Wipro sets up specialised unit for mega orders

Headed by former BPO division chief, it will focus on orders exceeding $100 million

MUMBAI: Wipro, India’s third-largest software exporter, has increased focus on large IT deals by setting up a specialised team for the purpose, senior company officials said on Friday.

The global program management (GPM) unit will be headed by former Wipro BPO chief T K Kurien. Its mandate is to seek opportunities greater then
$100 million in fresh or renewal contracts.

Meanwhile, Wipro is looking at recovery in order flow by the second half of the year, by when the indecisiveness by clients on their IT budgets is likely to give way to firm commitments.

“Earlier, we were reactive in nature—we would only respond to clients’ RFP (request for proposal). Now we are creating large opportunities and engaging with the client much in advance, to drive their business transformation goals,” joint chief executive Suresh Vaswani said.

Besides BPO, packaged implementation and testing, industries like manufacturing, healthcare, and retail report to Vaswani.

The company has begun to notice traction and the deal pipeline through GPM is about a dozen strong, and at various stages of approval.

According to reports, $110 billion of IT contracts are coming up for renewal by 2010, which should serve as a good opportunity for the GPM unit.

Joint chief executive Girish Paranjpe said the demand environment was improving and a revival in the telecom R&D, a key vertical, was expected in the next 12-18 months.

“First quarter was below our expectations. This quarter is better. If there are no major dislocation, then post summer, we expect the deal pipeline to begin filling up. We are the largest third-party R&D service provider and our telecom R&D practice has been affected on account of consolidation among original equipment manufacturers (for example, Lucent-Alcatel, and Nokia-Siemens) and the move towards standardisation, which has reduced need for propriety software. A revival will happen when the technology changes, which we hope will happen in the next 12-18 months,” Paranjpe, to whom telecom, BFSI, consulting, and high-tech verticals report, said.

The company is looking at leveraging all the margin levers it has at its disposal, like employee pyramid, utilisation rate, price hikes, and offshore mix and is looking at stable margins.

“We have adequate levers in employee bulge (pyramid), price hikes, utilisation, offshore and we will be using all of them. We are asking for and getting reasonable price increase for renewing contracts to the tune of 3-5%. There is also an internal target in improving utilisation and offshore,” Vaswani said.

At $3 billion worth of hedges on its books, Wipro is the most hedged IT company and hence is the least beneficiary of the recent fall in rupee against the dollar. Paranjpe said the recent fall in rupee has not changed the company’s hedging policy, which is to protect 50%-100% of net receivables over the next four quarters.

“Our hedging model is defensive and not speculative. We hedge to protect our business model and there is no change in our stand,” he said.

Wipro has also renewed its focus on India and the Middle East, which has grown at a compounded annual growth rate of 35% over the last five years.

Last year, the company won three mega deals in the region, a $600 million contract from Aircel, a $100 million deal from Saudi Airlines, and an undisclosed size order from the Future Group.

The geographies are housed under Wipro Infotech, which has now been re-organised. Its IT services and consultancy business have been made part of Wipro Global IT Services, leaving it with product business.
g_rabin@dnaindia.net