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By Swami Shanmugasundaram, CFA | 11-10-2011 12:00 AM

Wipro: Cloud Computing Hasn't Made Big Revenue Impact Yet

With few exceptions, cloud computing hasn't made a big splash yet, but its importance could explode in the coming years, says Wipro's CFO for international operations Sridhar Ramasubbu.

Securities mentioned in this video
WIT Wipro Ltd

Swami Shanmugasundaram: I'm Swami Shanmugasundaram. I'm an equity analyst covering IT consulting and outsourcing services here at Morningstar. Today, we are fortunate to have Sridhar Ramasubbu, CFO, international operations, at Wipro, one of the dominant IT service providers in the world. Thanks for joining us, Sridhar.

Sridhar Ramasubbu: Thanks, Swami.

Shanmugasundaram: Before we get into a talk, for those of who haven't heard much about Wipro, would you mind talking about the strategy, what the company is doing and its performance in the recent quarters?

Ramasubbu: Sure. So, Wipro is a $6.5 billion company, and it has got three main lines of business, which is the IT services, which is almost 88% of the revenues. The the remaining balance of 12% comes from consumer care and infrastructure engineering services.

In terms of the global reach in IT services, about 53% of the revenues come from the United States, about 28% comes from Europe, about 10%-11% comes from India, about 8.5% comes from Asia-Pacific, and the rest comes from the rest of the world.

So it's quite well-spread. We have the broadest portfolio of services. We're having about 12 to 13 verticals and five service lines. All five service lines are very strong. So, with our geographies, service lines, and verticals, we are very broad-based and have been growing significantly well. In the last five years, our compound annual growth rate has been about 28%-29%. We are listed both on the New York Stock Exchange and on Bombay Stock Exchange, and the company has been growing.

We recently had a change at the top, a CEO change, and there was reorganization within Wipro IT division. And those leadership changes at first level and the second level are now behind us. We've done what we need to do, and we're now looking at realizing the benefits of what we've done so far.

In the last quarter, the results were very promising, which could have been better, but we still grew sequentially by 4.7%. I think going forward, there are headwinds in terms of economies slowing down across the world, particularly Europe is causing lot of concern. But we've grown very well in Europe, with 5.3% sequential growth there. So even during last recession, we grew extremely well in Europe.

So, overall, there are headwinds in terms of economy. There are headwinds in terms of possible visa issues, but we are not seeing any big change in the customer behavior. We think with the outsourcing, the offshoring part of it, the value proposition is so strong that we'll continue to see momentum and shift more and more work offshore. And we are looking forward to it.

Shanmugasundaram: Given the uncertainty in the market, I think everybody's question is what's going on with the demand environment in terms of, say, discretionary spending? So, relative to what it was last year, what do you guys see in the market now? Are companies talking to you about discretionary spending at the same level or has it come down?

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