Wipro seeks to triple revenue expansion to 12-14 percent in FY17
Wipro Ltd's chief executive officer (CEO) Abidali Neemuchwala has set an ambitious revenue growth target of 12-14% for fiscal 2017, according to two executives familiar with the matter. That is more than three times the growth at India's third largest software services exporter in the current year.
Wipro, which will grow at 4.2% at best in the current year ending 31 March, will have 5% incremental growth in the next fiscal, thanks to the $371 million in revenue it got from the four buyouts it made over the last 12 months. Wipro expects its analytics unit, which accounted for $503 million of its $7.08 billion in revenue last year, to grow at 10% in the coming year even as it looks to generate more business from its 1,105 clients, the two executives said on condition of anonymity as they are not authorized to speak to the media.
A Wipro spokesman declined comment. Although the internal growth target of up to 14% is not the company's official guidance (the Bengaluru-based company only gives a quarterly growth outlook), this ambitious plan is significant for three reasons. Firstly, if Wipro manages to even grow at the lower end of the range (12%), this will mark the company's highest annual growth in eight years. The information technology (IT) business, along with its now-separated consumer care and lighting business, recorded a 29% revenue growth in 2008-09. Secondly, if the company lives up to Neemuchwala's hopes, Wipro's revenue growth will beat Nasscom's projections of 10-12% growth for the overall industry in 2016-17. Finally, this will suggest that Wipro under Neemuchwala, who took over as boss in February, starts on a respectable note to achieve its longterm goal of becoming a $15 billion firm in the next four years by 2020.
"Our first key focus area is on customer centricity," Neemuchwala wrote in an internal memo dated 11 February, asking employees to focus on "proactive and consultative demand creation measured through early renewals and order booking without RFP (request for proposals)."
The strategy is an old approach with a twist, some said. "It's the old penetrate and radiate strategy with a consultative twist," said Bill Huber, managing director at US-based outsourcing advisory firm Alsbridge. "Once working with a client, the com- pany uses inside insight to identify other business problems where it can help the client, and provide a unilateral proposal to provide those services."
"(This can be also done if we) mine accounts, (which will be) measured through number of customer movement across revenue bands," wrote Neemuchwala, as Wipro assigned aggressive growth targets for its senior executives to generate more business from existing accounts.
Wipro's aggressive growth target comes less than a month after senior executives at cross-city rival Infosys Ltd were told by its boss, Vishal Sikka, to aim for a 16% growth in the coming year. The renewed optimism comes amid global economic uncertainty and is bound to cheer investors, analysts said. "Even if Wipro manages to grow at 10%, it will be a huge morale booster for employees and should cheer shareholders," said a Mumbai-based head of research at a domestic brokerage. "Can Wipro grow at this pace? Difficult. But, if the management has set this target, then they perhaps know something which makes them set such ambitious goals. If they do it, then for sure it's the best start for Wipro under a new CEO." Since Neemuchwala joined Wipro as chief operating officer in April last year, the former Tata Consultancy Services Ltd executive has undertaken many steps to revive growth.
He made each of Wipro's six business unit heads responsible for the delivery of software, in addition to managing sales, a move aimed at cross-selling services and arresting any fall in profitability as clients seek lower prices from software services firms.