Wipro CFO says impact of new H-1B visa rules to be less on company as its localisation in the US is 71.9%

© Sandip Das
Wipro CFO says impact of new H-1B visa rules to be less on company as its localisation in the US is 71.9%

As business momentum accelerates in Q2, Bengaluru-based IT major Wipro is looking at better growth prospects in the coming quarters.

The company projected a revenue guidance and expects a 1.5-3.5 percent quarter-on-quarter growth for Q3FY21 at $2.02-2.06 billion , reflective of its confidence in coming quarters.

 The company also has a robust hiring strategy in place, for both laterals and freshers, to keep up with the growing demand across geographies and newer technologies such as cloud, where the demand is.

For the quarter ending September 2020, revenue grew 3.7 percent quarter-on-quarter to $1.99 billion.

Two new H-1B visa rules were announced, and one of them, H-1B wage hike, is already in effect. Could you tell us how much of an impact it would have for Wipro, and its margins since you would still have employees whose visa needed to be renewed? 

Dalal: Every regulatory change will have an impact on your operating business unit. But we will be definitely be less impacted, even if there is an impact. This is because of the higher localisation we have in the US, which is about 70 percent. It is a change we need to deal with and we need to deal with it in the right way.

Is the company looking at different models? Could you tell us the management’s thoughts on this? 

Dalal: I think it is too premature to make a comment right now. We are in the process of fully understanding it (new rule documents).

Has pricing pressure eased? If so, could you tell us why? 

Dalal: I would say yes, (for) there was more intense pressure in the first quarter when we worked with our customers. Maybe the priorities of customers are changing a little bit because we are seeing volumes back and people want certain agility in their technologies. So we will continue to work with our clients’ priority.

I would rather say we are in a business where we need to continue to evolve and remain competitive.

ALSO READ: Wipro – Journey to catch up with peers has just begun; buy for long-term rewards

With 98 percent employees currently working from home, are you seeing any cost advantages?

Dalal: There is definitely a cost advantage. But not so much because of office cost, because we continue to occupy most of our offices. Of course, we reduce it when we don’t need it. But those changes happen gradually and you cannot reduce your offices and workflow overnight.

Definitely, you cannot reduce offices in Special Economic Zone (SEZs), you stay with those. They are definitely giving us benefits but not material numbers.

It would be simple thing like variable electricity cost. It has come down. In India, the way electricity cost is fixed, you are not going see changes from Rs 100 to Rs 50, but from Rs 100 to Rs 75-80.

Where we are seeing material number is travel cost, which is true for all companies and not just Wipro. Travel costs as a percentage has substantially come down over the last two years, and that is a tail wind.

How has COVID-19 changed the company’s thought process when it comes to changing business models? Will those changes be permanent?

Dalal: The pandemic has taught us new possibilities that could help us in adopting a more sensible, long-term approach about work.

For instance, it was impossible to hold two meetings in Bengaluru because the traffic was so terrible. We were losing so much time and effort of employees. If I were a software engineer, I would much rather spend time in software engineering than wait for a bus or change one or two buses to reach office and do the same in the evening for over an hour. That was not sensible.

I think COVID-19 has taught us change management in an accelerated manner.

It is time for us to think about newer models of getting productive work without losing the element of culture and innovation. We cannot let go of social connect. At the same time, we have to take care of the well-being of people by not making them go through the friction of managing very hard commute.

If an employee wants to relocate to his hometown, it is a brilliant model because we can virtually continue to work with him for another 4-5 years. Otherwise, if the person has to move to Bengaluru for a project, that person and Wipro might lose such associations.

It is upon us to think how best to put that the change management to use. Certainly, it has given impetus to sensible, more productive business models for the future.

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