ET Now: Can you briefly share with us your business guidance?
Suresh Senapaty: With respect to the US we are seeing more and more flattish kind of a budget. There are elements of uncertainty which are holding back the customer base.
Also, sometimes things can get into a tailspin like the Euro situation and the US issue which was to be resolved in August but could not. That is the reason why we thought better to give a guidance within a bigger range rather than no guidance.
TK Kurien: There is a shift in customers' spending. The spending on the business side is coming down, there is stress on that part of the budget. To that extent what we expect to see is the budget pressure on the run. Discretionary is opening up. How much of discretionary will open up during the quarter is a judgement call that we have taken. So far as the deals that we have won are concerned, we are not absolutely sure whether they will start or not. But we expect to have visibility as we go through the quarter. That is one imponderable that we have built in. The second is when the ramp up of the deals that we won in quarter 3 would start. Those are the two things that we have built in into the guidance. So today leave the percentage aside, we guide based on absolute numbers and that is the range that we see in terms of guidance.
ET Now: Do you think the trajectory is headed higher?
TK Kurien: We are cautiously positive in terms of trajectory.
ET Now: Have you got any cancelations for the quarter gone by?
TK Kurien: No.
ET Now: Any word on the IT budget so far?
TK Kurien: It is a little early. We would have a better understanding as we get into next week.
ET Now: What is the initial feel?
TK Kurien: Flat in terms of budgets, but we see discretionary spend being a little more positive than we saw in the same time last year.
ET Now: Which means for you to grow you will have to gain market share?
TK Kurien: We will have to get market share.
ET Now: Have you gained market share of late?
TK Kurien: If you look at our hunting business, which is really our market share gain, we have got about 160 hunters right now. They are out there looking at what they can do in terms of gaining share in existing services as well as the new services. 50% of our deal wins in the last quarter have come from hunting. That is making progress. Am I thrilled with the progress? The answer is no. We have plenty of work to do and fundamentally to get this group productive, we think it is going to take a couple of more quarters. We started the group less than a year ago. So it is still work in progress. The biggest thing that we see is in terms of the newer areas that we have worked on where we are calling really outside the CIO's office which is on business and it is not necessarily consulting. It is in terms of what we call advanced technologies which is mobility, analytics, those kind of areas and there we are seeing growth. On the other hand, in our R&D business, we are again going through a fairly big shift in terms of portfolio.
ET Now: Pratik, for the quarter gone by, what is the good news and what is the bad news?
Pratik Kumar: It has been very positive from our point of view.
ET Now: Why do you say that
Pratik Kumar: We continue to invest in bringing in just the right kind of talent. We need to complement our existing talent pool. Our due focus on employee engagement is also reflected in the kind of attrition numbers which have come down steadily through the quarters, specifically this quarter. We continue to invest in capability building and we continue to drive organisational simplicity as we grow into multiple geographies. We have a reason to believe that we will be able to maintain the current trend going forward.
ET Now: Minus attrition, how many new employees you have added this year?
Pratik Kumar: Net headcount add would be around 2300 people.
ET Now: It is not a big number compared to the industry average.
Pratik Kumar: The strength of the organisation is to be able to read it right. You do not have to swing widely on your net adds number or in terms of your total adds number. It is keeping in view in terms of where our utilisation levels are, our campus hiring efforts which are going on. At the same time our effort to be able to just pick the right kind of talent and bring in. We think we are in a healthy position right now and we would continue to look out for right kind of talent, as I mentioned. We will keep bringing in and we will keep deploying where we think we need to strengthen ourselves.
Suresh Senapaty: I do not think from a net or gross add point of view we were worse off in relation to the competition with our peers, but from the volume growth point, yes.
TK Kurien: The big thing that has happened today if you look at the market we see significant technology coming in to replace the number of people that we used to deploy and we are seeing that as secular trend.
ET Now: Moving of the value chain?
TK Kurien: It is not moving up the value chain if the same set of services that you are delivering in the past is now linked to business outcomes being delivered by lesser number of people. We have really driven productivity very hard in the last quarter and we continue to do that in the quarters to come. If you look at our last quarter, if you look at our realization, there has been a significant uptick in realisation. On a gross basis realisation has contributed to almost 1.5%.
ET Now: It is efficiency.
TK Kurien: That is efficiency and that play would continue. Now the thing is that the play at one point of time can continue, but we have to move our time materials, engagement models back into more outcome base models. It is a shift that you are seeing and the kind of business that we are selling that is driving this kind of productivity.
ET Now: You are using the tailwind to make fresh investments that is the bottom line.
TK Kurien: If you look at the industry and you take a look at a couple of companies in the industry, the few companies that have kind of broken out an improved margin between quarter three of last year and quarter three of this year, one of them is Wipro because overall as an industry if you look at it, there has been a decline in profitability and you can see that. It is not rocket science.
ET Now: Give it a low base also.
TK Kurien: Not necessarily. We were at the mid point of the base, and we remain at the mid point of the base. That is where we are. But, if you look at the spends that we have been making, the kind of change the way we go to market are sales and marketing spends have gone up significantly, that is one positive. We have also driven significant level of productivity. Fundamentally what we are doing is cutting where we believe should be cut which is on the execution layer in terms of just the way we work and move in that investment back into the front end because if we do not do that long term our view is that in this space we lose the market share again. So that is the game that we are playing. Plus if you look at our operational efficiency in terms of cash low, if you look at them deploying that we have had in terms of number of days or sales outstanding, it has been pretty dramatic. In fact, in the last quarter, we have reduced close to about 4 days in terms of daily sales outstanding.
ET Now: Which will add up to your margins and cash flow?
TK Kurien: That will add up to our cash flow, not necessarily the margins. So fundamentally our view is to go after the quality of business, deeper relationships and go after relationships that are going to sustain over the long run where we are really strategic to the customer, that is the whole approach.
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