Offshoring Is Kind Of Over, Says Wipro, As Financials Surge Thanks To Offshoring

Wipro has both celebrated customers’ use of offshoring for its positive impact on its finances and suggested the concept may have been made obsolete by the pandemic-induced surge in working from home.

The Indian services giant yesterday reported its fastest growth in nine years, with Q3 revenue [PDF] of $2.1bn, of which $2.071bn came from IT services, the latter at a sequential growth of 3.9 per cent. Margins for the segment hit 21.7 per cent, the best in 22 quarters. Net income reached $406m, a year-on-year increase of 20.8 per cent.

Company president and CFO Jatin Dalal said the mix of work Wipro performed in pleasingly low-cost offshore locations, as opposed to in customers’ home nations, “has improved by approximately 6 percentage over the course of last four quarters.”

Customers seem to like it: across the quarter the company closed a dozen deals valued at over $30m, and those deals totalled $1.2 billion.

CEO Thierry Delaporte said demand “has shown steady improvement in the last 6 months.”

“The intensity of the sales activity continues to rise and the pipeline is robust. We are seeing heightened demand for our service offerings in digital transformation, in digital operations and in cloud infrastructure services in particular.”

A quick reminder: the world economy is in virus-induced recession. Yet Wipro said four of its five sectors saw growth above 4 per cent.

Delaporte was asked about Wipro’s offshoring performance and suggested that the virus-induced increase in working from home is helping the company because it has taught customers that they can trust workers they can’t see in the office.

“So there's definitely a reflection from many clients, realizing that they can build, they can manage complex operations and operating model with teams that are in distance,” he said.

He added that organisations have come to realises that a core on-site team is critical. “It means you need to have pure team -- people who are really next to you, connected with you 100 percent, even more than before, which pushes the logic of having less partner but stronger partners, right?”

India will continue to have a unique position, in terms of concentration and quality of technology expertise

“And so … my view is that what we could offshore does not exist anymore. It's all shores, right? It's the model under which a lot of clients will want to operate going forward. It will imply some people being close to them and people being away.”

And the CEO said he expects plenty of those “away” people will be in India, because other nations just don’t have as much talent for Wipro to hire.

“That's why, in my view, India will continue to have a unique position, in terms of concentration of technology expertise and talent but also in terms of quality of the expertise,” he said.

The offshoring shift came about, in part, due to the re-org initiated by Delaporte.

The CEO also outlined some customer trends. Many, he said “are moving away from traditional IT models and adopting business tech operating models”.

Customer experience transformation programs are becoming front-to-back initiatives, including core transformation and not just on omni-channel experience,” he added.

Cloud migrations, he added, are done. “Clients are moving beyond the lift and shift of the workloads, to the cloud, to exploit the automation native capabilities.” Which suggests off-premming – if we can coin a clunky phrase – is now perhaps an even more significant trend than offshoring. ®