Wipro Limited

Good day and welcome to the Q4 FY22 earnings call of Wipro Limited. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Aparna Iyer, Vice President and Corporate Treasurer. Thank you, and over to you, ma'am.

Thank you, Margaret. Warm welcome to our Q422 earnings call. We will begin the call with business highlights and overview by Thierry Delaporte, our Chief Executive Officer and Managing Director, followed by a brief overview on our latest acquisition, Rising by Rajan Kohli, Managing Partner Ideas Business Line, and then a financial overview by our CFO, Jatin Dalat. We also have with us as a part of the management, Stephanie Trotman, our Chief Growth Officer, and Saurabh Govil, our Chief Human Resources Officer. After the initial comments from the management, the operator will open the bridge for Q&A. Before theory starts, let me draw your attention to the fact that during the call, we may make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act 1995. These statements are based on management's current expectations and are associated with uncertainties and risks, which may cause the actual results to differ materially from those expected. The uncertainties and risk factors are explained in our detailed filings with ACC. WIPRO does not undertake any obligation to update the forward-looking statements to reflect the events and circumstances after the date of filing. The conference calls will be archived and the transcript will be made available on our website. Over to you, Thierry.

Thank you, Aparna. And good evening, everyone. Thank you all for joining us today. To those of you joining us from the U.S., good afternoon. Fridays are often known to bring good news, so today is no different, at least for us. In my opening remarks, some of the year that has gone by I'll elaborate on the demand environment, provide details on sectors, markets, service offerings, and share a business outlook for the quarter ahead. Let's start by acknowledging that we've had an outstanding year. We delivered revenues of $10.4 billion at an industry-leading growth of 27% plus in constant currency terms. Crossing $10 billion of revenue is a significant landmark for us, and we are now aiming higher. Revenue growth has been our fastest ever in absolute terms. We've added one-fourth of our revenue just this year. Our order bookings in annual contract value terms grew 30% year-on-year, and we are finishing off the year with the highest ever pipelines. Through the year, we've made significant investments, both organic and inorganic, in strengthening our solutions, our go-to-market, the leadership team, as well as the broader talent pool. We have added over 45,000 new employees on a net basis, which is also the highest ever. We also continue to invest in our internal transformation, We know this will bring agility into our processes and help us serve our customers better. Operationally, we delivered 17.7% operating margins, which is ahead of our stated range. Finally, our net income in absolute terms is the highest ever, which grew by over 13% year-on-year, and EPS expanded by 17% year-on-year. No doubt, it has taken a tremendous amount of discipline and determination to remain resolute in our pursuit of growth and execution excellence. I'm proud of what we've been able to achieve. Now, on to our Q4 performance and the demand environment. Our revenue growth during the quarter was at 3.1% in constant currency terms and 28.5% year-on-year. Look at it, we've been consistently growing at or over 3% for six quarters now. Our growth continues to be broad-based across all our key markets, service offerings, and in most of our sectors. During the quarter, we had a net addition of over 11,000 colleagues, which sets us up well for future growth. Business environment itself is fantastic. still very good. The demand for IT services is strong, propelling our business forward. This is reflected in the state of our pipeline, our order bookings, and our overall growth rates. In fact, look at the order book. This quarter has grown 38% year-on-year in terms of annual contract value. We continue to close large transformation deals and see Rapid expansion in small and mid-sized deals as well. This represents growth in our existing accounts as well as the expansion of our market portfolios. Equally notable is the pivot to high growth services as we help our clients transform and digitize their businesses. We've had significant wins that put design at the center of the experience. and combines our I-Core and ID's capabilities to reimagine IT, to reimagine back office and customer experiences. There's continued focus on our hyperscale partners. This will not only help us win more in the market together, but it's also providing the alignment and investments we need to scale talent, assets, and industry solutions for the future. For example, our industry alignment with Microsoft has strengthened our partnership dramatically. We work closely with Microsoft to define and take to market solutions that are focused on established priority scenarios that align with Microsoft industry cloud vision. We've chosen to prioritize BFSI, retail, and the energy and utilities where we will have a sharper focus. Ultimately, delivering faster time to value, rapid digital transformation, and a simplified Microsoft customer relationship, of course. A similar approach with ServiceNow has led to Wipro being recognized in their partner maturity index at the far upper right hand of the quadrant. In the joint industry solution space, Continue to explore areas that combine novel, first-of-its-kind solutions with broad industry-leading partners or coalitions to create innovative, impactful platforms. A great example of this is the cloud car platform for software-defined vehicles, which we announced earlier this year at the Mobile World Congress. In there, we've brought together Wipro's full-stride cloud services and engineering capabilities with more than 40 different partners to deliver an integrated cloud-native solution. This is helping automakers innovate faster and at a lower cost, while keeping software-defined vehicles digitally relevant for years to come, but decoupling previously integrated software and hardware. Our full-strike cloud services has had an impressive year since its launch in June 2021. Our cloud ecosystem revenues also grew at an accelerated pace of over 31% in the fiscal year 22. On the EM&A front, we have continued to pursue strategic fits pretty aggressively. Our more recent acquisition, in particular Capco, we are celebrating today you know the first anniversary of the acquisition are performing very well we're very pleased to report that capco has had a very healthy double dg growth this year they're ahead of plan and together we have had over 60 synergy wins across markets most of you will know we've announced also two more acquisitions in the last few days The first one is Convergence Acceleration Solutions, or CAS Group. They are a US-based consulting and program management company focusing on the communication sectors. They specialize in driving large-scale business and technology transformation. CAS Group's deep client relationships and strong domain expertise Combined with Wipro's execution capabilities, we'll deliver an end-to-end professional services solution, but also immediate impact on clients. We can now provide our clients with services ranging from strategy development and planning to execution and implementation. Second acquisition that we announced just earlier this week is Rising, a global SAP consulting firm One of the leading strategic partners in the world for SAP, Rising will become a very critical extension of Wipro's SAP Cloud Practice and Wipro Full Stride Cloud Services. Ajahn Kohli is on the call today. He will share more details on the deal. On to the operating margins now. We delivered profitability of 17% in Q4, adjusted for Capco, our largest acquisition. This will be well above the pre-pandemic margin levels. I will now provide some finer details on markets, service offerings, and sectors. All our markets grew double-digit, but the Americas and Europe, our top two markets, grew at 28% and 36% year-on-year, respectively, in Q4. and 26% and 39% year-on-year in FY22. Let's look at the different market units. In America as one, we grew 22% year-on-year in Q4, with all sectors showing strong growth. For the full year, we grew 21% year-on-year. Communications, media, and information services grew 28%. Consumer goods and life science grew 26%. Healthcare and medical devices grew 17%. While technology products and platforms actually grew 34% year-on-year in the quarter. In Americas too now, it grew 34% year-on-year in Q4 and 30% in FY22. Here also there was broad-based double-digit growth across all sectors in the quarter. The order book, in terms of annual contract value, grew over 56% year-on-year in Q4. Now let's look at Europe. A European business has delivered an outstanding year-on-year growth of 36% in Q4 and 39% for the full year. Germany and South-South Europe have grown over one and a half times in size. Benelux grew 23% and our UK business grew 39% year-on-year. Finally, our Apmea market grew at 14% year-on-year in Q4 and 9% in the year 22. Australia, New Zealand, and Southeast Asia are growing in double digits year-on-year for the quarter as well. The order booking, again in annual contract value terms, are looking healthy with 22% year-on-year growth. Remember, customer relationships remain top priority. Our top five customers grew 35% year-on-year. Our top 10 customers grew 34% year-on-year. In the last 12 months, we have added eight customers in the more than 100 million bracket and 10 customers in the more than 50 million bracket. Now, from a service offering standpoint, our ID's global business line grew 39% year-on-year in Q4 and 35% in FY22. Most of the sub-practices showed a healthy double-digit year-on-year growth, led by domain and consulting, which literally tripled in size. The engineering services business grew 26% year-on-year in Q4, which is a compounded quarterly growth rate of 6% over the last four quarters. Now, I-Corps, our I-Corps global business line, grew by 15% year-on-year in Q4 and 17% in FY22. Most sub-practices grew in double digits on a year-on-year basis, too. Digital operations and platforms led the growth with 18% year-on-year for the full year. The kind of deals we are winning are very promising. For example, a global on-demand education platform has selected DesignIt as its campaign and media strategy partner. DesignIt will help them with new ways of engaging on its digital channels to deepen brand recognition in global markets. Another interesting example is with a leading U.S.-based food service distributor. They selected WePro As a strategic partner to drive profitable market share, anchored on omni-channel initiatives, a next-generation service platform, and best-in-class insights and analytics. Some more examples worth sharing, but I'd like to now focus on talent and our go-to-market strategy. Pleased to report that in line with what I had shared with you last quarter, Our quarterly annualized attrition rate have moderated by 500 basis points. We doubled our fresher intake for FY22 when compared to the previous year, and our plan is to double this in FY23 as well. Further, we have decided to increase the frequency of promotion cycles for 70% of our colleagues in junior bands to now a quarterly basis. No doubt, leadership oversight is now deeper. The presence of senior leadership in locations outside India has improved by 16 percentage points. It's also relevant to note that nearly 50% of our leadership hires have been in the gross office and in the customer-facing global account executive roles. This means we are strengthening our front lines and sales teams. For the last 21 months, we have improved ethnic diversity in our senior leadership by 24 percentage points, and gender diversity in the leadership has nearly doubled.

I'm proud of this, and we will continue to build a more inclusive workforce in the coming years. We have always, and we continue to do business responsibly.

In particular, Humanitarian crisis in Europe has had our attention. We don't have any material exposure in the affected regions. Many of our employees in the neighboring countries, Romania, Poland, have personally joined relief efforts providing food and shelter for thousands of displaced people. Our employees in Romania are volunteering to manage a dedicated helpline to support those in need. We've also created an employee donation program and matching it to the dollar, doubling the available funds. We have also partnered with Project Hope, their emergency response team, and European partners are providing critical medical supplies, but also assistance to refugees. I can confirm that Wipro will always stand by the principles of democracy, justice, and equality.

Before I close, a word on outlook for the next quarter.

We have guided for revenue growth of 1% to 3%, which will translate to growth of 16% to 18% on a year-on-year basis in constant currency. While we don't provide an annual guidance, I want to confirm that we expect to grow in double digits for FY23 as well. On margins, for the median term, we hold the 17-17.5% band. However, for the next two to three quarters, we will see slightly lower margins. This is because of the investments we have made that I spoke to you about earlier. Summary. We are pleased with the current business momentum and very optimistic of further strengthening it going into the new financial year. All our key markets are growing on a year-on-year basis, and that is the solid foundation we are starting FY23 on. On that note, let me now welcome Rajan, Rajan Kohli, who will provide more details on our latest acquisitions of Rising.

Thank you, Terry. Thank you, Terry. It's my pleasure to say a few words about our acquisition of Rising. SAP is the market leader in ERP, supply chain management, and human capital management. It is growing rapidly due to increased cloud adoption and the post-pandemic economic recovery. Meanwhile, Rise with SAP, a comprehensive cloud ERP offering, is gaining traction as it helps companies develop new cloud-based business models to fuel their growth and transformation. Given this deep and broad growth profile for SAP, this is strategically important acquisition for four reasons. One, this presents complementary capabilities. Rising steep industry expertise in SAP enterprise asset management human capital management, and SAP for consumer industry positions them as a sought-after advisor for clients' complex SAP transformations. This offers cross-sell opportunities into our client base, as well as upsells to lead with consulting. Two, complementary customers in industry where we have strong presence. Rising enhances our existing position of strength and leadership in industries such as oil and gas, utilities, manufacturing, retail, fashion, and consumer with their own roster of complementary Fortune 2000 customers. Rising offers a local presence across strategically important geographies, US, Canada, Australia, and Germany. Over 1,300 experienced SAP consultants in 16 countries. As you know, on-site presence is even more important when we lead with functional consultants. Fourth, rising strong SAP process consulting expertise will advance Wipro's capability. While at the same time, Wipro's broader consulting and digital transformation capability will give rising clients access to a complete portfolio of services. The journey of rising with Zipro could not be better timed given the growth we have seen in the SAP market and the opportunity to support clients in their transformation to become agile and intelligent enterprises. I would now like to hand over to Jatin Balal, our CFO, for financial highlights of the quarter. Over to you, Jatin. Thank you.

Thank you, Rajen, and I will quickly cover the financial highlight. We had an excellent year. We grew 27.3% in reported terms, 28.5% in constant currency terms, delivered 17.7% in operating margin, had 19% ETR, which resulted in an industry-leading EPS growth of 17%. We delivered and converted consistent cash flows, Our operating cash flow as percentage of net income was 91%. Our free cash flow as percentage of net income was 75%. We had, after paying dividend that we declared in March end, $4.6 billion of cash gross of debt and $2.6 billion of cash net of debt as of 31st of March. We have $3.5 billion of forex hedges as on 31st of March, and we delivered 75.91 as a realization rate in quarter four. We have guided for quarter one at 16 to 18% year-on-year growth as guidance, which converts in sequential terms to 1 to 3%. We'll be very happy to take your questions from here.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

The first question is from the line of Kumar Rakesh from BNP Paribas.

Please go ahead. Hi.

Good evening, everyone, and thank you for taking my question. My first question was regarding the recent acquisition of Paribas, which you did. Thank you for the detailed explanation around that. What I wanted to understand that was a last part of the business, a significant part of the business appears to be built through acquisitions done over the last two, three years. and you spoke about that this company is in a space of high growth SAP cloud implementation. But when I look at the revenue which we have disclosed over the last two years, the revenue here appears to be about 11%, within which there is a large acquisition as well. So how do you see this company operating, and are all those acquisitions already well integrated and no risk? is coming from execution of integration of those acquisitions done by Rising.

Rajen, would you like to take this question? Thank you.

Yes, I can take that. So, you know, it is true that company has had several acquisitions over the last five to seven years, but they have not made so many acquisitions over the last two to three years. They made one very big acquisition of a company called Accune. Most of the other acquisitions are fully integrated, and Etune is more or less integrated with the core business. And Etune has a very good recovery post-pandemic. As you know, fashion and retail was the most impacted business during the pandemic. But now as we come out of pandemic, those industries are seeing very good recovery. So we are quite confident of both the quality of the asset and the quality of the recovery that we will see. This business will operate under the application and data business that we have adjacent to our SAP business. The idea is that we will drive synergies between Rising and Wipro's existing SAP business and go to market. We'll continue to serve existing clients of Rising and look for cross-sell opportunities for Wipro in those accounts. And we'll also look at existing clients of SAP business and lead with consulting that rising brings to the table.

Thank you for that. My second question was about the growth outlook, which we have given 1% to 3%. Assuming that we hit about midpoint of that through the year, we could at best be doing about 10%, 11% of growth in the full year in FY23. Well, it would be a double digit, but it would be a far higher slowdown in growth from FY22 level compared to where the industry is. is likely to be. So, how are you seeing the growth panning out through the year? Are you expecting the growth to further accelerate post the first quarter or that the conclusion which I'm making is broadly correct?

So, Rakesh, this is Jatin. You know, I'll start and I'll request theory to add on. See, we are suggesting that the growth is going to be double digits and double digit doesn't end on a number. It starts on 10. What I want to highlight is, you know, we have grown six quarters at a three percentage plus. And that is a track record that we have as we enter this year. We have given a one to three percent guidance. And, you know, this is a natural rhythm of the business and no business will consistently grow at one specific percentage. There will be certain quarters which would be faster, certain quarters which will be slower. And we have to retain that realization. And what we see, we guide for quarter one accordingly. It's neither conservative nor any other way that we will change our guidance style.

If I can add to what Jatin said, I would say that, you know, yes, we are, you know – the reality is that, you know, it continues to be a solid growth for now seven quarters. And, you know, one to three is the level where we feel we are comfortable for Q1. The pipeline is solid. Based on the quality of our bookings over the last two, I should even go, you know, beyond, but of the last quarters has been really strong as well. So, That's what gives us the feeling and the confidence as we are starting the year that we will certainly be able to deliver double-digit growth. As Jetin said, more to come over the next quarters, for sure. But I think this is with confidence that we are starting the year 23. It's going to be another year of nice growth for Wipro. Thank you, Tehsi.

Thank you, Jatin, for that. I have more questions, but I'll let her ask a question. I'll fall back on the queue. Thank you.

Thank you. The next question is from the line of Ravi Menon from Acquiree. Please go ahead.

Hi. Thanks for the opportunity, gentlemen. Just a clarification on the guidance. So, you know, we've heard that this year the normal Q3 to Q4 season actually did not quite play out. Typically, Q4 has slightly higher working days due to higher holidays in Q3. And Q1 should, therefore, definitely have more working days than Q4. But that doesn't seem to be coming through. And in a point-in-demand environment, is this something to do with, say, the deal anniversary in Metro? What headwinds should we be thinking about when we, you know, come up with other tactics?

Ravi, this is Thierry. I hope I will respond to your question. Your voice was not heard. Always clear, but I understand what you're trying to understand is the nature of this guidance and the seasonality. You know, what I would recommend is look at the seasonality quarter after quarter. The sequence shows growth of, you know, five or six of our competitors and us in the last six quarters. And you will see that we are probably... If not the only one, one of the only ones to have been consistently above 3% every quarter. And the reality is that because of the nature of a contract one day or the size of an opportunity or a deal, you have some quarters a little more, some quarters a little less. I don't think that you should read anything material or kind of a trend between a guidance like the one we've given in the previous quarter, and this one, I think we are still talking about growth, and I think we keep the same level of confidence that what we had in mind several quarters ago, again.

Thank you, Pierre. I appreciate that clarification. Secondly, I want to ask you about the acquisitions. We've done Capco, that is, the FSI. Now, with Rising, we've got retail, and we've got agile, too, and we've got cybersecurity. Do you think that we should see this as pretty much a loss of large acquisitions, or do you think there is a need to fill out certain gaps in the service portfolio?

Right. Okay, excellent question, Ravi. Frankly, if you look at the acquisitions, I'll tell you first, I'll reflect on the acquisitions we made, and then I'll give a view going forward. If you look at the acquisitions we have made over the last two years, they have all in common requirements. a strategic nature the deal the deals we've made are strategic what i'm what i mean is that we are not acquiring volume we are not going for the sake of you know acquiring a sizable business that will bring a scale no we are not doing that we can we are looking at that have a strong brand, not necessarily large companies, but companies that have a strong brand and bring a true domain expertise or a true ability to drive transformational deals. If you look at Agile, that was a consulting company business in security that is reinforcing and enhancing our security practice very successfully. If you look at Capco, it's the best example. By the way, I just want to celebrate here with you our first year anniversary of the acquisition of Capco, exactly a year ago. Frankly, Capco is a very strong brand. And we've had the opportunity to realize the potential and the power and the quality of the talent of this team. We have been able to create together between the Capco and the WePro teams as many as 60 synergy deals over the last one year. Capco has performed extremely well under Lance Levy leadership in the last one year. And, you know, I must say, this idea of combining our strong BFSI business with a large consulting practice like Capco was the right thing to do. And I think we are pleased at the time we are celebrating this anniversary. If you look at Cass, and rising now, the deal we just announced a few days ago. CAS, you could look at it as a small Capco. It's more or less the same strategy, which is to say, you know, adding a consulting practice that has a particular strength in a given sector. In the case of CAS, in the communication sector, And already now, we have opportunities. Our teams from CAS and from Wipro, if I can say, are working together on some deals with clients. So it's getting immediate traction. And then we have a very nice and solid SAP practice, but we didn't have real consulting capabilities. Rising brings just that. So again... Again, an example of an acquisition that is strategic in nature because it allows us to have a different kind of discussion with our clients and allow us to go for more transformational deals than what we would typically go for before. So that's what we've done so far, and that's what we will continue to do. So don't... We do not have a number to reach. We don't have a number to reach. We don't have a particular target. It's not like we want to close a deal every now and then. But we look at what kind of opportunities we see and what kind of deal. If there is a solid case for a strategic move in one of our freeing source sectors, we'll continue to look at it. I cannot... better answer to your question than like that.

Thank you so much for the clarification. Very quick. One last kind of bookkeeping question. You spoke about engineering services and really fast growth there. Could you share what's the rough proportion of our revenue that engineering services contributes to?

What percent of the revenue coming from engineering services? Yeah. I want to go

Yeah. Ravi, let me come back to this question. We have not disclosed it, but let me just check. I'll come back to it. Sure. Thanks.

So what I can tell you is engineering, all I can say is engineering services is actually a significant practice for us. It's gaining real scale. I think we are now one of the global players in engineering services. And I'm very pleased with the growth I've seen in that space over the last quarters. And we continue to accelerate Thank you so much. I'll start talking with you.

All right. We can go with the next question, and we'll come back to Ravi's question after this question.

Thank you. The next question is from the line of Gaurav Rateria from Morgan Stanley. Please go ahead. Hi.

Thank you for taking my question. I have two questions for Rateria and one for Jatin. So while ATV growth was quite strong, the TCV of large deal win was soft on a quarter-on-quarter basis. How much of that has a rub-off effect in the near-term performance? Was that one of the factors that kind of drove your guidance to one, two, three, versus the trajectory of two to four in the last report?

Well, you know, this is, you know, I've always said that, you know, the, you know, going after large yields is, you know, strategy. It's an important priority for us, and we are gearing up to, and we are We have a nice pipeline. We have a lot of good opportunities. We have deals that we could expect to close in the next few quarters. And so we are on it. And I have zero doubt that it will trigger some nice deals. I see it as coming on top of the sales activity that we drive quarter after quarter. If you look at the performance in sales of the last quarters, it's been strong. So it's actually been strong, but coming from, you know, smaller or mid-sized type of deals. We have also some large deals, but, you know, as you have seen, less this quarter than other. Now, you know, we also see that some of these deals are coming in chunks, okay? So sometimes clients are just not comfortable to go for, you know, lengthy commercial discussion and prefer to split the deals in different chunks and get us to start a phased rather than going through this long process. So that's also a fact that we are observing. But absolutely, our objective is to continue to get and get some of these large yields in the next quarters.

Okay, second question is on some of these strategic acquisitions that you have made. it looks like all of them are, some of them are running independently while you have integrated the go-to-market. So when do you really think the integration is really fully over? How do you bring it all together as one workflow, not just in front of clients, but also in terms of the organization structure as one consulting organization?

I've got a couple of points on that. One, we have integrated a lot of the companies we've acquired and And they are now completely part of the Wipro family. However, when we talk about integration, it doesn't mean we are merging them and completely removing the brand and so on. In the case of Capco, for example, it's a strong brand and we really want to retain this brand at least for the foreseeable future because it's highly recognized in the market. Second, Capco is a consulting practice. So, you know, we have a consulting practice inside Wipro, and the objective is to combine those two consulting practices. But the objective is not to merge the consulting practice with, you know, a technology practice. Those are different families. And we are managing inside Wipro with different families, right? I'll take another example. Designit is completely integrated now in our organization. However, because it's also a different family, highly creative. We are keeping a different brand, and they are, you know, the capabilities, if you like, the talent, the people are in one practice. So again, the integration, it means integration of systems, integration of processes, legal offices and so on. Those things are not necessarily, those things are absolutely done, but it doesn't mean that necessarily the brand disappear or that we are merging completely this team into our teams. We maintain the logic of families because a consulting team It's not the same as a technology team. It's not the same as a digital operations team. It's not the same as creative teams or engineering teams.

Thank you for the elaborate answer. One question for Jatin. What is the flexibility we are allowing ourselves to invest and manage supply-side challenges in the near term? And how should one think about consolidation of risings with respect to impact on margins, both with respect to the amortization schedule or any integration-related costs, any particular guidance there will be helpful. Thank you.

Yeah, sure. I didn't follow your last line very clearly, Gaurav, so can you repeat the question?

Yeah, so the question was, what is the flexibility we are allowing ourselves to invest and manage supply-side challenges in the near term? And how should one think about consolidation of the rising and potential impact on margin due to amortization or any integration-related costs?

So, Gaurav, we have stated that while we remain confident about the corridor of margin that we have disclosed before and we have always talked about it in mid-term, For next two, three quarters, our margins would be slightly lower. And that is really the flexibility that we are retaining. The growth is absolutely front and central to our strategy and to our execution as we look at FY23. And therefore, we will have to remain focused on making sure that we are doing everything to deliver an excellent growth trajectory. Thank you. So we have retained that flexibility in the commentary we have made or the way we have planned over here. To your second question on financial integration or financial consolidation of rising and the relative impact on the margins, it's difficult to call out at this juncture exactly, but you could take a proxy of our previous discussion amortization range as a percentage of the purchase price we are paying and I think that would be ballpark an accurate number for you to assess and the profitability is very similar to an on-site consulting firm a good on-site consulting firm will deliver on a consistent basis Thank you so much Thank you

The next question is from the line of Pankaj Kapoor from CLSA. Please go ahead.

Hi, thanks for the opportunity. My first question is on the outlook that you see for the Capco business, specifically given the current macro headwind that we see in Europe. So what kind of a pipeline or what kind of a deal activity do you see for Capco? Is there any risk, especially on the financial services side, which is leading to any elongation in decision-making from the clients.

Kash Chiri here. By definition, Capco has, being a consulting business, has a shorter cycle, if you like, and therefore, the visibility typically you would have on a business like this is not in quarters, right? A few quarters. However, I would say the business continues to be very strong, very strong. In fact, I was just trading some messages with Lance, and the outlook continues to be really solid. I think this company, because of its impact and the ability to help bank and financial institutions and insurance to grow, drive transformation programs, they are really helping those companies to improve their productivity and address some of their efficiency challenges. And I think the visibility we have on the pipeline, pipeline is strong. If I look at the bookings for the quarter four, I think it's been the biggest ever they've done. So based on where we are now, It's looking good. It's really looking good for Capco. Not worried.

Okay, that's helpful.

And the second... Yeah, Pankaj, I just wanted to add one thing, because you were referring to the European market, and indeed there's a significant part of the business of Capco in Europe. I would say the mix of Capco between Europe and America is significant, but the 103 Pro is as well. So here I tend to be a little bit careful because, you know, a macro situation like the war is something that can evolve and no one knows, right, what can unfold. Based on what we are seeing today, looking at the pipeline or talking to our clients, no signs of slowdown either, right? So we stay close to it. We talk constantly to our clients.

But today, no real sign of slowdown.

Over to you. I understand. The other question is on your large deal wins, just persisting there. So it's almost four quarters since we announced a major deal win. And I understand that these deals are cyclical and it is very difficult to predict the timelines. But four quarter is a reasonable timeframe to look at the success of how our large deal strategy is working. So just curious to know that, A, on the large deal front, what is your initial sense? Is there a kind of a calibration that you need to make midway to make it more effective? And the second part is that, unfortunately, since you only disclose deals which are upward of $30 million, it clouds our optically sense of what kind of order book that you have. But how do I look at your overall order book if you can share some quantitative or a qualitative commentary in terms of how that has grown on a TCVP? Thank you.

So let me address the second part, which is the quality of the pipeline, and then I'll hand it over to Stephanie, who's sitting here next to me, to talk about the large deals. The nature of the quality of the order book. One, about 40% of our order book today is coming from cloud is cloud related and that is more every quarter and we like that because this is really where we get a lot of growth and where there's you know we know that the market is continues to expand and so there's You know, we know that this is a good quality of deals. The growth we are seeing from domain and consulting, the growth we are seeing from engineering in particular, continue to be very strong. So that is promising. What's equally promising is the fact that about 50% of the deals we've closed in a quarter I've been in partnership with some of our larger partners, SAP ServiceNow, AWS, Google, Microsoft, Salesforce. And those relations have clearly changed in nature over the last months. When I hear that Bill McDermott is mentioning our name in his earnings yesterday, It's something that wouldn't have happened necessarily several quarters ago. Same thing with Microsoft. Same thing with SAP, actually. So I think it's a reflection of the fact that our order book is positioned around the right parts of the portfolio, if you like. We have been working actively on the rotation of our portfolio, and the performance in booking supports this rotation. On the large deals, Stephanie, over to you.

Thanks, Thierry. We started building our large deal organization last year, and I'm pleased to tell you that it's fully in place and operational today, and everyone on the team has a robust pipeline of opportunities, and we're very excited about the pipeline that we are working with going into 2023. We did have some very large deals in 2022, but they haven't materialized, as the clients, as Terry mentioned, either decide to break them up and stage them or are still in the midst of their decision-making process and determining whether single partners or multi-partner is the right solution for them. So I would say overall our strategy is working. Our teams are disciplined and on the ground. We're putting the full might of one WIPRO behind them to help them really differentiate And we're very optimistic about what we'll see in 2023.

Thank you. And just one last question to Jatin. Jatin, from a full year perspective, you think that the kind of investment that we are planning and the kind of wage pressures that you have in the first half, do you think that the margins could be significantly at a risk in FY23 on an overall year basis versus FY22? Thank you.

Pankaj, you know, difficult to look into the future because we are also dealing with an external environment. But our commentary right now very clearly is this, that the margin corridor that we discussed before, we will be slightly lower than that for next two, three quarters. That's the visibility right now. And I'll stick to it and we'll continue to talk more about it as we see how the year progresses.

Thank you and wish you all the best.

Thanks, Pankaj. Margaret, before we go to the next question, I will also address Ravi's question. You know, we don't break it out, the engineering spend, engineering as a services, the revenue of our aggregate, but specifically for this question, you know, it is a little over 10% of our revenues, and it has had a fabulous year. It has grown in healthy 20s this year as a growth. And as Thierry mentioned in his commentary on engineering, it is an area where we remain very bullish. We are making all right investment in this space, and we are looking forward to another strong year in FY23.

Thank you. The next question is from the line of Dipesh Mehta from MK Global. Please go ahead.

Thanks for the opportunity. My question is broadly more about clarification. You indicated about double-digit revenue growth guidance for the year. is it organic or is it acquisition close so far? How one should look at it?

The guidance we give for the growth is organic, right? So it's based on the situation we have, you know, based on the perimeter as of today, right? Actually, yeah.

Based on the acquisition, we have close so far. That is right understanding?

It is right, Dipesh. You are accurate in your assessment. It is all the acquisitions which are closed as of today. That's what we have counted. And therefore, we have not counted rising, which is announced but not closed.

Understand. Thanks. Second question is about the margin, slightly medium term rather than near term, which you indicated. Now, when we did KEDCO, we... indicated our organic business will operate at 19% and Capco because of the amortization and transaction related costs would have 200 bps kind of impact. And over a period of time, this 200 bps impact will narrow down. So, and considering now we are one year in that journey and obviously supply side challenges have some implication in near term. But how one should look medium-term margin trajectory for Wipro because acquisition is also part of growth story for us and integral part of revenue growth. Whether this 17 to 17.5 is a good range to understand from medium-term perspective or how one should look Wipro's margin trajectory?

So from a medium-term standpoint, Dipesh, we believe today that 17 to 17.5 is a trajectory that we would like to hit. Yes, your assessment is right that some of the amortization costs related with Capco would come down over the years, but not certainly in one year. At least the first few years we will have that impact that we have spoken about. And that's how you should see it from a medium-term standpoint, as you mentioned.

Thank you.

Thank you. The next question is from the line of

Sandeep Shah from Equirus Securities. Please go ahead. Sandeep Shah from Equirus Securities.

Yes, thanks.

Thanks for... Yes, please go ahead.

Yeah, can you hear me?

We can.

Yeah, thanks for the opportunity. Yes. Yes. So just six to seven months back, we have issued a press release talking about a $1 billion investment for building cloud capabilities of $750 million. Can you hear me?

Yeah, we can hear you. Go ahead, Sandeep. Yes.

Yeah, yeah. So we have released the press release talking about $1 billion investment Yeah, $1 billion worth of investments of which $750 million would be in organic and building the cloud capabilities. So whether rising is a part of the $750 million plan or this would be over and above that?

No, no, no. Rising is in the right space and certainly it's part of our cloud-less consulting capabilities and that's how you should see it.

Okay, thanks. So that means it's a part of it as a whole. And second question and last question is in terms of margins. So even after CAFCO, if I look at the fourth quarter margin over first quarter margin, at EBITDA level, there is close to a difference of 200 basis points, while at EBIT level, the difference is 70 to 80 basis points as a whole. And we are talking about a further decline in the next two, three quarters from the levels of fourth quarter as a whole. So the question is, growth is turning around, but operating leverage is not coming. So when do you expect that to come? Because FY23 could be a year where some of the hits on the margins are unlikely to be recovered because of the higher wage hikes, return to office, travel costs and all that. So is it fair to assume that 524 could be the year of operating leverage as a whole for Wipro?

Sandeep, let me first start by saying that we shared a range and we operated always in that range or in fact a little higher for previous quarters until quarter 4 where we are in the range but at the bottom end of the range. And the second point is that the operating leverage is coming through, truly. However, you know, we are also investing additionally. So it is not that we are not being productive in the way we are spending money, but we are actually generating productivity and investing in the areas that we want to invest in. And Thierry spoke about some of those areas in his opening remarks. And I don't see any difference in FY23 also. Only, so to say, external variable for all of us to watch out and not just us as company but as an industry is the continued pressure on talent and what we'll have to do in FY23 for that and we will see how FY23 therefore pans out. But we are very clear that we on one hand drive efficiency that we can invest back as investment and that's the whole point. Strategy has been in 22 and will continue to be in 23. Okay.

Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Ms. Aparna Iyer for closing comments.

Thank you all for joining the call today. In case we couldn't take your questions, please feel free to reach out to the investor relations team and have a nice weekend ahead.

Thank you. On behalf of Wipro Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.