Amid the pandemic in June 2020, the company had appointed former Capgemini COO Delaporte as its CEO with a mandate to “transform and take tough decisions.” The 56-year-old has led an aggressive acquisition strategy that has seen Wipro acquire a dozen companies, shelling out about over $ 2.3 billion in the last three years.
However, amid a decline in tech spending globally, questions are being raised about the company’s growth forecast and timing of big -ticket buy-outs such as the $1.5-billion Capco deal, which majors in financial services consulting. In the current quarter, Wipro has forecast a 1-3% decline in revenue, compared to the revenue expansion forecast by rivals.
In an exclusive interview with ET’s Sai Ishwarbharath, Romita Majumdar and Surabhi Agarwal, Delaporte said the company is taking bold bets and decisions in order to “transform.”
What will be your strategy for growth for the next two years of your tenure?
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(I will) continue to drive the transformation. By the end of the term, the company (will be) stronger, not only delivering good numbers in terms of growth and profitability, but also (will be a) company that is playing a different role in front of clients. My obsession is with the way we are serving our clients. Our primary mission is to deliver excellent services for our clients. Wipro has added about eight large deals (over $ 100 million) in the last three years. Also, inorganic growth has been around a third of overall growth in FY22 and FY23. How do you view this?
We’ve grown 45% in the last two and a half years and if we can do that, always (we) will be in a good place. Believe me. I think I’m very comfortable with the growth we’ve driven over the years. I stay focused on our plan and on the execution.
And trust me, we are obsessed to deliver the performance every quarter, but never to the expense of the future. My commitment to the Premjis and to the board is that this company will be profoundly transformed and be ready for the future. To be one of the best companies in the industry. That’s what we are focusing on every day.
Is there a buy-in from the Board for the aggressive strategy of acquisitions?
It’s difficult for me to speak for the Board. But I can tell you one thing, I could not have a better Board. Because ( it) is supporting us. They are very aware of what we are doing. Every quarter they meet a lot of our leaders and they engage. They are contributing to our progression. Rishad (Premji) as the chairman is a fabulous partner for me and I spend a lot of time with him. He plays his role as chairman and I’m very pleased with the way it works. And I think it’s very harmonious in the way it works.
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How do you rate your performance in the last three years?
The performance of the company has been solid in terms of growth. In terms of profitability, we’ve had a dip four quarters ago but I think the performance on our margins is solid, keeping in mind the acquisitions we’ve made. Some people may have decided not to do the acquisition for short-term margins but that would have been a mistake. The objective is to make sure that this company is a true global player in the future.
Let me give you a couple of data points. It took nine years for Wipro to grow from $5 billion to $8 billion in (terms of revenue), from 2011 to 2020. It has taken two and a half years to go from $8 billion to $11 billion now. It is a game changer in terms of growth, we have doubled the size of the number of large accounts from 11 to 20.
We have increased the number of big deals to 57% more big deals this year than the year before. If I look at our positioning, every client I’m speaking to or any market analyst, they all say, ‘We see a different Wipro and a bolder Wipro’ and ‘We see a company where there’s great talent.’
Wipro’s (profitability) numbers are lowest among top four Indian IT firms.
We are between 16 and 16.5% for the last three-four quarters. We will trend up. Yes, there is a gap that exists. And it’s been here for 20 years. So, it’s not something that suddenly has happened. Now, keep in mind that about two percentage points (decrease) is from acquisitions. For sure, we are working on our fundamentals, improving our productivity, working on establishing the systems that we need. All of that is with the objective to unleash some pockets of margins. But again, a lot of the margin improvement is reinvested in our future today. My view is that the reason why the board brought me in is to transform. To make the decisions that were difficult to make. And so that’s what I’ve been doing.
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What are these difficult decisions?
When you are changing an organisation, but then it’s a (difficult) decision because it’s disrupting the organisation. (But) we’ve made it. To make a large acquisition, I’ve heard a lot of people telling me, “Oh, this doesn’t work because of cultural differences” but we’ve done it. And it’s been an absolute success. We’ve invested in talent. You have to be ready to shake the place a bit and challenge the opposition to really get prepared to jump higher and further. So, I think that’s what we’ve done. We’ve been bold as an organisation.
I believe the market has changed. I joined in the time of COVID, it’s been a low point in every industry, then we’ve had an incredible period of growth. It’s been a very high point. And then we have a slowdown–all of that in three years. We were used to cycles of 10 years maybe and now everything is happening in a very short timeframe. We are going up and accelerating and then decelerating but we are staying focused on our priorities.
What do you feel about the timing of Capco acquisition as both consulting and banking and financial services are hit globally?
The decision to buy Capco was a game changing strategic decision. BFSI is about a third of Wipro’s business but we were contained to only one type of projects and we were missing the opportunity to compete and play on the larger transformation programmes. Over the last two years, since the acquisition of Capco, we’ve had hundreds of synergy deals between the consulting and the technology business. Its impact on the market is visible every day and every single client is telling me that the addition of Capco and Wipro has been a positive improvement.
Second, in terms of integration, we have had a very reasonable level of attrition. I’ve not lost many senior leaders from Capco and they’ve integrated very well in the organisation. In terms of performance, and after two years, the company is still ahead of the plan built at the time of the acquisition. Yes, there is a slowdown now. And yes, this market is growing less than before. But the performance of Capco today is at par with what I’m observing from the rest of our consulting business.
Capco is contributing to a significant part of our growth from a consulting standpoint in the BFSI sector. Consulting today represents 15% (of revenue) and is key to our strategy. It would be, in my view, a big mistake to look at it just in the lens of growth for one given quarter.
What do you think about the continuing exits from the company at top level?
For the last three years, we have driven a significant transformation and upgrading of our leadership. We’ve done it consistently and will continue to do so. It’s all about talent and leadership and establishing a winning culture and a constant mindset to always do better and raise the bar. And that is what we’ve done. I am focused on that. I will maintain the focus on this talent and leadership development growth for over the next few years.