Being strong in digital, we see many opportunities

IT firm Wipro's first quarter results saw its margins drop by 150 bps primarily on account of currency fluctuations. In a chat with ET, the chief executive of Wipro, Abidali Z Neemuchwala, spoke about the company's renewed localisation strategy, fall in margins and its growth in digital revenues. Edited excerpts:

When do you expect the margins to recover?
We will continue to play in the narrow band that we talked about earlier. I think every year there is a pattern. We give salary increments, half the impact happens in Q1 and the rest in Q2. The steeper impact is that of the foreign exchange. All of our operational levers are looking good. So, we should be coming back to our margins soon.

You seem to have focused on your localisation strategy this time around. Can you shed some more light on that?
We started working on this strategy almost six quarters back. We have executed quite well on that. This means in every geography that we work in, for the work that gets done inside the geography, we should hire local workforce and deliver locally.

Of course, the US is an area of bigger focus because it is our largest market and as we said earlier, we are over 50% local there. Latin America is a market that we recently started to focus on. It is almost 100% local. In the other markets the percentages vary depending upon where we are in localisation.

What is the kind of new deals are you winning? What does your pipeline look like?
The funnel that we exited in Q1 last year versus Q1 this year is higher. I think we are seeing deals whose sizes on an average are smaller. The nature of those deals is becoming more and more digital-transformation kind. Our win rates are good and we are able to win our share of deals very well. Strategically, some of the deals we have been doing are in terms of integrated services, IP lead deals as a service... There were seven or eight large deal wins that we have announced. Also, in some specific verticals, our strategy is paying off. For example, in energy and utilities we have said that we will focus more on North America. That focus is paying off.

How is the BFSI growth in North America?
Historically, we did not have large revenue in percentage terms as some of the other peers. We see this as a huge opportunity because we are strong in digital. As banks are undergoing digital transformation, we are getting a higher percentage of market share in those deals compared to our historic percentage. Though there are uncertainties, overall I feel good about BFSI.

What is the size of your digital deals?
As a partner, we get a $20-$25-million deal. The average deal size in digital is 25% higher than six months back.