Wipro sees million dollar deals in media, telecom

Bangalore: India’s third-largest software services exporter Wipro Ltd is seeing a pickup in spending from top telecom and media clients in the US, and hopes to win at least 4-6 deals that may each generate between $50-$100 million in revenue annually.

“If we look at our deal flow, we will continue to win at least 4 to 6, $50 million- $100 million deals a year. And these are in our pipeline,” Ayan Mukerji, chief executive of Wipro’s media and telecom business, said in an interview on Monday.

He added that the deals “are in our pipeline, otherwise we won’t get growth of 15% (year-on-year)”.

The media and telecom strategic business unit is Wipro’s second largest business unit and contributes nearly 17% of the firm’s revenues, with nearly $1 billion in annual sales. But it has struggled in the past 2-3 years.

Mukerji conceded the company is yet to achieve 3-4% sequential revenue growth and admitted that Wipro is witnessing challenges in the network equipment sector.

Mukerji conceded the company is yet to achieve 3-4% sequential revenue growth and admitted that Wipro is witnessing challenges in the network equipment sector.

He attributed the network equipment industry’s challenges to “getting squeezed on the capex side”.

“Also, the network R&D, they’re really getting squeezed. (There are a) couple of reasons. The world is moving to 4G when they’ve not fully utilized 3G. So, who’s going to pay for that? And by the time we’re into 4G, we’re talking about 5G,” said Mukerji.

Wipro has also hired many technology consulting executives to tap into demand from the US studio industry.

“We see headroom in the studio space. We have hired very senior consulting folks who are from the studio market. So, we’re really focusing on studio publishing and media. We see a very solid pipeline moving forward,” said Mukerji, who joined Wipro in 1987. In 2012, Wipro undertook a restructuring of its telecom business to focus on telecom operators as customers and, as a result, getting a greater share of revenues from areas such as analytics and mobile broadband.

Experts and executives from rival firms, however, are critical over the way Wipro’s media and telecom business is structured.

“GMT (global media and telecom) has reported only three good quarters over the last eight quarters and continues to face structural issues,” analysts Viju George and Amit Sharma of JP Morgan India wrote in a note dated 25 July.

Mukerji, who also heads Wipro’s product engineering, conceded that the company may struggle to see immediate improvement in its product engineering business, which has struggled to grow during the past 2-3 years amid changes in the technology landscape. “We need to figure that out. We’ve faced fundamental technology shifts in PES (product engineering services)—there’s been a big change. The question is to how do we adapt ourselves to the changing landscape,” said Mukerji.

Wipro will also continue to trim down the number of its non-strategic customer accounts as part of a broader push to focus only on bigger and fewer customer accounts, a strategy that was first laid out when CEO T.K. Kurien took charge in 2011.

“We continue to drive down our tail accounts. Our tail accounts are less than 0.5% of our revenues. Our goal is to increase revenue per customer. We want to move more towards mega and gamma obviously,” Mukerji said.