Account mining and hunting strategy paying off: TK Kurien, CEO Wipro's IT business
Certain areas of business like R&D and telecom continue to be stressful for us, but we are shifting up, says Kurien.
Despite the December quarter being seasonally soft, all top IT companies have reported robust growth. Is it too early to conclude that demand is returning?
If I was sitting here last year, I would say that on a scale of 1-10 my level of confidence would be roughly 5, this year it is 7. So, it is a little positive. All of us recognise that the third quarter is going to be a weak quarter. So, we all did everything possible under the sun to make sure it didn't look like that. We really anticipated it to be a bad quarter, though it wasn't as bad. But there was a sudden bump-up that came along.
India environment has certainly improved significantly, but that is not getting translated into dollars for us. But our account mining and hunting strategy is paying off. A portfolio shift that we have anticipated is happening. So, from nine months of last year to the nine months of this year, we have let go $52 million worth revenues in the non-strategic areas. The number of tail accounts (smallest of accounts by size) has come down to 20 accounts from 80 last year.
However, certain areas of business like R&D and telecom continue to be stressful for us, but we are shifting up. In the telecom equipment market, for example, we have shifted focus from R&D to traditional enterprises. At one point of time, telecom clients used to fetch us 30% of the business and even the deal win was in the enterprise business and not the R&D part.
Where are you seeing demand coming from?
We are giving push in the areas of advance technologies, which include cloud, analytics, mobility and social networking. We are heavily investing in that space. We believe that CIO's budget will come down significantly. Some of our CIOs have made the transition from just doing back-office work to really go out to the front and middle office operations.
For this, they would need the kind of services that we are offering. Our offering would be built around specific software product and solutions. Clients in the past bought technology as component. Today, they are buying business solutions with embedded technology.
In the renewal space, are you seeing deal activity picking up?
There is a fierce competition in the market. And this is between two sets of players; rational and irrational. The irrational players will try hard to get more share but over a period of time the market will clean up.
There is a fundamental change happening around. What we saw in the productivity gain in manufacturing all these years, will find its way in the technology services space. There would be far more technology coming in and that is a secular trend. It (this trend) will not change. The discretionary budget, which adds to volume, would change, depending on customers and type of business they are in.
Another concern is insourcing by large corporations like GM. Should that be a matter of worry?
In the outsourcing space, there is a shift happening in terms of value and it will continue. Insourcing is not a worry, because everyone will not do it.