are helping them run more efficient and agile businesses and capitalize on the emerging opportunities presented by artificial intelligence.
are seeking out Wibro's full stride cloud capabilities for the next phase of their cloud strategy. We are helping them run more efficient and agile businesses and capitalize on the emerging opportunities presented by artificial intelligence. For example,
A large global medical device and a healthcare company have selected Wipro to transform their operations infrastructure into a modern, cost-effective and cloud-first model.
Wipro FullStriCloud will deliver a consistent and omni-channel workplace for 120,000 employees in 160 countries.
We will help this client achieve 40% automation, cost optimization, and while simplifying their global operations. Now, we are able to do all of this and more thanks to our 250,000 associates around the world. We want to see them succeed in their roles.
That's very beautiful.
As part of our transformation, we've continued to work on various aspects of employee experience.
We serve all new initiatives to streamline policies, to streamline processes, talent support and training and development opportunities.
We also want to make sure employees' voice and concerns are heard. Our 2023 Employee Engagement Survey showed an overall engagement of 88%.
We also want to make sure employees' voice and concerns are heard. Our 2023 Employee Engagement Survey showed an overall engagement of 88%, which is higher than before.
now benchmarks us to global standards on employee experience.
We also named one of India's best companies to work for by the Great Place to Work Institute for the second year in a row. But that, to me, is table stakes. We must and we will continue to improve how we produce experience by our employees.
Because all of these efforts, attrition has continued to moderate quarter on quarter, coming in at 10, 8 quarter low of 14% in the first quarter.
I am confident that our long-term business strategy is correct and well suited to ride the changes we predict in the industry. Most importantly, I believe our business strategy will keep us competitive and resilient in the future.
Final word, as always, on our guidance before I close. For the next quarter we are guiding for a sequential growth of minus 2% to plus 1% in constant currency terms.
We expect margins to be in a similar range as in the last few quarters.
margins to be in a similar range as in the beginning of the film in a sense.
Let me turn it over to Jatin for his comments.
Thank you, Thierry, and good evening, good morning, everyone.
I will summarize our performance for quarter 1. We grew 6% year on year in revenue terms. We improved our operating margin by 112 basis points year on year. As a result, we grew 14% on operating profit terms.
Our other income was one of the highest in recent quarters. We grew it 110% year on year.
Our tax rate went up slightly higher and effective tax rate was 24%.
As a result, our net profit year on year grew 12%. Let me talk about cash flows and forex.
We continue to convert our profits into healthy cash flows. Our operating cash flow for the quarter was 130% of our net income.
and free cash flow at 126%. We had after completion of buyback
$3.5 billion of Graph Cash and $1.7 billion of Net Cash.
$1.5 billion of graph cash and $1.7 billion of net cash in the beginning of this quarter.
Our forex, the realization rate was quite healthy and improved at 81.90 for quarter 1. We had $3.6 billion of forex hedges at the end of the quarter.
The realization rate was quite healthy and improved at 81.90 for quarter 1 and we had 3.6 billion dollars of forex hedges at the end of the quarter. We will be very happy to take your questions.
Thank you very much.
We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touch tone telephone.
If you wish to remove yourself from the question queue, you may press star and 2.
Participants are requested to use handsets while asking a question.
Ladies and gentlemen, we will wait for a moment while the question queue assembles.
We have our first question from the line of Sudhir Guntupalli from Kotak Mahindra AMC. Please go ahead.
Yeah, thanks for the opportunity. Preeti, just to get on the macro, unlike during some of the previous downturns, this time around, many of the macro variables are continuing to be surprisingly resilient, both in the U.S. and in Europe , except for a brief period of panic around the regional banking crisis.
So based on your client conversations, what is the key concern or key variable that you are gathering? Could it be the end of the rate hike cycle? Or what else could drive a return of expense? And if you were to second guess, how quick that would be.
I really like the question you just asked. I think it's a real one. And so let me try to respond to that. Interactions with clients.
More or less, I would say, a similar pattern, which is that
On one hand there is no one question the fact that technology is critical to the success of the evolution of the company whatever the industry is by the way.
Second, I think it's the recognition of the fact that over the last years there has been massive investment made in technology. Now, and third is certainly the fact that, you know, the fact that the
macro economy continues to shed a little bit of mixed messages to those industries and to the leaders across those industries. And so at the end of the day,
I've always been very confident on the fact that technology was on top of each of these leaders' agenda and that they have a lot of
transformation programs in mind to drive and at the same time they are a little
influenced, you know, I think...
even more than new influence, they are very aware of the fact that this climate of uncertainty
He's weighing on some, you know,
He's weighing on some, you know,
potential decisions for companies to continue the same volume of investment. So they have made some choices and I think there's a certain level of cautiousness.
driven by the fact that the macro
environment is still a little uncertain. So that's what I'm hearing.
And that's probably, you know what we're observing is actually a reflection of that, Sudhir. I think that...
when we look at the type of deals we are winning. We are winning more deals than ever before.
and that is being consistent for the last three or four quarters. Every quarter when we look at our DCV, performance is actually solid.
And I think you all have this question about the conversion to revenue. The answer is the reality is that while we close all these deals.
and they respond to ambition from clients, there's a reduction of what we all call the discretionary spend, which are typically smaller deals, shorter period, and where it's probably...
easier for less strategic for clients to to put a stop to it for some time and so that's what we are saying the second question is about you know is there
perspective, you know, what about the second half of the year? Again, really reflecting on my discussion with clients.
There could be a point in time where they feel okay we have this budget that we haven't spent yet. The year has unfolded being possibly better than feared so it's time for us to resume the investments or the spend.
And you know, we are getting prepared for that. And whenever it happens, we'll be ready for that.
But knowing if it is going to happen, you know, in a month or two or three or four that I don't know. I am being... I'm staying.
cautious in the way I'm projecting an evolution of this market in which we've been for the last six months
and obviously keeping a very very close focus on it. We'll see but for the time being I would say the market we see
is not dramatically different from the market we saw three months ago.
not dramatically different from the market we saw three months ago. Back to you Surya.
Yeah, got it. Just an extension of that, is the panic around the banking crisis completely behind us and going forward? Do you foresee that there can only be an improvement in the demand situation from where we are assuming macro variables remain reasonably stable?
I mean there will be, again predicting the future, you know we've been over the last two years a bit shaken up by some macro element that we could not necessarily predict and that have had a massive impact on a lot of what has happened after so I'm
By definition, I'll be cautious on that, but I think that a lot of banks still have reasonably good fundamentals and they are very aware of the importance of technology for their own transformation.
so yes it will resume at some point in time it will restart with a lot of you know particular a lot of the consulting activities that have been you know reduced and where you know they will need to launch those large program aiming
improving the efficiency of the organization and you know their KPIs and ratios.
Got it, Kirti. Just one quick one. The $1 billion investment commitment in AI over three months. Is it fair to assume it will be largely in the M&A route?
The one billion dollar investment commitment in AI over three years, is it fair to assume it will be largely in the M&A route? No?!
It's not fair, actually the majority of it will be organic.
So, you know, this is organic. It is an investment that we are already engaging now and we will accelerate it steadily over the next three years.
So, you know, this is organic, it is investment that we are already engaging now and we will accelerate it steadily over the next three years. Not three quarters, three years. Yes, there is in there.
bit of budget for M&A but we do not suspend if you like the progression that we want to drive over the next three years to acquisition. It will come as a compliment or as an acceleration but we are already in action now.
Thanks, Diri. That's it for now for all the very best.
and all the very best. OK, thank you, Sudhir.
Thank you. We have our next question from the line of Nitin Padmanabhan from InvisTech. Please go ahead. Hi, good evening. Thanks for taking my question.
I had a couple. So first, theory, if you think about the cut in discretionary.
versus let's say the lower ACV of deals versus what we would have seen in the prior two years. Which do you think is a more significant driver of the weakness? Is it equally weighted or is one higher than the other? So that's the first question. Does the base lift up slowly and Bol Commercial Lab is correct for our
The second is how are CAPCO and RISING sort of fairing in the current environment.
And finally, Jatin, your thoughts on margins going forward and what you're thinking about, how you're thinking about compensation increases. Because we hear a couple of companies actually sort of pushing it out or sort of doing away with some of it. So just wanted your thoughts on these three things. Thank you.
So, okay, so, the first question was on, actually, you know, I'm
I'm not sure I can easily answer your question whether it's this questionnaire or ACV. You know, by definition, what is ACV and not ACV?
can easily answer your question whether it's this question or ACV. By definition what is ACV and not ACV?
Showing a difference with TCV is by definition short term deals.
that includes mostly discretionary spend. So I would say you know you can call it the way you want those are short term
versus large deals basically. Okay, so that's
I don't know Jatin, you have a better way to answer this first question? No. The second one is about Capco and Rising. Same comment I would have made, I'm sure I have made a quarter ago. It's a consulting business. There's where there's a lot of discretionary spend. It's a little harder.
days that it was some quarters ago. It doesn't change at all the strategic nature of these deals and I think it is always been clear for us that these were investment for the future and not tactical. We know consulting our early cycle.
type of business so you know and that's what we are seeing. Having said that...
Actually you get one the fundamentals are good, second I take the example of rising because that's the last addition to our organization when was that a year ago.
Actually you get one the fundamentals are good second. I take the example of rising because that's the last Addition to our organization. When was that a year ago? Yeah About a year ago, huh? You you
May, so a good year to go. Frankly, the attraction it gets in our SAP business in our SAP business is...
beyond our expectation at the time of the acquisition. There's no doubt, whether it's in the way we are able to develop true strategic level of exchange with SAP.
or in the way we are going for large transformation, large deals in SAP that rising has been a...
great addition to the to the family so that's the second one the third one you know I'm always tempted to respond on margin for some reason we always ask the CFO on margin so let's go ahead
First, what I want to share is in quarter one, despite a significant volatility in revenue, we have done well to stay flat on operating margins. And that was because of variety of operational levers that we were able to manage very well, including
improvement in utilization, which would have been, as you can imagine, quite difficult in such a revenue scenario. As we enter quarter two, we definitely want to hold on to this trajectory, and we will continue to leverage the efforts that we have taken in quarter one.
to continue with the same consistency in Quarter 2. As Saurabh mentioned in the press release, as we have spoken about it earlier today, we did our last salary increase in September of last year, and we plan to do that for this year sometime in Quarter 3.
So at least for quarter two, that's not something that we are penciling in at this point in time.
Sure, Jatin. So on the utilization you think you have more room? Because it already seems to be maxed out. So would you need to start hiring in anticipation of demand maybe six months down?
Next to me is Amit, our CEO , who is obviously driving utilization up. So Amit, over to you. Thank you, Thierry, and thank you, Nitin. Yes, utilization clearly is going to continue to be a...
We will also be looking at different components of utilization, not only the aggregate number, in terms of location, in terms of seniority. So yes, there is still some room to drive our utilization up from where we are.
Thank you Thierry, thank you Jatin, thank you Amit. Thank you Nithin.
Thank you. We have our next question from the line of Gaurav Ratteria from Morgan Stanley . Please go ahead. Hi, thanks for taking my question. So first question is for Thierry. The success of strategy pursued by us is pretty well reflected in our higher win rates.
As you can imagine, I run Wipro and I'm with this leadership team working on driving the performance of Wipro in the right direction. We are focusing on our priorities.
We are focusing on our journey. We have
mean just look at yourself the growth the profile of growth of Wipro over the last three years and you know what you know the most important point is actually been
change to the previous trend of growth of this organization.
I'm not going to benchmark our performance every quarter against every other company in our industry. We have our own journey. We have our own gauge, our transformation. Three years ago we are working on many different aspects of our...
progression if you like. Growth has been solid double digit two years in a row. Yes there is a slowdown. It's a reality for everyone if you want me to refer to to reflect on others as well and I think that's what I'm saying. Having said that...
I believe that we are every day becoming more impactful in the market. As you said, it is visible in the deals that we have closed, the large deals that we have closed.
It's also visible in the way we are growing our large accounts and that is showing that our account strategy has been paying off every single quarter The last 25 years were socially and socially?
We have doubled the number of 100 million dollar account in into Mush young
And again, I think it's a testament to the ability of the company to grow when we are focused on whether it is in terms of account, in terms of sector or markets.
Great. Second question is regarding the investment committed for generative AI. How are we going to fund this? How are we going to fund this?
investment and if we can quantify this would have any implications on our longer term margin aspirations. Thank you. Go on. So, funding is funded by the operations.
to be clear. So this is in our plan. It's backed into our plan.
Amit explained to you a few minutes ago that there's a lot going on in terms of improving the efficiency of our operations, what we call our operational excellence. Whether it's in the way we are injecting more automation and AI into our delivery to the industry.
to be more efficient or whether it is in the way we are streamlining of our operations, reducing the layers and just being more nimble and more agile as an organization. All of that is driving.
operational improvement that we are re-injecting in our future. We've never compromised on development or...
mid to long term strategy. We've never compromised on the obsession for our clients and for excellence in delivery. And AI obviously is an investment but also a gigantic market for us. And so that's how we look at it.
So you should look and consider that because we consider we are well positioned in that market, that it will trigger revenue growth and profitability over the next quarters. Jatin, do you want to add anything to that?
Thank you so much.
Okay, all right. Thank you so much. Thank you.
We have our next question from the line of Kirish Bhai from Nirmal Bang Equities. Please go ahead. Yeah, thanks for the opportunity. Considering the demand environment, how would you characterize the comparative intensity that is in the market today compared to say six months back?
competitive activity
So, you know, it is a very competitive environment as we look to renew our existing book of business and acquire new clients with new opportunities. Of course, we are finding ourselves in situations where...
we really have to differentiate our value proposition and drive more value for our customers. We're winning against all of our competitors. If you look at our large deal wins this quarter, it was pretty mixed in terms of what we were winning and who we were winning against. So I think as Thierry mentioned our strategy
we speak right now or is the customer able to extract sweeter deals from you in terms of larger productivity benefits down the road.
Yeah, hi Girish, I hope you are well. No the answer right now is yes, in sense that there is nothing unusual that we see on large deals that we don't normally notice. Obviously if there is a 200 or 300 million dollar deal.
You would benchmark it with the best standards on productivity, best standards on pricing. But that is not out of ordinary behavior of dropping prices or giving deferrals in billing, etc. In our behavior, we have not yet observed that would worry us.
Okay, lastly on generative AI, there's been mixed commentary around the fissionary impact of this on at least certain service lines. What's your take on this and how early or late will this happen, if at all it happens?
So Girish, your specific question is does generative AI already, I mean, is it already reflecting in reduction in revenue and potential headcount for the GBLs for our service lines?
No, I'm saying will the productivity gains that people claim or there's been claims around it, will that be entirely passed on to customers resulting in some kind of revenue compression in the time to hit?
So, Girish, we haven't seen that yet, but as you already know that every competitive deal goes with certain assumptions of year-on-year productivity numbers that are baked in and those numbers will continue.
Gradually, they will continue to break in the productivity benefits that JNAI will break in. I would request Subha to add from her perspective, how does she see this journey to unfold? Thank you, Jatin. So, Girish,
We feel that Gen AI is a fundamental shift in how...
We feel that Gen AI is a fundamental shift in how any business would do.
Gen AI is a fundamental shift in how any business would do business.
So what does that mean? It means that we will see greater and greater efficiencies and productivity in every sector and every vertical. And it will also translate into how our business will run more efficiently moving forward. As we begin to ramp up adoption of
this technology across every business process, every technology stack, and every offering, and every.
technology across every business process, every technology stack, and every offering and every interaction we have with our customers.
So, yes, there will be productivity gains for our customers. We hope to drive it for them, but we also see significant productivity gains for our businesses going forward.
Thank you very much. Thank you. We have our next question from the line of Abhishek Kumar from JM Financial. Please go ahead.
Hi, good evening and thanks for taking my question. I wanted to understand the assumptions that have gone into our guidance for the next quarter. I think last quarter if I remember right, we mentioned that some of the clients had already intimated us about certain things.
RAM downs and the impact was to be felt in one queue. So our sense is that that probably is in the base quarter now. So what is driving another, you know, sort of at least at the lower end, another sequential decline for the next quarter? Have you seen?
more such information is coming our way on project ground down continuing.
So if you look at the guidance for Q2 is actually showing it I would say a slight improvement over Q1 right and so
guidance for Q2 is actually showing a I would say slight improvement of Q1 right and so what I think we are
uncertainty remains, there's no deterioration, we stay a bit cautious because of the uncertainty right and that's how we see the Children's day for me.
In terms of how the last quarter turned out, was there any stabilization towards the second half of the quarter or the VPX sort of persisted through the quarter?
You know this is a difficult question. I'm not sure I can answer. I mean it's too early to tell, right? You cannot make a trend based on 20 or 30 days. So I don't think I'm in a position or jetting or anybody here is to tell you that you know based on the last 30 days we can see a trend. I think it's...
You know, this is the...
The reality with the context of uncertainty is that precisely it's a little bit, you know...
context of uncertainty is that precisely
And so, you know, some industries certainly are more pushers than others. Banking, financial services.
Technology, you see that, I mean technology has
reduced. There are actually some technology companies have been going through several waves of layoffs so there's a bit of a slowdown on the technology side after several years of stronger
Comms is another sector where we are seeing that. Some other sectors, you know, healthcare, energy, utilities are sectors that are actually probably investing more and less cautious if you like. So this is the context.
The reality is that you're probably going to have to wait for some more months before really getting the confirmation that the market has rebounded for good.
So that's helpful. Thank you and all the best.
You're welcome. We have our next question from the line of Ravi Menon from MacQuery. Please go ahead.
Thank you for the opportunity. Thierry, I just wanted to understand your reorganization of the four global business lines. If I look at it, consulting is still separate. So, what I thought that this is a good opportunity to embed consulting more deeply and try to increase the crop fill for that. Could you explain the rational logic behind the reorg?
Okay, all right. Ravi, so I'll try to, I have a one-hour version of the answer, but I'll try to be concise.
Back in late 2020 when we implemented our operating model with SMU and GBLs, we decided, because this organization had never gone through a metric setup.
You know we felt that you know it needed to be extremely simple for it to be rapidly implementable and that's what we did and that's why we went with two GBLs IDs and I-Core.
What possibly we could not anticipate at that time is the speed of the growth we would experience in those two GBLs.
In two years, 45% growth made those two GBLs massively bigger than what we had anticipated when we launched the model.
45% growth made those two GBLs massively bigger than what we had anticipated when we launched the model. In parallel, the growth made those two GBLs massively bigger than what we had
The level of maturity of organization to work with SMUs and GBL working together in a very integrated model has dramatically progressed.
And finally, we have seen, we have listened to our clients and we've seen a couple of things. One, the fact that we've done great in engineering and it was maybe time for engineering to...
You know just fly on its own a little more, right?
because we have a fabulous potential at Wipro to really
because we have a fabulous potential at Wipro to really be a leader in engineering.
Second was the fact that more and more our clients were expecting from us that we come to them with a comprehensive cloud strategy addressing both infrastructure and applications without
you know, this is shading between those two different dimensions. And I think, you know, we felt that, you know, by combining those two components into what we call now a full-stride cloud services would make us more impactful and more competitive and more...
just able to better respond to their
As you said, we've made acquisitions in consulting, we also had a consulting business, and you know by experience that consulting is...
needs to be at the forefront of the market so needs to be as close as possible to the accounts and to the
They also need to be very closely connected to the other GBLs because basically every global business line, every offering needs to work hands in hands with our consultants. But at the same time they need to be...
manage differently because consultants operate under different operating models
and I have a deep understanding of this business and clearly the objective was to create this platform, this consulting platform.
for the future of Wipro. And finally our fourth GBL is what we call Enterprise Futuring. It's actually combining different types of businesses, DoP...
for the future of Wipro. Finally, our fourth JBL is what we call Enterprise Futuring. It's actually combining different type of businesses, DOP, Data,
and a digital experience
experience that have
You know as part of their evolution and applications obviously the necessity
to leverage artificial intelligence in everything they do. And so those four GBLs have been put in place on April 1st. It means that we are already in operation under this model for the last three months.
and it's impressive I'm gonna I'm gonna share with you something
and it's impressive. I'm gonna share with you something. It's been working so smoothly.
This new model that I almost forgot to mention that we had just done it to the board a few hours ago. It says a lot about how seamless this implementation has been.
And for sure, the intention is to increase our impact in the market with our clients and at the same time streamline our operations and reduce the layers, if you like, between our teams operating and our clients.
Thank you for the detail, Eric. And if I look at the kind of deals that you're announcing, it looks like you've actually started doing more complex deals and more, as I might call, outcome-oriented deals where there is some risk transfer and you actually get paid for that transfer of risk along that path.
allows you to make better margins than a simple shift. Completely agreed and this is exactly our strategy that we've laid out three years ago and we're executing against that quarter after quarter.
Thank you so much and best of luck. Thank you. Thank you. We have our next question from the line of Deepesh Mehta from MK Global. Please go ahead. Thanks for the opportunity. Couple of questions. First about if you can provide some update about the global account executive program and empowerment. Q&Await, yes we can!
which you earlier suggested is the key focus area. So if you can give some update where we are in the journey. Second question is about the four service lines which you said if you can provide some update, I think in terms of growth, how the traction is happening, which area is seeing more weakness compared to others. So if you can provide some sense about those four service lines. Our last question is for Jatin about a bit margin experience now, I think earlier we.
We had mentioned that 17, 17 and a half is a medium term outlook that we have for our business.
and that ambition remains, we will continue to work towards that. However, we need to manage the short term and in the short term there is volatility in the market and uncertainty in the revenue line and that does impact our ability to drive the improvements that we want to drive.
focus will continue to move towards that medium term goal. It won't be an immediate outcome that one would be able to drive towards, but I think we have right building blocks in place to move towards that goal. I will hand it over back to you. Yeah, Jatin, thank you. So the first question, the two questions. First one was around GAE mailed to the provision simple open. known certificate Platinum.
transition, grow and really invest.
and really invest long term.
And in these accounts, we wanted to grow these accounts not only in volume but also in value, in impact basically.
with the clear ambition to be not only an IT provider but actually a true transformation partner for our clients.
As part of this ambition we have decided to...
Invest into a total account executive. Those GA's. We renamed it to really send a signal inside the team that as a GA, you are a total leader of the account you are managing. You are the CEO of the account you are running. You are representing.
We pro for the account and we must all align behind you
pro for the account and we must all align behind you in your account strategy.
Frankly, this has triggered, this has fueled growth over the last three years. I said a few minutes ago that the number of $100 million account has gone from 10 to 21 in the last 2.5 years.
I think it's a reflection of that. We have now a lot more.
accounts of over 100 million. We have a lot more 50 million dollar accounts and we continue this strategy. In fact we reduce the tail of accounts.
to have less accounts but more impact in these accounts we invest more and as you said we Empower the GA's the account executive to really drive and have the opportunity to make decisionsinstalled citizens invest
and grow those relationships, but also make sure that we are positioned as a true partner in those accounts. Finally, as part of this,
and grow those relationships, but also make sure that we are positioned as a true partner in those accounts. Finally, as part of this program,
I mean we've embodied a lot of talent. We have today a significant diversity inside our organization and in particular in the account executive team as well which is driving a lot of positive impact inside our organization every day.
beyond those accounts. The second point you had was the service lines, so the four service lines, the performance of the four service lines. Jatin, you want to say something? Yeah, so Dipesh, as you know, we, like most of our competitors, we no longer publish the actual financial performance of these four service lines.
But suffice to say that except for consulting where we have talked about the impact or a slower growth that we have seen, rest of the service line continue to perform very well and in line with the overall growth of the company.
Thank you. We have our next question from the line of Mukul Garg from Motilal Oswald Financial Services. Please go ahead.
Hi, thanks. I just want to clarify, regarding the billion dollar investments, which you guys have announced in Gen AI, can you give some sense on where the majority of this investment will be rooted to? Yes, I think so.
Is it something which you guys will primarily invest into tools which you will build out on using AI? Or is this something where Big Potion will kind of end up supporting employees who are trained in that and hence the
the compositions will be higher than what you are currently kind of giving? Or is there something else where this investment will kind of be consumed given the quantum of the number? And second, Jatin if you can just help us understand.
how to look at this investment, it will pass through your balance sheet, through capitalization or will you be expensing this out in income statement and if it is an income statement item can this be an incremental expenditure on top of what you are currently doing?
So, you know, we have a very comprehensive plan, of course, behind the $1 billion MCOOLIN. It includes
It's about investing into solutions, into assets, into accelerators, into capabilities, into methods and it's across the organization. It's also about training. There's a lot of aspects of these investments and of course you know as
Mukul, I think just as Thierry described various streams of investment, I think the accounting treatment will follow those streams for period cost of course that would be expense.
but large programs which could have future benefits to organizations over the years would be capitalized and of course M&A would be accounted as per the merger and acquisition accounting policy. So it would follow the overall approach but it is not incremental.
dollars spent in Adi and all the expense lines will remain what they are as Sierid discussed or described. Earlier on this call, this would be funded through the gains on operations that we will make. So in that sense, it should not be seen or modeled as an incremental large P&L hit that you will take over the years.
It's absolutely, it's not outside of our margin profile for sure. I just want to add one thing, I realized I forgot two things. It's also about investing in research in platform. And also you know that we have Wipro Ventures, right? Wipro Ventures carries today.
about two-thirds of the investments of Wipro Ventures are in the AI field. So we'll continue because it's incredibly important as well to continue to go after cutting-edge startups
Over to you Mukul. No, great. I think that's helpful and thanks for the colours. Thank you. You're welcome.
Over to you Mukul. No, great. I think that's helpful and thanks for the colors. Thank you. You're welcome. Thank you.
Ladies and Gentlemen, that was the last question for today. I would now like to hand the conference back to Mr. Deepak Kumar Bora for closing comments. Over to you Sir. Thank you all for joining the call. In case you could not take any questions due to time constraints, please feel free to reach to the Investor Relations team. Have a nice day.
Thank you. Thank you. On behalf of Wipro Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.