Bangalore, Jan 21 (IANS) Wipro chairman Azim Premji Friday admitted that his company underperformed during the third quarter of 2010-11 fiscal and grew slower than its peers like Infosys and Tata Consultancy Services (TCS).
However, the company is expecting higher IT revenues in the fourth quarter (Jan-March) at about $1.4 billion, according to a top official of the IT bellwether.
‘I don’t think we should be making excuses. We have underperformed in quarter three (October-December) relative to competition and relative to our potential as a company. What we are trying to do is to improve performance in quarter four and further going forward,’ Premji told reporters here.
For the quarter under review (Q3), the firm posted Rs.1,319 crore (Rs.13.2 billion) in net profit, registering 10 percent year-on-year (YoY) growth and 2.6 percent sequentially, while revenue grew 12 percent YoY to Rs.7,829 crore (Rs.78.3 billion), which is 1.3 percent sequentially.
Noting that competitive pressures had shown his company’s growth was slower than its peers, Premji said while TCS and Infosys were growing faster than Wipro, the performance of even Cognizant for the quarter stood out for its faster growth pace.
‘The fastest segments in the market where competition has been able to pull up the entire size of their companies have been financial services and healthcare,’ he noted.
‘Though we are strong in the financial services area, relative to the total share of our top line, its contribution is 27 percent, whereas most of our competitors have done far better,’ Premji asserted.
For instance, the banking, financial and insurance (BFSI) sector accounted for 50-55 percent of Cognizant revenue and in excess of 35 percent of Infosys and TCS revenues.
‘So, they (peers) have got the advantage of extremely high turbocharge growth, which has happened in the financial services sector, an advantage we did not get,’ Premji noted.
The company’s flagship global IT services and products business grew 15 percent YoY to Rs.5,949 crore (Rs.59.5 billion), reflecting a sequential growth of 3.5 percent.
Under the international financial regulatory system (IFRS), net income is $294 million, revenue $1.75 billion, including $1.3 billion from global IT services and products business.
Premji, however, declined to comment if the sudden exit of joint chief executive officers (CEOs) Girish Paranjpe and Suresh Vaswani and appointment of eco energy head T.K. Kurien as the new CEO from Feb 1, was a consequence of the company’s underperformance in the IT services business.
‘Organisational changes are determined by strategy, which is the foremost in any company. The changes don’t go in front and strategy follows. As we see, the strategy we have set for the organisation is fundamentally right. We believe it requires to be executed more rapidly, more quickly and with more thoroughness and to do in the short term,’ Premji maintained.
Hoping that the organisational change would result in faster growth, the chairman clarified that the changes were not made keeping in view how the markets would react in the short-term.
‘We don’t make changes to get short-term reactions from the market. I think results will tell whether it is a right or wrong decision. We have a 150 percent conviction that we have made a right decision and we have chosen the right leader,’ Premji observed.
‘We expect revenues from our IT services business in the fourth quarter (Jan-March) to be about $1.4 billion, a sequential growth of four percent,’ Wipro chief financial officer Suresh Senapaty said.
