Wipro's Management Presents At Credit Suisse Group Technology Conference (Transcript)

Wipro Limited (WIT)

Credit Suisse Group Technology Conference Call

November 30, 2011 13:00 ET

Executives

Sridhar Ramasubbu – Chief Financial Officer

Analysts

George Mihalos – Credit Suisse

Presentation

George Mihalos – Credit Suisse

Okay. So, I think we are ready to begin. My name is George Mihalos. I am part of the newly hired IT services processing team here at Credit Suisse. And our next presenting company is Wipro being represented by the CFO of International Operations, Mr. Sridhar Ramasubbu who is a long-time Wipro executive. Sridhar, thank you for being here first and foremost. And I think we'll begin with Sridhar giving sort of a quick (Fibernet) update as to Wipro's business and then we'll jump right into the Q&A. So, Sridhar, I will turn it over to you.

Sridhar Ramasubbu – Chief Financial Officer

Thanks. I want to look at the three or four issues, which are on top of peoples' minds. In terms of first, the Q2 performance, it came at the top end of the guidance. We guided about 2% to 4% and we came at 4.6% sequential growth, which has been positive. For Wipro, specifically we had a challenge. We had CEO change in January of this year and the reorganization efforts we communicated to the market that it will take two to three quarters before we sort of get it to a rhythm of continuous growth. So, we have the leadership change, the key leadership changes are in place, the go-to-market single-access is in place. And we have done – we believe that we have done what we need to do and we sort of fixed the supply chain issues which we had and we are looking forward to the coming quarters in terms of how we can realize those benefits of those changes, which here are affected in the reorganization. So, the reorganization has been done is behind us.

We had recently acquired oil and gas unit for both upstream and downstream revenues in oil and gas, huge potential from SAIC for about $155 million. That integration has gone well and they are looking at that acquired unit in terms of delivering results as you move forward, and also in terms of geo-expansion into some parts of Canada, Calgary, in LATAM, in Africa, and Middle East. So, it looks very promising, very good consultants we have. I think we will leverage that unit in terms of taking our Energy and Utilities Group, a vertical to the next level.

In terms of demand outlook, in terms of how the market is sticking at, we still think that there is no appreciable change of any slowdown or any change in customer behavior at this point in time. We are getting about 53% of our revenues from US, 28% from Europe, and about 10% each from India and Asia-Pacific, and that's from the rest of the world, including Japan. We are not seeing any difference in customer behavior neither delay in signing up contracts or any cancellations, etcetera, etcetera.

We did communicate in July that we had one customer who delayed the signing of contract by about four weeks in Europe and that was one incidence. And then in the October earnings call, our BFSI had communicated that, I mean to responding to your question that how do you see the budgets going forward the next year said there is no appreciable change. However, there could be couple of investment banking customers in the security space in the U.S. and couple of them in Europe could moderate a little bit in their projection for next year, but it's too early to comment, because none of them have finalized their budgets. The budgets have not been finalized across the verticals and we are looking at – we are positive, we are not seeing any pricing pressure, we are not looking at any ramp downs, we are not looking at lengthening up sales cycle. So, we are not seeing anything untoward in the market, which is supposed to reflect the macro level market challenges what we are hearing, barring today I heard that market has gone up because of (action) from federal government.

On the verticals in terms of momentum verticals, we see good pipeline and good order book and good traction in energy utilities, in retail. The retail was little bit softer last quarter, but overall the pipeline and the opportunities are plenty there. We see huge opportunities in healthcare and we see huge opportunities in BFSI.

On the service line, both Infrastructure Services; BAS, the Business Application Services and BPO are showing promises. BPO has little bit declined last quarter, but the pipeline is good, the opportunities are good. We think that we will get very good traction in those areas as well.

On the geographies, U.S. and Europe are continuing their good stand. We are still keeping our fingers crossed in terms of the macro level issues in Europe. But even during recession, we grew very well in Europe. Last quarter, we did 5.3% sequential in Europe. So, we are confident that the value prop of this offshore will help us keep us in good stand in Europe as well. But still we are keeping our fingers crossed, because we do not know the linkages of those European market, financial market, and the economy what it will do to U.S. and what will be the effect of fact. We don't know about that.

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