Suresh Senapaty , Executive Director and Chief Financial Officer, Wipro, spoke to V. Sridhar soon after the company announced its results on Wednesday. Excerpts:
How have you fared in terms of operating margins?
There was only a ten basis point reduction in margins in the last quarter. This is much better than how our competitors have fared. While we have done well in terms of price realisations — both onsite as well as offshore — we have also improved our people pyramid cost.
Are you also referring to the proportion of freshers in your workforce?
Our margins have expanded by 60 basis points because of the higher proportion of freshers. The compensation hike we have to do is one source of pressure. But we have also invested more on our data centre programme, in our India business and, investments in domain experts have had an impact on margins. But we are seeing a stable pricing environment. But these investments are bearing fruit, in terms of the strength of the pipeline we see.
Can you tell us something about the pipeline you see now?
The pipeline we see now is stronger than what we saw a quarter ago. It is mainly in the area of IT infrastructure services, business application services and business analytics.
What is your strategy to cope with currency volatility?
Our hedge book is about $2 million. It has between $1.6 million and $2 billion during the last 6-8 quarters. Our strategy is to protect revenues for the next two quarters.
Is the Standard and Poor's revision of India's sovereign credit rating justified?
I think it was coming, based on what is being seen as visible actions of the government in controlling the fiscal deficit. But nobody could visulaise it coming so soon. Fortunately, S&P has not downgraded, but has only effected a change in the outlook. That is a signal for the country to take corrective action, in order to avoid a rating change, which happened in the case of the U.S. If that happens, it could choke investments into the country.
Your comments on the decline in the Wipro stock price by more than 7 per cent on Wednesday.
We have no control over the stock market. All I can say is that the medium-to-long-term story of the value proposition of the Indian IT sector remains intact. Of course, the type of demand is changing, but companies need to re-engineer themselves to be trusted advisers to their clients.
