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Wipro has learnt to be cautious. Its services exports rose 37%, mostly courtesy Wipro Technologies, and margins improved. This is well above the industry average of 17% and would normally have put the company in celebration mode. But vice chairman Vivek Paul, bitten over very many quarters, is now shy. At the analysts' conference at the end of the fiscal, the best he would say was that price points had stabilized and margins had improved a bit, and that the upswing was “too small a percentage to get overjoyed about.”
Perhaps Paul could ease up a little bit. The topline growth was accompanied by a decent bottomline growth even as the company embarked on one of its largest hiring sprees ever. More importantly, it saw some of its key verticals pick up momentum-especially Telecom OEMs. Manufacturing grew fastest at 110% while BFSI revenues continued to grow at stable rates.
Vertical driven spending-or what Wipro calls its enterprise solutions business-grew therefore to form nearly 60% of Wipro Technologies' entire business. That was the good news. The bad news was that its high-end R&D services business, which had been forecast to grow faster than the enterprise business, continued to see its third straight year of low growth, falling from 50% just before the downturn to 31% this fiscal (was 24% in fiscal 2002-03).
Azim Premji
Chairman, Wipro Ltd
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Vivek Paul
Vice-chairman Wipro, & CEO, Wipro Technologies |
Suresh Vaswani
President, Wipro Infotech |
Raman Roy
Chairman, Wipro Spectramind |
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At Wipro Infotech, the company's domestic, MEA and APAC arm, the story was mixed though. Overall, the domestic business continued to fall as a part of total revenues-down from 39% in fiscal 2000-01 to 24% in fiscal 2003-04. Even within these, the composition of revenues has changed. Systems sales grew just 1% and now constitute 46% of the domestic business compared to 58% just four years ago. Meanwhile domestic services-largely facilities management and annual maintenance kind of services-have grown steadily.
After a 50% jump last fiscal, they now constitute 26% of total domestic revenues, up from just 11% four years ago. Systems sales were hit by a 20% decline in the mainstay Sun server business and a decline in Wipro brand sales (SuperGenius and notebook-brand LittleGenius, et al), which also fell 10% in value terms (up 4% in unit terms, though, indicating eroding margins). All told, the division's products-services mix was 65:35 in 2004, as opposed to 72:28 last year.
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