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spk00: We believe in a future that belongs to everyone, a future built on the promise of technology and the progress of all where we can accelerate digital transformation while transforming the ways we create meaningful impact. At Wipro, we're helping organizations around the world harness the power of emerging technology to transform their companies and local communities into engines of growth and opportunity With more than 190,000 employees across 63 countries, we're advancing innovation, changing the way businesses are run, and empowering leaders to stay competitive. We're reimagining the role of sustainability, making it more than just a daily business practice, but a part of a company's enduring purpose. At Wipro, we're committed to creating a more resilient world for business and for all. Because in a future that belongs to everyone, the future must work for everyone. Wipro.
spk08: If you want to ask any question, please choose the raise hand option in the toolbar. Please pin the participant name preview on your devices to view the conference. I will now hand over the floor to Mr. Vipin Nair and request him to take it further.
spk04: Hello, everybody. We'll now begin the press conference with opening remarks by our CEO, Thierry. Over to you, Thierry.
spk01: Vipin, thank you. Hello, everyone. Thank you for joining us. Thank you. Those of you joining in from India, many of you may be coming out of a very difficult period during the second wave of the pandemic. So I wish you well and will, with all humility and hope, believe the future holds better days for everyone around the world. This is not an experience that we can write off lightly. Many of our colleagues and their loved ones have experienced grief, stress, suffering, Over the past 15 months, Wipro has stepped up in every way possible to support those affected. Our COVID task force led by Saurabh and our CEO, Sanjeev, have done everything possible for our colleagues. We ramped up efforts around oxygen provisioning, COVID testing. We established isolation centers in many Indian cities. We partnered with hospitals. and managed hospital admissions. For many of our employees who are stationed on site with family members in India, Wipro's task force has managed the hospitalization and care of their family. Globally, we are continuing, obviously, to offer COVID care, sick leaves, and enhanced medical insurance coverage. But unfortunately, we lost some of our colleagues to the virus during the second wave. In some cases, where a spouse of such an employee has sought jobs with us, we've treated it as a priority and offered them a relevant role in Wipro. And we recognize the emotional toll on people. So mental health resources are being made available for our colleagues around the world. Presently, about 55% of our employees in India are vaccinated, and we will continue to provide vaccination facility in our campuses. But more broadly, for our community, we continue to operate a dedicated COVID hospital in our Pune campus, which has treated almost 6000 patients so far, providing some relief to the city. The small things that we were able to do has gone a long way to bring relief. For leading us through this extraordinary time. I thank my leadership team for steering our people and our business and every one of our employees for being such strong custodians of the spirit of Wipro and for giving us their best. This has definitely made Wipro a stronger, a more resilient, a more dependable company than ever before. And this reflects in our results in the last few quarters and also in what I hear from customers. They say they are seeing a more innovative mindset and operational agility from Will Pro's team. Clearly, our new business strategy, the simplified operating model and bold approach is starting to pay off. Our Q1 performance, therefore, continues to show considerable expansion and buoyancy. Our revenue growth trajectory has continued to show sharp improvement. Bookings have remained healthy, and our execution showed remarkable perseverance. Let me share some specifics now. One on revenue growth. Our revenue growth during the quarter was 12.2% in reported terms and 12% on constant currency terms, which is well ahead of the top end of our guidance range, both on an overall basis and excluding Capco. This translates into a 21.3 year on year growth in constant currency terms. Not only is this the best ever quarterly results, Q1 also saw us report the highest organic sequential growth that we have delivered in 38 quarters. This tremendous growth was led by strong volumes across almost all markets, sectors and service offerings. Our billable account addition during the quarter, therefore, was the strongest ever. Revenues from our latest acquisition, Capco, was also ahead of the guidance. Second, the demand environment is robust and the quality of our overall pipeline is better than before. Our gross funnel addition during the quarter was strong and we continue to increase our participation in deals in the marketplace. We closed eight large deals resulting in a TCV of over 750 million USD. Surely, all markets are witnessing solid demand, but in the Americas One market, large deal wins were exceptionally strong. At this point, we are seeing a good mix of large, medium-sized, and smaller deals. At the announcement of acquisition of Capco, we had shared with you that the long-term sustainable operating margin band, post the dilution of Capco, was to be between 17 and 17.5%. During the quarter, we have delivered margins well above that range at 18.8% after consolidating two months of Capco results and significantly investing in talent and supply chain. We have, in particular, added 12,000 plus employees on an eight basis, which is 80 of what we added in all of last financial year and the highest in the last decade now let me add some color to the underlying business performance all numbers are in constant currency for ease of reference there is significant traction across all our markets and our growth is broad-based The top three markets grew double digits on a year-on-year basis, even without Capco. In America's one, we grew 18% year-on-year. Most of the sectors I've seen are strong traction, with health and consumer verticals leading from the front. In America's two, We grew 24% year-on-year, driven by a strong volume increase. Capco has further elevated this performance. The demand in the BFSI sector has remained strong across all service offerings this quarter. The high-tech business grew by 26.2% year-on-year, while our manufacturing business is making a recovery slowly. Our European business has delivered a year-on-year growth of 32.5% on the back of several large deal wins, as well as, of course, Capco acquisition. UK, Southern Europe, Germany led this growth. Our apnea market grew moderately at 0.8% year-on-year, and we are now seeing improved environment in ANZ and Southeast Asia. The pipeline in these markets are healthy and growing. Now, from a service offering standpoint, our ID's global business line grew by 18.3%, quarter over quarter, and 25.3% year on year. Most of the sub practices showed a healthy growth. We are seeing increased demand in new age offerings like cloud transformation, the shift to cloud is unmistakable. We announced a number of cloud-related wins in different industries and geographies in the last few months. And to further our growth and commitment to clients and hyperscale of partners, we will be making a significant announcement about our cloud business in the coming weeks, which I encourage you to look out for. Our core global business line grew by 3.7% sequentially and 15.9% year on year. Both of our large scale practices, infrastructure services and digital operations platform grew in double digits on the year on year basis. Seven, our top 10 customers grew 13.4% quarter on quarter. and 17.9% year-on-year in constant currency terms. We added two customers to the over 100 million account category and two new customers in the over 50 million account category. Now, let me give you a sense of the kind of deals we are winning. First, we secured a multi-year, multi-million dollar contract this quarter from a US-based healthcare company to consolidate their entire on-premise and cloud infrastructure operations, as well as end-user services using intelligent automation. The consolidation will create attractive opportunities to streamline operations, enhance user experience, and ease the application portfolio migration to cloud by using a digital-first approach. Second, a leading European automotive manufacturer has awarded us a contract to transform and modernize their internet and cloud security access so they can meet the requirements of remote working. Our solution will provide protection from advanced cyber threats and end security compliance, protect corporate data leaks, reduce cost, provide scalability. Another example, a leading US-based distributor of plumbing supplies has selected Wipro to support their cloud transformation journey by embedding quality engineering in the development lifecycle, encompassing CRM implementation, data migration, and legacy applications. Additionally, Wipro will provide managed services for Cloud ERP, covering multiple business functions and resulting in improved business agility and customer experience across more than 1,400 store locations. As most of you will know, we completed our acquisition of Capco at the end of April 2021. Over the last two months, we have made sure that they are gradually inducted into Wipro and start to feel at home. While these are early days, we continue to build good momentum on our joint go-to-market efforts. And not surprisingly, the synergy pipeline is shaping well, and we have started seeing some early wins. For example, we had a joint consulting win with a leading global payments provider where we will create a migration framework for 950 regional banks and merchants to move to a new digital platform for debit cards. And we will continue to announce more such wins. Now, finally, onto our outlook for the next quarter. We have guided for revenue growth 5% to 7%. even at the lower end of this guidance, we will cross the 10 billion annual run rate of revenues, which we are very excited about. While we don't guide for full year, the Q1 performance and the Q2 guidance sets us up for a well ahead of double digit growth for the full year, even excluding Capco. Now, while sharing with you our new strategy last year, I had said that talent will be a critical success factor. This pandemic has overturned several notions of how organizations traditionally approached talent engagement and development. The dramatic shift to a remote working environment has made labor across all sectors and markets more mobile and liberated. Therefore, Higher attrition has become a universal issue. Wipro analyzes this and is adapting quickly. We have doubled down on increasing intake from campuses across the world, as well as reskilling our existing workforce. We will onboard 33% more freshers in FY22 versus the previous year. We also intend to onboard 6,000 plus freshers in Q2. Growth is our priority, and we will ensure that talent supply is not a constraint to our ambition. In the short term, we will experience some inflationary pressure in people cost. We have announced a salary hike for 80% of our employees effective September 1st, the second hike in this calendar year. To summarize, we are pleased with the sharp improvement in our growth trajectory, and are optimistic about building on that momentum in the remaining quarters of the financial year. On that note, let me hand over to Jatin for his comments on the financials. Jatin, over to you.
spk03: Thank you, Thierry. Thank you all for joining us. As you know, our revenue growth year on year is 25.7%. Our operating margin for the quarter is 18.8%, which is 30 basis point lower than last year Q1. We got certain closures of audits in tax and therefore certain benefits there. Therefore, ETR for this quarter is 16.1%. That has led us to a night profit growth of 35% and an EPS growth of 41%. Our DSO was seven days better at 68 days in this quarter. That has helped us achieve 104% operating cash flow as percentage of net income and 90% of free cash flow as percentage of net income. Our gross cash was 4.1 billion at the end of Q1 and our net cash was 2.6 billion at the end of Q1. Our forex realized rate was 74.75, and we had 3.4 billion worth of forex hedges at the end of Q1. As Thierry mentioned, we have guided for 5% to 7% sequential growth in quarter 2 at the exchange rates which are mentioned in the price list. Thank you very much again for joining us, and we'll be very happy to take your questions from here.
spk08: Thank you. We will now begin the Q&A session. Participants are requested to switch on your video and unmute yourself at your turn. In the interest of time, request participants to ask a maximum of two questions. I request Mukta to identify yourself and go ahead with your question. You can switch on your video and unmute yourself to proceed.
spk09: Hello, gentlemen. If you can hear me well, Congratulations on a very strong quarter, your best quarter yet. Theory, I want to ask you, I mean, this is much higher than the guidance that you had given us just three months ago, and that also includes the organic growth of what you have said really what changed in the last three months and maybe Jatin can also help identify what was the organic growth and what came from Capco and Jatin if you can also just highlight even in your guidance for the next quarter what is the organic growth that you're factoring in You said that the acquisition has been delayed. Any challenges there? And you said it will close next quarter. But if you can highlight something on that. And one important question lastly to Theori and Saurabh on attrition. That has really climbed up a lot quarter on quarter. I remember Theori, last year you said that you would be the leader when it comes to the talent court. But the attrition has really inched up. What are the steps you'll be taking now, and what are the margin pressures going ahead, given the high end that goes up?
spk01: Thanks for those questions. I don't know if it qualifies to only two questions, but I'll respond to all of them, and Jatin, you'll help me, and Saurabh as well, as always. On the first one, on the growth, This is true, Mugda. I think the reality is that we are in an acceleration mode and we've been able to really accelerate. We have ramped up our supply chain engine. We have really improved our talent acquisition machine, if you like, and I think it's certainly helped. I think also we've had some very strong performance in bookings now for three quarters. And so there's a trend of acceleration. The fact that we are ahead of the guidance or above the guidance is obviously a good news. But I think it's... You know, it's a reflection of the fact that we've had, it's not been like, you know, one big off, but we've had a steady acceleration of the growth across the organization months after months. So that's my first answer on growth. On Ampion, you know, I let Jatin respond on the specifics, but I don't think any concern. It's just administrations, administrative steps taking a little longer sometimes. Jatin, you want to comment a bit?
spk03: Absolutely, Thierry, that is right. We think it is purely administrative, and we are confident that we will close it quite soon. But this is regulatory approval, so beyond the point, not able to comment. But there is no problem whatsoever that we see in terms of closing it in quarter.
spk01: Absolutely. On the point number three around attrition, I think it's a reality and that's what I've tried to say in my speech as well. I think there's a rare reality that goes across the IT sector is true for all companies and is also true for the entire labor market. I know for a fact for talking to clients that they are all seeing an increase in attrition and my feeling is there's a little bit of a consequence of this. new way of working where people are feeling a little more opportunity and freedom and more fluidity in the labor market. Having said that, I think we are responding well to it. I think the quality of the spirit, I would say, inside Wipro, the mood of the people is good, is strong. We've responded also with a second salary adjustment cycle in September. And I think we are also increasing the level of connection and making sure that people are feeling part of the journey. But I think the level of enthusiasm inside the organization is good and certainly helping us maintaining the attrition to acceptable level. to a point where we are not seeing it impacting our revenue growth, frankly. So, Rab, if you want to add anything on that?
spk05: Thanks, Thierry. So, Mukta, Thierry is right. First of all, growth is key, and we will ensure that people's supply chain does not impact growth. Attrition, as I called out last quarter itself, that we will see an uptick in attrition, which is very much in line with the demand environment in the industry. So that's there, but number of steps we have taken, and I just want to highlight those steps for everybody to understand that what steps we have taken. One is financially, we have taken steps of, we did for 80% of our workforce, we did early this year, we did a salary increase, we're doing another one in September. For our middle and senior people, we did a salary increase in June. our A-table organization will go through three promotion cycles in 12 months, in December of 2020, in June of 2021, and again in December 2021. And we had called out last quarter that we're doing skill-based bonuses. So if you see financially, we are doing a lot of work which is there. Apart from that, to augment the supply chain, we are doing unprecedented hiring in terms of threshold into the organization. As Theri called out, We'll be onboarding more than 6,000 freshers in Q2, which is the highest ever Wipro has done. And we will be rolling out more than 30,000 offers next year, in this year later for freshers to join us next year. So we are making sure that we have a huge pipeline building up to manage the entire people supply chain. And we will see attrition at a heightened level, longer drop off in the next quarter, but we are very confident of managing this change environment without impacting our business.
spk01: Thanks. Last point was on the margins. So I'll start and Jatin, you go ahead. Mugda, we maintain our position on margins. We've said the same thing now for three or four quarters, I believe. So we maintain our, on one end, we know that, you know, the salary and attrition is putting pressure on the margins, but on the other side, we are simplifying the model and working on, you know, pyramid as much as we work on automation to maintain margins. Jatin?
spk03: Yeah, absolutely, Theri. I will quickly break it down for this quarter. As you can see, the margins are 18.8. So, roughly compared to Q4 of 21, you are seeing about 2.2% reduction. Of that, the Capco integration is about 1.3%. And remaining 0.9 is a combination of three factors. We had some one-time gain on sale of Ensono and one of our other investments. We have invested significantly in talent. As Thierry and Saurav spoke about, that is becoming a competitive differentiation in today's time, and we have remained ahead of the curve in terms of that investment. And third is we had certain forex gain flowing through in the P&L line. So if I combine all three, that is the remaining 90 basis points. But overall, we remain in line with what we have spoken about before. We came a little ahead in quarter one and will continue to manage it as we go forward in quarter two.
spk08: Thank you. I request Poonam to introduce yourself and proceed with the question. Poonam, you can unmute yourself and proceed, please.
spk05: Can we go to the next person here when we come back to Poonam later? Sure.
spk08: I request Sajid to unmute yourself and proceed with the question.
spk02: Good evening, gentlemen. My question is with respect to the guidance. You gave a very optimistic guidance for the second quarter. I remember when we spoke last quarter, you spoke about the fact that for the full year, you're looking at a guidance of 11 to 13 percent, including Capco and Amphion. Are you still optimistic on that? And now that the Capco integration has been more or less completed and you've been able to get good synergies in, in terms of margins and all, are you looking to up the guidance for the full year as well? And can you give an idea of 11 to 13 is the base level or are you going to go up from there? And on the margins front, if you can give an idea of are we, you know, At the end of Q4, it was around 20 odd percent, and it's fallen to 18.8. Is there enough room to go back to 20 percent band?
spk01: Okay. So, Sajid, first of all, let me clarify. We didn't guide on a full year growth. We guided for Q1. But nevertheless, today what we are saying is that We still don't guide for the full year, but given the performance of Q1 and given the Q2 guidance, it's clear that we are gearing up for a growth that will be well ahead of double digit growth for the full year, even excluding Capco. On the margin side, I would say we are We have communicated repeatedly about, you know, the fact that we had to. We were shooting for a margin around 19, 19.5 percent, and then we had two points of dilution from Capco. We are still on this line of 17, 17.5, considering we continue to invest. We are investing and therefore that's where we see the evolution of our margins going forward.
spk08: I request Swati to unmute your line and proceed with the question. Please introduce yourself. Swati, please unmute your line and proceed with the question.
spk05: Nope. May I move to the next one?
spk08: Poonam, if you can unmute your line and proceed with the question, please.
spk07: Hello, can you hear me?
spk01: Yes, we can, Poonam.
spk07: Yeah, sorry, my unmute button just got activated. Sorry. So I just have like two questions. One was on the pressure hiring increase of 33% which security had mentioned. So am I correct in understanding that your pressure hiring would be upwards of 12,000? You had mentioned you'll be hiring around 9,000 this year for FI22.
spk05: So Swati, to answer that question, we will be hiring more than 12,000, onboarding more than 12,000 freshers in FY22.
spk07: And 30,000 for FY23?
spk05: 30,000 offers will be made. We are looking at more than 22,000 plus freshers in FY23.
spk07: And one more question is on the return to work. With vaccination gaining phase, Do you have any plans when you want to get employees back to work? Because your POS TCS has said from September and Infosys have shared they are planning to get employees back to work in the next six to nine months.
spk05: So we are going to start in a small way, but for sure, depending on the environment and the pandemic and the third wave, our plan is to look at September where we start getting people gradually back to work. But this will be dependent country by country. They're in different stages of the pandemic. So, you know, it will differ from country to country and every country will take a decision. It's not one size that fits all.
spk07: And one last question to Thierry about the Capco. Is it possible for you to share the growth numbers excluding Capco for Wipro in the quarter?
spk03: Thierry, should I go ahead and take that?
spk01: Yeah, yeah, you can.
spk03: Yeah, go ahead. Yeah. So, you know, since, as you know, we considered Capco acquisition from 29th of April. That was the date of acquisition. And for our guidance next quarter, we are not breaking it down. For quarter one, we can share that of the growth that we have shared as reported growth of 12.2% sequential, of 4.9 percent came from organic and the rest came from capco but since this is the first quarter we are sharing this our guidance remains a consolidated guidance of five to seven percent for quarter two because now it's part of the business association thank you and sorrow if you can just split the numbers of pressures we had onboarded in q1 of the 12 000 how many were our pressures and how many laterals
spk05: 2000 approximately less slightly shade less than 2000 sessions were on board in Q1.
spk08: Thank you, thank you all. Thank you. Poonam, can you try unmuting yourself and proceed with the question now?
spk01: Not lucky.
spk04: Let's move to the next person. I don't think she's there.
spk08: I request Bisma to unmute yourself, introduce yourself and proceed your question.
spk06: Yeah, good evening, gentlemen. I'm Bisma Malik from New Indian Express. So I know the impact of Capco acquisition on margins has already been talked about, but I just wanted to understand that, you know, in addition to the announcement which was made by Vibro regarding debt financing, were there some other revenue ways also, some other ways also of capital raise for this particular deal? And my second question is related to the India business. The second wave of COVID had impacted India market very hard. So how did it impact the India market for Wibro? And in case the third wave hits the country, what is the projection like? What is the probable effect on the regional markets like India? And if you can give us also some indicative numbers on lateral hires. You know, in the coming quarters, what is the number for laterals, you know, for recruiting laterals you're looking at? So, these three questions.
spk01: Okay. So, Jatin, you take question one. I'll take question two. Sorry, I'm going to take question three. Okay.
spk03: Thanks, Eric. So, you know, I will create question one. We had a very successful bond offering, our debut bond offering of 750 million US dollars that we did in month of June. And that was the principal external borrowings that we did for the Capco acquisition. And we haven't done anything else in terms of debt trades. We have funded the rest of the acquisitions through internal accruals. There was also another question before which asked the question that, you know, about 11% to 13%, there was a confusion and theory clarified on that, that that was merely reflection of our original guidance for quarter one. I do want to share a corresponding number for quarter two, the 5% to 7% growth that we have guided for. That range, if I take it on a first half basis, that will give us a growth of between 26% and 28% for the first half of this fiscal. So just the way we are guided for 5% to 7%, I'm giving a cumulative view for first half, the range of our growth of our guidance range. Over to you. Thank you.
spk01: Okay. So on the India business, impact of the COVID. I would say the performance of the first quarter has been decent in India with a very modest growth. In fact, actually in line with our own prediction and we didn't know that we would have the what we went through in May and in April, May, June. So I would say it's been mitigated partially, but certainly might have slightly impacted the growth in India in Q1. Our projection for Q2 is actually positive. We are accelerating the growth. And you know, there's a good level of confidence from our leader KU in India. Saurabh on point three.
spk05: Yeah, thanks Thierry. For Q1, Laterally, we hired about more than 10,000 people. So that's there. And for the quarters ahead, it's very demand-led. So as you said, we are infusing a lot of freshers, and balance would be laterals based on demand across the globe. We would not like to give a number right now, but in the quarter, we'll share with you how it's going. Again, I repeat, supply side will not be a constraint in meeting our demand requirements.
spk04: Okay. Is there anybody else who would like to ask a question? I can see that Poonam is there. Poonam, would you like to go now?
spk01: You are on mute, Poonam. The most awaited person in school.
spk05: Still on mute.
spk04: All right. I don't think we have any more questions, so if there are none, Thank you so much. We'll close up this conference now. Take care.
spk01: Thank you, everyone. Have a great day.
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