Wipro Limited (WIT) Q4 2020 Earnings Report, Transcript and Summary

Ladies and gentlemen, good day and welcome to the Wipro Limited Q4 FY 2020 Quarterly Investor Conference Call. As a reminder, all participant lines will be in listen-only mode, and there will an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Aparna Iyer, Vice President and Corporate Treasurer. Thank you, and over to you.

Thank you, Stanford. Warm welcome to our Q4 FY 2020 earnings call. We will begin the call with the business highlights and overview by Abid, our Chief Executive Officer and Managing Director, followed by a financial overview by our CFO, Jatin Dalal. Afterwards, the operator will open the bridge for Q&A with our management team. Before Abid starts, let me draw your attention to the fact that during this call, we may make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act 1995. These statements are based on management's current expectations and are associated with uncertainties and risks, which may cause the actual results to materially differ from those expected. The uncertainties and risk factors are explained in our detailed filings with SEC. Wipro does not undertake any obligation to update the forward-looking statements to reflect the events and circumstances after the date of filing. The conference call will be archived, and a transcript will be made available on our website. Over to you, Abid.

Thank you, Aparna and good evening and good morning, ladies and gentlemen. I'm joined by my entire Executive Committee, that is the Wipro senior leadership team virtually today as we practice social distancing and have adopted ourselves to the new normal of working as a leadership team. We will share with you the results for the fourth quarter and full year performance for the fiscal year 2020. But before I do that, I want to thank the leadership team, all of the 180,000 plus Wiproites globally, our customers, and our partners for their untiring efforts and perseverance as we transformed ourselves into this new normal and enabling us for delivering on our commitments to all our stakeholders. These as all of us know are unprecedented times, and I'm extremely proud of how the entire team has come together in the face of this crisis and work 24/7 to ensure the safety and well-being of each other, while continuing to serve our clients. The fact that we've been able to stick to the earnings release schedule that was published several months back is a testament to these efforts. On our Q4 and full year performance, as you might have seen our Q4 revenues grew by 0.4% in constant currency terms within our guidance range. And for the full year we grew at 3.9% in constant currency. The first two months of the quarter was strong for order book closure of large deals and ramp-up across all of our projects, but in March, as the COVID health crisis rapidly deteriorated in key markets like US, Europe, UK and the lockdown in India, we clearly saw an accelerated impact to our business. Let me talk a little bit about our response to the COVID crisis. As we realized earlier in China and then in Philippines we quickly activated our COVID-19 global crisis management task force, headed by Bhanu, our Chief Operating Officer, and consisting of various cross-functional teams of business continuity planning, our Chief Information Officer, our Chief Information Security Officer, our HR team, our Facilities Management Group, Corporate Affairs teams and our top most priority was and remains the safety and well-being of our people. With a lot of cooperation across not only internal but even external stakeholders including the administration in various jurisdictions, we were able to move by early March most of our people in global offices to be enabled to work from home. On March 15, we changed the working arrangement for our support employees based in India to work from home and started enabling the 165,000 billable client-facing employees to work from home. The initial effort obviously was about getting approvals from our customers to be able to do that. Then, just before the lockdown and to enable work from home, we moved massive number of desktops and provided additional laptops and data cards and transported them to our people's homes. We also created additional capacity in our cloud VDI and VPN using our own offerings around these areas to be able to enable a large number of our employees to work from home. In parallel, we've reached out to our customers, briefed them on the measures we were adopting and sought their approvals. All of these hectic efforts ensured that today, 93% of our employees are approved to work from home by our customers, and 90% of our employees are actually engaged in delivering projects globally and services to our customers in a work from home mode. In the past few days, our teams have settled into the new ways of working. Managers are conducting daily standup calls to track people, their welfare, their wellbeing, and the customer service delivery is being managed through this. I'm pleased to report that our SLA performance has been stable, and we are collaborating well with our customers on delivering our commitments to them. Most of our customers have appreciated our business continuity planning and our ability to help them. While there are many examples, I would like to share a couple of examples with you. The first one is of a large bank in the US, which wanted to launch a full-fledged digital solution to support thousands of small businesses and their employees under the fiscal stimulus program initiated by the US Treasury to get financial relief under the US CARES program, which is popularly known as the PPP. A team of committed employees from Wipro took this up as a challenge, worked closely with our cloud enterprise platform partner and started working on 3rd April and built a solution in about 72 hours, which happened also to be a weekend. We've ensured that the application went live on 6th of April after incorporating a few regulatory changes by the U.S. government on existing systems and providing a new front-end to be able to originate loans. On the first day of going live, 22,000 PPP loan applications were processed resulting in loan disbursal to the tune of $5.5 billion. This has made a significant positive impact not only to our customers' business, but to the society at large. After that we've had similar -- three similar engagements with different banks in providing similar services. Another example that I want to provide is of one of the largest and busiest airports that we service in North America. We had to manage an orderly shutdown of international traffic besides being prepared to handle cargo planes delivering essential supplies like food and medicine from across the globe. This meant enabling and equipping most of the airport staff to work from home and ensure that they could continue to access all business-critical applications without any issues. We happened to provide infrastructure services to this particular airport. And as you know airport employees are not attuned or accustomed to working from home and this was a big change for them. We enabled change management across the employee staff and over 800 people were enabled to work from home in about 48 hours. These are employees of the airport beyond the Wipro teams, which service these employees and the customer. And we guided their employees. Over phone, we manned walk-in support kiosks in virtual mode walked -- helped them do various monitoring across locations trained them on MS Teams, which was deployed for collaboration and enabled the soft phones features among many other things. Totally, across our customers, we have enabled over 0.5 million, client employees to be able to work in this new normal. There are many other examples across our various service offerings where we are seeing an opportunity to help our customers tide over this crisis. Talking a little bit about the demand environment. While we are very satisfied with our actions in ensuring safety of our employees and ramping up capability to service our customers from home, we are still very much in the middle of the crisis and the economic turbulence that it has caused. Based on various estimates, the global GDP growth rates are expected to decline by at least 2%. This assumes that the virus peaks in the April, May, June quarter. But if it peaks -- if the peak goes into the July, August, September quarter, then the decline could be even more dramatic. This is likely obviously to have a significant impact on our customers' business and earnings. And hence, a cascading effect on their IT spends. We already see instances of budget reductions, cuts in discretionary spend, request for temporary discounts and pricing pressure and restructuring of existing spends. Sectors like retail, hospitality, airlines, energy, especially oil and gas and auto segment in the manufacturing business are experiencing a more immediate and deeper impact. Given the uncertainty in the environment and the inability to predict the course of the health crisis, we have decided to temporarily suspend our practice of providing quarterly guidance. And we will resume when we have increased the certainty -- when we see increased certainty of both the demand and the supply side constraints that this crisis has created. During the crisis, our priority will be to remain a trusted partner of our customers by staying close to them and enabling them in here and now. And focus on proactively positioning our offerings especially focused on efficiency like modernization, a cloud automation, cybersecurity analytics et cetera to gain market share in strategic accounts as well as make the most of consolidation opportunities that this could provide. As we expect the revenues to decline during the quarter, it will put a significant pressure on our margins. We will have trade-offs to make on hiring, on salary increases that become due in this quarter in terms of the merits annual salary increase, discretionary spend that we have within Wipro, variable costs such as subcontracting facilities et cetera. And defending revenues and gaining market share will continue to remain a priority as we look at opportunities to get more efficient. We do anticipate that our working capital requirements will increase in the near term. But our gross cash in our balance sheet does provide us the confidence that we will emerge stronger and better. In the end, I would like to reiterate that the environment is tough. And as we all know when the going gets tough the tough gets going. And we believe that we are coming into this crisis with a -- in a position of strength. We will remain steadfast in our goals of employee safety and well-being, business continuity, staying close to the customers and tweaking ourselves to the new normal. I wish you all the very best. Please stay safe and stay strong. And I will hand over to Jatin to give the highlights of our financial performance.

Thank you, Abid. So as you know we came within the guidance that we had given for quarter four. I will talk most of the numbers relating this being the last quarter of the year to the overall financial performance of the year. Our rupee revenues were 4.2% growth for this fiscal. We expanded our operating margin in IT Services segment by about 0.2% to 18.1% for the full year. That helped us grow our operating profit to 5.8%. We further got help from other income, which grew this year as some of you know we had larger cash earlier part of the year, which was pending the buyback that got completed in September, our other income grew 8% year-on-year. Given some of the tax announcement that we saw during the year, our effective tax rate was lower by about 1.7% during this year. And, therefore, overall we were able to grow our net income to -- Y-o-Y at 8%. Because of the reduction in number of shares, outstanding shares as a result of buyback, our earnings per share growth for FY 2019, 2020 was 11.2%. As at the end of the year, we have about $3.4 billion of net cash and $4.4 billion of gross cash. Overall, we have ForEx hedges of $2.7 billion in a very narrow range of what we have been maintaining. Our realized rate for this quarter was INR73.95 compared to INR72.09 of the previous quarter, so we did have benefit coming to the P&L because of better realization. Overall, we feel we have a good cash position, a strong cash position to continue to look at opportunities that such an environment may present in form of consolidation. We also had a good year on operating cash flow and free cash flow. We delivered operating cash flow as a percentage of EBITDA around 81% and free cash flow as a percentage of net income on a very similar number about 80%, 81%. We had a slightly lower operating cash flow and free cash flow in quarter four as some of you may have noticed. And that was because we had four salary payments, which happens once in a few years in India and that impacted both our numbers by approximately 30%. So the numbers that you see as a conversion of operating cash flow to EBITDA or operating cash flow to net income, but the 30% number I'm giving you is with reference to both operating cash flow as a percentage of EBITDA and operating -- and free cash flow as a percentage of net income would have increased by about 30% if we were to make adjustment on account of that. We did have a slightly higher DSO in quarter four because we did see some disruption on regular payment cycles that some of our customers undertake as in last two weeks a lot of the organizations were going through the teething issues on BCP. But we have had a good first two weeks of quarter one, which gives us confidence that we will catch up on some of those inefficiencies of quarter four. This is all I had. We'll be very happy to take questions from here.

Thank you very much, sir. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Nitin Padmanabhan from Investec. Please go ahead.

Yeah. Hi, good evening, and thanks for taking my question. So, first, I just wanted your thoughts on the price cuts, the cut in discretionary and extended payment terms. If you could just give some clarity there in terms of, one, what proportion of clients do you think will end up asking for such concessions? And do you think these concessions are even on a price cut basis is it very temporary? Two, is there any vertical specific cuts where you think it's more, sort of, prevalent? And finally, do you think something like an IMS also will bear those price cuts if it were to occur?

So Nitin we are seeing both -- there are certain verticals and certain organizations in those verticals who have fundamental question mark on their business model. And there we are seeing a relatively more permanent impact I believe. But a lot of requests we are getting is near-term postponement or deferment of discretionary spend. And on the run side of the business, obviously, we see both requests coming in for higher efficiency, which does result into a lower revenue but also there are opportunities that we see along with that of certain level of consolidation that we would look forward to. Infrastructure business or IMS that you referred to is -- a large amount of it is cloud work that we do. And we are seeing an accelerated movement to the cloud because it enables not only efficiency, but it also enables better working from home and virtual working in this new normal. And that is why we will see some pressure on the run side of the infrastructure business. We see equal amount of opportunity both on the back-end modernization, automation cloud, et cetera as well as on the front-end of enabling -- we have our own IP called VirtuaDesk a very strong offering around VDI and enabling virtual desktops and we are already seeing good traction as customer adjust to this new normal by investing in collaborative tools and collaborative working across that from the IMS benching.

Sure. But would you be able to characterize what proportion of the clients are actually asking for steep cuts? Is it a large proportion of clients at this point in time more than half or something? Or how should we think about it?

So the way I would think about it is there are ongoing conversations with a lot of clients. In some cases, we are also being proactive, we are very close to our customers. We see opportunities that have always existed and there is an element of acceleration of those opportunities that we can bring, which would obviously reduce cost for the customer, but at the same time could be revenue opportunities for us. It would be very difficult to quantify what percentage of clients are asking for this, but there's a small percentage which have come upfront from verticals that have been very severely impacted that I talked about retail, travel and hospitality, oil and gas, the auto segment within manufacturing and others. But we see opportunities that we are going proactively with the offerings that we have which are very specific to this COVID crisis and from our experience from past recessions that could be leveraged in an environment like this.

So if you look at GFC and look at things now, do you -- how would you characterize the difference in terms of what clients are seeing in terms of impact? Do you think that it is -- what you're seeing now is a little worse than GFC, because everyone is impacted versus these specific sectors then how would you characterize it?

So it is as bad if not worse than GFC, but we are still very early. So the focus in the last three weeks or so, if you take mid-March as when really across the two main geographies Europe and U.S. from a demand side and India from a supply side got impacted, right now the focus of our customers and our own focus has been primarily to get up and running and business continuity. Some of these conversations are just getting started as the second phase of managing the crisis. So I would say, it's a little early on that to say whether it is going to be -- how worse it is going to be compared to the Global Financial Crisis.

Great. Thank you so much and all the very best.

Thanks, Nitin.

Thank you. [Operator Instructions] The next question is from the line of Mukul Garg from Haitong Securities. Please go ahead.

Thanks for taking my question. Abid just wanted to follow-up from this previous question on discounts. We've heard from industry participants that clients in specific cases are asking for discounts up to 50% of an existing rate card. Can you give us a sense of what type of discounts are you seeing from a monetary point of view? And are they at least as of now primarily focused on Q1? Or is that something which will spill over to Q2 or Q3 as well?

So -- hi, Mukul, this is Jatin. Yes, there is certainly significant pressure on price. I think what has changed from GFC times is that a large portion of our business has now become fixed price. So while immediately we can -- we will certainly have to take certain reduction in terms of both the top line as well as profitability. But when you are able to lock in a business on a fixed price basis for, let's say, three-year, four-year time frame you are -- you've higher confidence of working through your automation plans, your pyramid, your on-site offshore mix to be able to get some of those productivity benefit back into margin at a later point in time. I won't comment specifically on the quantum of margins. I think there is also one big realization if I may put it in the market about the quality players which -- for which customer would be willing to sort of stay with and not just go on price, and I think Wipro has done well vis-à-vis responding very swiftly to our client requirements. We were, I think, first off the block vis-à-vis how we responded to some of the work from home requirement. And that I think is also a source of us to be able to stay in a portfolio on the strength of that execution.

Understood. And Jatin in terms of duration current conversation are mostly Q1 constrained or people have started looking at a slightly longer-term as well in discounts discussions?

Yes. Yes. So these are – I would answer it in two parts. Number one is whenever a crisis like that – this happens the reaction of the customer is here and now and this year. So that is part one. But I also believe that right now even customers are thinking through their strategies for rest of the year or next year. So some of this conversation are just beginning and they will evolve over a course of this quarter and probably early part of next quarter. And we will have to stay with those, remain resilient and make sure that whatever we are doing is in the interest of the relationship that we have with customer over a period of time and what we can further build on that over future periods. So it's not a 15, 20-day 30-day phenomena where everybody is coming to you and then you decide and then the – then you are back to a normal work as usual. This is going to unfold I think as we see various parts of the world coming back to their business and various parts of the industry reflecting upon their own economic prospects for 2020 and 2021.

Got it. And if I may just get one more question. And Abid, while we all understand that the visibility on business is quite low and hence guidance is difficult but can you give us a sense of the impact on individual sectors, especially on the energy and BFSI side, what sort of – what sort of hits you are seeing especially as you mentioned during prepared remarks that you were expecting a decline this quarter?

So, as I mentioned in my remarks, definitely the aviation sector both airlines and airports, the overall travel and hospitality sector, oil and gas due to the oil price, retail, a lot of retailers except food and grocery have almost shut down their stores and they are having a huge impact. The auto sector, especially in manufacturing, where not only the demand side but also the supply chain has been adversely impacted are the – I would call them as high impact verticals. On the other hand, some of the other verticals like communications where the surge in the use of bandwidth, the surge in entertainment and media segments, in terms of consumption of their services. We have seen utilities, for example we are not seeing a major change. In banking we are seeing both tightening of the belts and primarily driven as all of you are in that same industry by interest rates and volatility that is seen. On the other hand because of the quick response of various governments on the fiscal stimulus, there is also a positive impact on the banking industry, where they will see more activity around refinancing, originations of loans and grants enabled by the PPP equivalent programs across jurisdictions and so on and so forth. Logistics, we have a few logistics customers where there is a new paradigm of supply chain management and logistics, where we are seeing some traction. So more important than just the sectors alone, we are staying very close to each customer organization, enterprise and customizing our interactions and offerings and strategy to the strategies that these individual organizations are adopting in their context to be able to make the most out of it. Obviously, the ability to quantify at this point in time is very difficult. Otherwise we would have guided because a lot of things are in flux right now but hope the color I gave you helps you with the sector-wise feel that we are getting. Obviously the healthcare, medical devices, life sciences, where we have a lot of strength has both kind of impacts there are – because we are enabling a lot of hospitals, we are enabling a lot of our customers in the ecosystem to be able to provide COVID-related services, we've ourselves invested a lot directly in – for example, design of a new ventilator which is more of a prototype design but a lot of that expertise could be leveraged analytics-based solutions around predicting and developing models and so on and so forth. But also on the other hand a lot of the hospitals, as they prepare to take care of the COVID impact, a lot of the elective surgeries and elective procedures have been put on fold. So if you compare from a normal occupancy of a hospital versus what they are occupied today, actually they are less occupied in most – just if I take U.S. for example, let's say for a New York or a hotspot, in most other places the hospitals are running at lower occupancy. And that has a cascading effect on their financials and IT spend and how we service them. So at this point in time, I would say there are a lot of moving parts and quantification of that would be quite difficult.

Thank you. The next question is from the line of Moshe Katri from Wedbush Securities. Please go ahead.

Hey, thanks for taking my question. My question is more kind of maybe broad-based. What is management planning to do in terms of balancing on one hand protecting your revenues versus protecting your margin base? What sort of trade-offs are you willing to take? And then in that context, obviously if demand does slow down, what happens to your bench? What sort of utilization rates are willing – are you willing to kind of sacrifice in order to kind of preserve your bench at this point? Thank you very much.

So Moshe, great question and I will take the help of a few of my colleagues in answering this. But from a Wipro perspective as you would expect, any reputed organization to do, very quickly we formed three teams within the organization led by my three CxOs. So the first team that was formed was on the crisis – managing the crisis itself and providing business continuity and that was led by Bhanu supported by a ton of people in the organization. The second team we formed under Jatin, which has all of our presidents of our business units, which is looking at the opportunities that come out both here and now as well as in the future and how do we from a customer perspective address those opportunities. And I'll ask Jatin to give a little more color to the activities that has – that team has been undergoing. And the third team has been formed under Saurabh, which looks at cost overall, but also employee policies that are more empathetic in this crisis for our employees globally as well as opportunities that we need to look at for driving efficiency and the entire talent engineering areas as well as the corporate social responsibility as a responsible corporate citizen that we would do in times like these are all headed by Saurabh. So I will ask both Jatin and Saurabh to give a little more color to you on a little more specifics of what we are trying to do to answer your question, Moshe.

So Moshe, I think one of the positive aspects about a crisis like this is that, it resets, it resets the table in terms of what you can do for your customer. And one of the key focus areas for Wipro through this is really, how do we emerge out stronger. And I'll tell you some of the fulcrums on which these changes are taking place. Number one is, for example, some of the constraints in our business, which meant that you must have in most places you must get a person to a work or get work to a person. And this was fixed places either in your ODCs in India, or work locations of customers overseas that paradigm has completely shifted. So assuming you have 100%, agility you should be able to theoretically capture every possible demand that is out there to be captured. Number two is that, the models of engagement from customer is changing and in a distributed environment like this, where customer wants an optimal outcome, your ability to provide a reliable, robust response and reliable robust outcomes to the customer matter a lot more than working in a silo within an organization of our customer for some specific skills that we could provide. So your – the character of an organization comes in as a big differentiation in this case. So, we are looking at – we are looking at a fundamentally what we could do in times like this from a market offering standpoint and from our ability to respond very swiftly to customers' requirement. For example, we have spoken for some time about our additional investments and emphasis on what we call as big bets. And two of those big bets were really cloud and cybersecurity. And I don't think there is ever – there has ever been a better time to be a market leader in these two areas than today. So we are working through horizontal offerings, some of which Abid spoke about in his opening address, where we very swiftly responded to customer requirement, as well as domain specific be it banking, or energy and utilities, which we could very quickly take to our customers. And one very, I would say one very emphasize aspect of our response to this crisis is how do we emerge stronger. I'll request Saurabh to talk about some of the cost section.

Thanks, Jatin. Moshe to your question and it is how do we – our premise will be is rather that we manage the cost implications in the short term, but are equipped to move with agility as and when the demand picks up. And that's the way we are looking at our entire supply chain in terms of how do we look at hiring, how do we look at bench, how do we manage people, including – how do we have – how do we look at subcontracting, how could we make sure we deploy our people given the rear view of bench happening. So all these moving different parts of the supply chain will be the levers for us to ensure that in the short-term given the impacts we should manage the cost but as and when things stabilize, we are quickly in a position to come back. And that's been the intent in terms of looking – going deep on this one.

Understood. Thanks for the color. Be safe.

Thank you. The next question is from the line of Ankur Rudra from JPMorgan. Please go ahead.

Excuse me. This is the operator. I'm sorry to interrupt. Mr. Rudra your voice is breaking.

Is it clearer now?

Yes. Better. Thank you.

Okay. Thanks for taking my question. So the question is, if you look back at the previous crisis that you face, including GFC and the other ones. What are the main learnings you can take away from that play differently this time in terms of all the balances between revenue optimization versus cost optimization?

So Ankur, when we compare ourselves having navigated the crisis, the two most important things are number one in a crisis, there is a race towards quality partners or providers that the customer trusts. And today, if you look at our customer satisfaction, it is at an all-time high. We just completed our annual customer survey and our customer scores are over 90% on customer rating and over 66% on NPS. Second is everything that we did in the first two or three weeks of crisis management, we've received a lot of appreciation from our customers of not only enabling Wipro services to work from home, but in some cases even helping the customers' own employees as well as their vendors who are struggling to enable business continuity for the customer. And all of that gives us the right to claim being close to the customer and having the customers' trust. So, that is one aspect. As I said, there are two aspects. The second aspect of that is having relevant offerings. And I think Jatin alluded to this earlier in his response to Moshe. The investments that we've made over the last few years around digital around cloud around cybersecurity even consulting is very relevant because it requires a lot of organization change management consultative proactive propositions to be taken to the customer, all the investments we've made in client mining and our mega gama accounts in terms of client teams, so that we are contextualized, we are relevant, we are aligned to the customer strategy as we take these offerings that are market leading we've got leadership position in over 100 of the 150 analyst reports that we participate, which talks to the strength of our offerings that combined with the investment that we've made in client teams to be able to make them contextualize and relevant to our customers including the investments in intellectual property especially around HOLMES and some of the automation artificial intelligence cybersecurity platforms, data analytics platform that we have invested in are all very valuable. Topcoder, which is a cloud sourcing platform which is very amenable to the new ways of working. So, we have the strength of our offerings, we have the strength of client relationships which are both important to be able to do that. And one of the things that we are very fortunate about and we've been working on it as well is the quality of our balance sheet to be able to help customers in this time of crisis. As you know we've got significant cash available on our balance sheet. We've worked on the quality of our revenues whether it is unbilled revenues, whether it is our PBBs, et cetera which are -- that give us a lot of confidence on our own internal strength to be able to structure deals with customers that are beneficial to them for the long-term and provide us a competitive advantage as we work on those deals. So, all of this kind of put together I would say whether you call it learnings or best practices of coming out as winners based on the experience of the past crisis that we have all seen.

Thank you. Very helpful. Any particular insights on the workforce side which may be different from last time?

Saurabh?

Workforce management insights basically the levers that I called out in terms of -- sorry. One second. So, yes -- so -- sorry, the impact from our workforce insights which we have on GFC is that I think the only point which I called out earlier is that how we are in a position to take actions which are fast and required here and now however enables us to be agile to come back quickly. I think that's the biggest learning from a workforce -- that's what we have seen. And that--

Just to give you--

Do you want to add something Abid?

No, I was just saying just to give an example Saurabh talk about the enablement of work from home in terms of the managers and the reskilling acceleration that we are doing. I think the question was more around Ankur wanted examples.

Yes. So, as Abid alluded to this has -- this pandemic has also pushed the boundary which we have never expected. So, 93% of the workforce enabled to work from home, all managers are able to do daily calls connected -- stay connected things which we have not done example very clearly doing a book closing or recurring results which are planned and going out with them all these very clearly are pushing the boundaries for us which have not happened. So, that is one. The second is I think reskilling. So that will be another part in terms of how people were coming off to the bench as different volumes are happening and different ramp downs and ramp-ups are happening how do we equip them to move for the newer ways. So, I think that's another one. And having a Topcoder platform and Top Gear platform for us is another opportunity for us to train people and make them ready. So, the nimbleness for us to make our workforce ready as and when the demand comes will become the key. And all our actions and activities will be focused towards that during this period. That's the focus as we move forward.

Thank you.

Thank you. The next question is from the line of Parag Gupta from Morgan Stanley. Please go ahead.

Hi, good evening everyone. So, Abid the question that I had for you is that you did mention that some of the clients you have especially in the three to four verticals that you talked about are seeing significant challenges because obviously there the first order of impact is much higher. I just wanted to understand how much of the impact on these customers in your view is temporary? And how much of it could be permanent? So, I'm just basically thinking of -- are you seeing any of your customers who are running the risk of potential bankruptcies, which in this case may not be just a temporary impact on your business, but actually could be permanent loss of revenues. So, if I could just get some sense on that from you. And then I'll ask my second question after that.

So, Parag, we have Srini Pallia who is the President of our Consumer Business Unit which has seen the earlier brunt of this. So, I'll ask him to give you some color on it. And then it could be followed by Angan who heads our Banking and Financial Services business, to give you a little more color in terms of what he sees as to what both of them are seeing in those two verticals.

Thanks. Hi, Parag. Srini Pallia here. Like I think Abid mentioned that retail travel and hospitality industries had a significant impact. Those are the industries that are part of the Consumer Business Unit. Now, if you look at the specific segments within that which are hardest hit includes one of our apparel and fashion retailers, the home improvement retailers, specialty retailers and, of course, airlines and restaurants and food chains. Now, if you look at the analyst reports, they say that some of these retailers and departmental stores may shut stop for the next six months as well, right? So what we saw initially post-COVID is there was hyper demand for grocers, which we expect to normalize in a month's time. And again, across the board, there's a significant pent-up demand for online commerce and also automation that Abid talked about. So to us, at this point in time, the way we see it as retailers are looking at our help, especially ideas around last-mile inventory, last-mile delivery inventory and omni-channel side. So at this point in time the visibility that we have within some of our customers are they've stalled the transformation programs. They put a hold on discretionary projects and thereby there's a reduction in developmental work, especially on projects. So if you were to look at a crystal ball and look at what could happen… [Technical Difficulty]

Participants, the line from Mr. Srini Pallia has dropped. Please take an interim while we reconnect him.

Angan, do you want to go in the meantime?

Yes, yes. Abid, thank you. So, Parag, from a financial services standpoint and I think Abid as well as Jatin mentioned this earlier, see the interest rates are probably be almost heading to zero and also could be negative. So that, obviously, has an impact apart from the COVID situation. So in the medium term I've seen a lot of discretionary spend getting stalled at this point in time. So there is obviously an impact in the medium term. But equally, just like Abid said, I think, there is a big opportunity in terms of vendor consolidation, in terms of working on the run side, there can be enormous opportunity. So from our perspective, while the future is very uncertain and it's difficult to predict we are staying close to our clients. We are working with our clients very, very closely. We are making sure that we deliver to all the SLAs that we have signed up for. We've been fairly successful and we will continue to do that. So we will keep the long-term client and our employee interest in mind in whatever we do, Parag.

Great. Thank you. I'm just assuming that Srini is not back on. So I'll just go ahead with my...

Yes. Sorry, I'm back. I don't know for some reason. I don't know where you last heard me.

You basically talked about omni-channel and last mile is where retailers are asking for your help and they are holding discretionary spend. So that's where we lost you after that.

Okay. So, Parag, at this point in time we are still working with our customers in some of the new ways which are typically driven by COVID-19, essentially around curbside pickup that I was talking about, which helps shoppers to collect the merchandise from store associates. There are some engagements where we are helping our customers around store traffic and social distancing through video analytics. A lot of customers, obviously, they have -- they want to liquidate the inventory post-COVID. Adaptive pricing and dynamic pricing becomes very important from a competitor benchmarking perspective. And also home delivery for those retailers who have been not full-fledged on e-commerce or omni-channel. So these are the areas that we are focusing on. So we will -- we think that, while the overall IT spend will come down, but there will be key niche areas that the retailers will help -- that will need help and that's where we continue to invest our time and effort, if you will.

Great. Thank you very much. And, Abid, my second question was for you. I guess, for Wipro, you were basically now looking at two potential headwinds: one is the headwind of COVID and how that flows through; and the second is obviously the fact that you have decided to move on, does create some amount of vacuum at the top level. Is there any change in views? And how -- or to put it differently, is there anything that we should be keeping in mind as to how Wipro can manage these turbulent times, especially with you also potentially moving on at some point in time? Thank you.

So, Parag, I will let Saurabh give a little bit of an update on the CEO succession, as he's been doing it very closely with the Board. But I wouldn't classify that as a headwind. The company that I leave I feel very confident. I talked about our customer satisfaction which is at the highest level, our offerings where we have our top leadership position and recognized by the stakeholders intellectual property our strong balance sheet, a very strong leadership team and energized sales force and the customers. So I feel quite good in terms of a strong foundation, which I'm leaving behind. And a testimony of that is that we announced my stepping down on January 31. And while COVID was somewhere a small spec in the background, it was obviously not what it is today. And we spent from middle of February to middle of March, as I articulated, preparing for it as we started first seeing it in China and then we started preparing for it and executed quite well in March. As I promised on the request of our Chairman and the Board that I would continue till my successor is announced and onboard and continue business as usual. And I think the whole crisis management has proven that. The credit goes more to the team which made it happen, because we have a deep leadership bench, we have great team leading this organization. So I would definitely not classify it as a headwind. If anything, it is an opportunity for bringing in fresh ideas and thinking afresh in a new normal that we are going to land ourselves in a few weeks from now. Saurabh, do you want to give an update on the succession process?

Yes Parag. So as Abid said 31st Jan we have announced and Board along with the Governance Committee and the Nominations Committee is working. We are well on track to -- on the process. It's moving extremely well in the entire process. It's not got impacted by the pandemic in any way. And we should be in a position to announce our new CEO in this quarter. So it's very much on track there. But as Abid said, he's very much there till the new CEO comes. So it's all business as usual for us.

Got it. Thank you very much and all the best.

Thank you.

The next question is from the line of Diviya Nagarajan from UBS. Please go ahead.

Hello all. Thanks for taking my question. And I think quite a few of my questions have already been discussed here. But just one follow-up on what you've talked about as what you're doing for customers right now in terms of enabling work from home. Could you kind of run us through what kind of project sizes and opportunity that really is? So you talked of for instance enabling like soft teams is one of your customers. What are the kind of project sizes and durations you're looking at here? And what kind of a potential opportunity could this be as more customers try and implement these in the next several months?

So Diviya this is Bhanu here. I will try to take this question. So we are looking at two, three different kinds of opportunity as we enable our customers through this process right now. The first, like you mentioned is to get the customers enabled for their organization to work from home and operating the new methods. If I look at for example within our own organization; for example, our chat messages between our employees has increased by about 47%. Our collaboration minutes have gone up by 26%. Our usage of collaboration tools with respect to users has gone up by about 21%. So we see organizations trending significantly towards these virtual collaboration tools. So one of the things that we are doing for a lot of our customers is to quickly enable them to utilize these collaboration tools and make the work from home very effective for them, so that's the first kind of thing. And associated with that is all the cybersecurity capability that need to go with it right? So that's the first set of activity. The second set of activity is to help them with respect to the new opportunities that are coming in the short term because of the COVID crisis. Abid alluded to some examples of how organizations are trying to introduce products to take care of -- to take advantage of the fiscal stimulus that is being done in some of the countries. Similarly there are organizations for example which are supplying to, let's say nursing homes and with all the lockdowns that are there in play right now, you need to help in terms of optimizing algorithms in terms of finding the right routes and so on and so forth, right? So there are multiple short-term opportunities that are coming. There are organizations which are looking at faster planning of their supply chains and so on. So lot of short-term opportunities of that type. Then there are third set of opportunities that are coming in terms of organizations looking post-COVID how would they look like. For example, a lot of conversations about, how the supply chain visibility and predictability should be there? What are the supply chain dependencies that the organization has and how would they want to go forward and address those supply chain dependencies? There are questions about how much of process automation should be done? How much of the current work that is being done through our digital operations and platforms organization? How much more automation can be done in those areas, right? There are lot of questions around -- there are lot of conversations around, what kind of new digital migrations can happen, right? Obviously, all organizations have understood right now that migrating to cloud is one of the best things that has happened for them. Those organizations that have moved to cloud they have been able to respond to this very well. And so those conversations about hey how do I go long term into, what should my architectures look like, right? So we are looking at all the three sets of opportunities right now. Obviously, opportunity sizes do vary depending upon the depth of the organization and how widespread or how geographically spread that organization is.

Ms. Nagarajan, do you have any further questions?

Yes. Just a follow-up on that. Would it be fair to characterize the first two opportunity sets as being typically smaller-sized projects because you did talk about them being more short term and the third set of projects being much more longer term?

Yes. So the time line wise that is correct. But the first opportunity itself for example making organizations to enable to go them work from home, there could be some of the larger opportunities as well in that depending upon the size of the organization and how ready they are right now.

Fair enough. And I think one follow-up if I may that NASSCOM seems to have started lobbying for the government to allow furloughs in the IT services industry. Is that something that you would consider if it comes to -- I think you've talked about tremendous need to control costs, but would that be on the cards as one of the cost control opportunities?

Saurabh here, absolutely. I think we are right now all options on the card and furloughs is very much on the card. It is a flexible option and it helps us to come back quickly. So very much we'll explore across all the countries possible.

Thanks and all the very best of the year.

Thanks Diviya.

Thank you. The next question is from the line of Pankaj Kapoor from JM Financial. Please go ahead.

Yeah, hi. Thanks for the opportunity. So my first question is on the guidance suspension. I was just wondering is it more because of relatively speaking uncertainty on the volume side or you're unable to look at the kind of a pricing pressure that can come in which is leading to this decision?

Jatin?

Yes. No. I think the -- we articulated the key reason behind guidance is the fluidity of the situation. I wouldn't characterize it any other way. If we could size any angle of it and we were still -- would be able to provide, then we would have provided the guidance.

I understand Jatin. I'm just trying to figure out whether there is lack of visibility in terms of customer demand for pricing only. So, I'm just trying to understand that whether the volume can continue. It is just that the clients are coming to ask for pricing cuts and which we are unable to predict. Or is it that the people are more uncertain about the work itself, so that there is a possibility of volume also contracting?

Yes it is both actually where people are reprioritizing where they want to spend, whether they want to spend and when they want to spend. And then of course the pricing also comes into the play. So, uncertainty is on both the axes.

And there is one more axis right now, which we think is temporary, but the temporary could extend till the lockdowns and shelter at home extent is the ability to do certain type of work from home, which is about right now in our case about 7% of the work.

Got it. And Jatin, the second question is on your capability to manage the cost in this time. So, you highlighted some of the pressures that you are facing and you also highlighted some of the levers that you may want to use. As a net-net impact of all that, any sense which you can give in terms of whether we are able to manage margin in a narrow band? Or do you think that margin in the near term could come under significant pressure?

Yes. So, we will -- based on the visibility that we have as less as it is, we are going to definitely go all out on the costs, Pankaj. But since the revenue side of equation is fluid, one is not sure how well those two will marry. I think we should go back and see Global Financial Crisis and see some of the margin behaviors. That's how we are looking at it to learn from past. But our endeavor of course is to drop as less as possible. But these are uncertain times Pankaj. So, this is not normal where I can feel comfortable about a range or narrowness of that range kind of position.

Thank you.

Ladies and gentlemen, that was the last question. I now hand the conference over to Ms. Aparna Iyer for closing comments.

Thank you all for joining the call. In case we could not take questions due to time constraints, please feel free to reach out to the Investor Relations team. Have a nice day. All of you stay safe and stay strong. Thank you.

Thank you, very much. Ladies and gentlemen, on behalf of Wipro Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.