Wipro Q4 2010 – earnings, learnings & metrics
FACTS
- 27 new clients this quarter
- 121 clients for the fiscal year FY10
- Wipro signed up major deals in
- Insurance Space – Main Street America ( IT Services),
- Retail – Best Buy ( IT & offer lab for innovation services),
- Consumer product firms ( infrastructure deal)
- Pharma (IT support)
- Wipro launched two platforms in retail domain around – Loss Prevention & Customer Experience.
- Launched an IT Cloud Advisory & Assessment service
- Total of 16 clients with revenue > $50 million per year
- Total # of active customers – 845, Top 10 provide 19.7% of the revenue
- Strong growth in telecom, health, Energy & Utilities & BFSI
METRICS
- Revenues (IT Services) – $1.166 billion QoQ (+3.5%) YoY (+11.5%)
- Total Revenues for quarter – $1.55 billion ( IT Services 75% of total revenues, IT Products 14%, Consumer Lighting – 8%)
- Net Income – $269 million, YoY (+21%)
- Total Revenues for the year – $6.03 billion ( 6% YoY), $4.390 billion ( IT Services revenues – growth of 1.8% YoY)
- Total Net income for the year – $1.02 billion ( 18% YoY)
- IT Product revenue grew 11%
- Net addition for quarter of 5,325 employees
- Total employee strength (a/o March 31st, 2010) – 108,071
- Revenue Guidance for Quarter ending June – $1.190 to $1.215 billion
- Attrition Rate – 12.1% ( IT Services – Voluntary), 1.5% (IT Services – involuntary)
- BPO Attrition rate – 15%,
- Utilization Rate – 71.5%
- Revenue break up – North America – 57.9%, Europe – 26.2%, Japan- 1.6%, India & Middle East – 8.5%
- BFSI- 26.0%, Technology,Media & Telecom – 26.2%, Retail & Transportation -15.0%, Manufacturing – 15.2%, Hi-Tech – 5.1%, Energy & Utilities – 9.1%, Healthcare & Services – 8.5%
- Application Development & Maintenance – 39.3%, Infrastructure Services – 21.1%, Packaged Implemention – 13%, Testing Services – 11.8%, BPO – 10.6%, Product Engineering – 4.2%, Consulting – 2.3%
LEARNINGS
- Budgets to be up this year and budgets will be spend this year.
- Wipro is making a strategic decision to hire local and build delivery centers ( although significantly smaller in size) across US, Australia and other locations. 56% of sales team are local.
- Wipro is one of the largest outsourcing vendor with reducing dependence on Application Development & Maintenance as the core revenue engine. Wipro has been able to diversify more effectively in other areas of business compared to other outsourcing vendors including areas such as Eco-Energy, Defense, Product Engineering, Infrastructure management.
- Large organization starting talking about clouds as companies still looking to understand cloud solutions as vendors jostle to position themselves as cloud service providers. So everyone is learning on the job and positioning in anticipation of growth of cloud solutions. Emerging markets seem to be good test bed for some of the outsourcing firms as they offer services to mid size firms in developing markets.
- Fixed price has higher margins for firms than T&M contracts. The ratio of fixed price to T&M contracts though remains constant within outsourcing firms.
- Pricing will continue to be flat to marginal increase.
- Vendor consolidation, when markets were slow was a major exercise although it seems to have subsided now.
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