Wipro Limited (WIT) Q1 2021 Earnings Report, Transcript and Summary

Ladies and gentlemen, good day and welcome to Q1 FY 2020 [sic] [2021] Quarterly Investor Conference Call for Wipro Limited. As a reminder, all participant lines will be in the listen-only mode. 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 from Wipro. Thank you, and over to you ma’am.

Thank you, Ved. A very warm welcome to our Q1 FY 2021 earnings call. We will begin the call with opening remarks by Thierry Delaporte, our Chief Executive Officer and Managing Director, followed by business highlights and financial overview by our CFO, Jatin Dalal. Afterwards, the operator will open the bridge for Q&A with our management team. Before Thierry starts, let me draw your attention to the fact that during this call, we may make certain forward-looking statements within the meaning of 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 differ materially 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, Thierry.

Thank you, Aparna. Good evening ladies and gentlemen. It's really wonderful to speak with all of you today. Last Monday, I joined Wipro as the Chief Executive Officer, and I'm excited to join Wipro and consider it a great privilege to be asked to lead Wipro, such an exceptional global company with incredible legacy. I have known Wipro as one of the pioneering leaders in the industry. And over the years, I've come to greatly respect and admire the company, its values, its people, and its capabilities. Above all, the Founder, Chairman, Mr. Azim Premji’s extraordinary leadership of this company for over 50 years, and his, you know, equally exceptional generosity is a generic. I have great respect for the work done by the Azim Premji Foundation for the underprivileged. And it's – today it's 67% economic ownership of Wipro adds greater meaning to what we do. I speak to you amidst a global pandemic, which has few parallels in history. Safety of our employees will be our paramount concern as we navigate these extraordinary times. The pandemic has brought about lasting changes in our ways of working. I've heard of remarkable stories from our customers, our partners, and colleagues on how we have adapted to the new demands of today, and the indomitable spirit and dedication that we have shown in keeping our promise to customers and communities that we operate in. Over the last few weeks, I've been spending time, although only started a few days ago. I've been spending time over the last few weeks with senior leaders and teams across units and functions to take a holistic view of our business and better understand our opportunities and challenges. This is definitely a defining period for our industry and for Wipro. Disruption has always been a part of business. The challenges are new, but I know that Wipro with a long history of 75 years has overcome many challenges with tenacity and resilience. The culture of innovation fostered here over the ages will help us pivot and transform. Finally, I'd like to state that profitable growth is our most important agenda. Despite the immediate challenges, I have absolutely no doubt that we will emerge stronger. Over the next few weeks, working closely with Chairman Rishad Premji and also senior leaders, I hope to finalize the plan to drive improvements across all spheres in our quest to achieve industry-leading growth. So I look forward to meet you in person next time with more details on our strategy and vision for the organization. With that, I hand it over to Jatin for his comments on the business performance and highlights for Q1 2021. Jatin?

Thank you very much Thierry. Good evening. It's great to talk to you all. You know, it has been a tremendous quarter for all of us. I can talk on behalf of team Wipro. When we started the quarter, I think we had very, very little visibility as to what we are getting into; one of the toughest quarters as we started the journey. I will give you a brief synopsis of what we have done in the course of the quarter, and then we will take up the questions. I want to cover these highlights in three parts. Number one is employee safety and wellness, second is on our financial performance and a little bit on demand outlook, and third is about an acquisition that we announced today. So, let me start very briefly about the way we have managed our operations. We have continued to work extensively from home. And at any point in time, we don't have more than 4,000, 4,500 people in our offices, and we have been able to work seamlessly, including delivering transitions, including delivering to complex development projects, including meeting all SLAs as per our requirements from home. Our teams have taken a greater onus on themselves to remain connected, to make sure that we are available for each other. Our organization has come out with, you know, initiatives like Fit for Life, which are employee health and wellness programs, including some sort of counseling support when somebody needs help and somebody to talk to. So, that was my first aspect. Second aspect; let me talk about the financial performance. As you know, we delivered in a constant currency 7.5% decline, and you know, on a year-on-year basis, we declined about 4.4% in constant currency. Our performance on margin was very satisfactory. We delivered an expansion of operating margin by 1.4 percentage points on a sequential basis and we delivered 60 basis points or 0.6% on a Y-O-Y basis. If you see, we have also done very well on cash conversion, which is the third metric we track very closely. Our performance on our operating cash flow was 127% of our EBITDA, and our free cash flow was 157% of our net income. As you know, we had one month extra salary last quarter, and we had that benefit in quarter one, but even if I take that away, I think the teams have done remarkable job to remain very cost conscious and cash conscious in a tough quarter. I will go a little down in the P&L. You know, we have a slight expansion of other income, which was led by the larger corpus that we have of cash, and we have about $4 billion of cash compared to $3.4 billion that we had last quarter, net of debt on our balance sheet. Our ETR was slightly higher at 22.1%. Our net income was year-on-year flat, and our EPS growth, because we had a buyback as you know in September last year, our EPS growth was 5.7% year-on-year. Overall, we are quite happy with the way we came together and executed the quarter. Now, let me talk a little bit about the demand environment. Demand environment is driven by what we call as three Cs. The first is cloud, second is collaboration, and third is cyber. We are also seeing great uptick in offerings like VDI, SD-WAN, excellent traction for our digital operations and platform offerings in this post-COVID era. From our sector standpoint, while we have had a tough quarter one probably across all sectors, but specifically we are seeing some stability returning in our consumer business unit, in our tech business unit, and in our communication business unit. For others, we will watch it closely as to how the traction unfolds during the course of quarter two. Overall, from our perspective, we started the quarter with a certain trajectory, but we executed well on many fronts, including on revenue front to be able to come at the end where we came. Now, let me talk a little bit about the acquisition that we announced today. It's a – the acquisition is a smaller acquisition, but it gives us a good access into Northeast Brazil. It gives us access into new set of customers that we don't have in financial services, retail, public sector, and manufacturing services. It’s a profitable business which has been growing rapidly, and above all, you know, it provides us a great opportunity in terms of sourcing this talent, which is very capable and very cost competitive for our global business. Overall, I think Team Wipro came together quite well in quarter one. When I started, I said that -- when we started, we had very low visibility as to what we were getting into, but I think we stayed together and delivered a good quarter for our partners and shareholders. So with that, we are very happy to take your questions.

Thank you very much sir. [Operator Instructions] The first question is from the line of Sudheer Guntupalli from Motilal Oswal Financial Services. Please go ahead.

Good evening, gentlemen. Thanks for giving me the opportunity. The margin performance during the quarter, especially at gross margin level was very impressive. In fact, it was better than even pre-COVID quarters. What is your thought process on the sustainability of this cost structure or margin level? So you look at it more like a one-time spike due to aggressive cost control or you think this would be something which is sustainable going forward?

Sudheer, thanks for your question. You know we -- let me give you a little bit more color. I think, you know, there are three components to our margin expansion for quarter one. One is the operation which is nearly 1%, where we really went after the traditional levers. We managed to utilize our people very well. We really had a look at our variable workforce. We looked at, you know, using utilization and improving – you have seen offshore rate improving. Overall, I think, and of course, there is a component on automation, which is not visible too externally that has also paid up. So overall, I think we did a very good job in terms of managing our workforce to our requirement in an environment where revenues were highly uncertain. So, that was one component. Second is, we of course kept a very tight watch of every incremental spend that we had to do. We also looked at existing spend and whether they were giving us the buck – the bang for the buck as they were giving us in pre-COVID times, and if they were not, then we have really looked at them whether those spends should continue. So, that was roughly 1%. Another 1% has been ForEx, and we have taken a slightly larger provision for doubtful debt, which is more called as expected credit loss, which is driven by environment and not by a specific situation or specific customer or any specificities for that matter, which is about 0.5, so that is about 1.4% sequential expansion that we have done. And as you can see, I think we have done well on operations. And therefore, we believe that we should be able to keep our operating margin in a narrow band in quarter two also. Having said that, as Thierry articulated in his opening remarks, our focus remains growth as an organization, profitable growth that we want to go after, and therefore if we need to make investments, we will make those investments and that will always be our first priority. And subject to that, yes, we will try and keep it in that way.

Thanks Jatin for that. And in healthcare vertical, some of the large companies had actually reported very strong growth in this vertical led by work-related to contact-tracing applications, etcetera. However, we did not seem to have gotten similar benefits. Is this due to difference in our service offerings in the healthcare vertical, and broadly your thoughts on vertical wise outlook across other verticals also will be very helpful.

So, I will start with first – I will start with the second part of your question and I would request Bill to take the first part. Bill Stith is our Global Head of Health BU. So, we have shared that we do believe that we are seeing more stability in CBU, technology, and communication in terms of where it can be in quarter two. Other BUs, we also see overall stability, but for other BUs we will wait and watch how the environment sort of progresses. So, that's the sort of commentary on other BUs and I’d request Bill to respond on health.

Yes, thank you. So first of all, let me just remind that, you know, Q4 for us is a high volume seasonal business with – especially in our payor segments for open enrollment. So, we typically expect a little bit of pressure coming into Q1. Obviously that was expanded due to COVID where we saw mostly volumes dropping due to patients pushing out their elected treatments, which also translated into furloughs in our payer provider segment. Medical Device and Life Sciences also have impacted on volumes based on inbound calls associated with standard procedures. I would say that our pipeline is strong. We won new deals both in existing and new robots [ph]. And we further expanded enabling our clients, especially in VDI and cloud as mentioned, and we do – we saw a lot of demand for delivery in our near-shore locations of Philippines. We are watching elections, obviously, as you know, that could have an impact especially in our ACA exchanges in U.S.

Sure. Thanks and all the best.

Thank you very much. The next question is from the line of Kawaljeet Saluja from Kotak. Please go ahead. Kawaljeet Saluja your line is unmuted , you may go ahead with the question.

Hi, congratulations on extremely strong margin performance. I joined the call a little bit late, so I don't know if Thierry is taking any questions, but if he is, you know, I have the first question for him.

Yes, I am. I am.

Okay. So Thierry, welcome on board. The first question that I had was I didn't know what would be your first 90 day or 120 day plan as you go about getting Wipro back to the growth path or getting back to the industry growth? So what will be your key priorities for the first 90 or 120 days?

Okay, understood. Okay. So first of all, I must confess one thing, I've been a little bit cheating with the concept of first day, because I've definitely been working before my first day, last Monday, and so I've dedicated the last three, four weeks – four, five weeks actually connecting with, you know the leadership team; connecting with our Chairman, Rishad Premji; connecting with the Board members and so on. So, you know, I've already had a good time to really get a flavor for the business, the clients, our employees, better understand the power and the strength of our culture, of our values and so on. Having said that, obviously, starting now, looking at the priorities for, as you say, the first 90 or 100 days, you know, I look at it in different buckets. On the first one, which is the operation, so I'm someone who likes to jump and dive into the trenches day one. And so, it's literally starting to engage with our leaders in the operations every day and really be active on the day-to-day operations. We have the quarter two to deliver or quarter three, and there's a great sense of attention paid to how we will be dealing with the health and the safety of our employees. So that is really specific to the current situation where we are in, but also to the fact that it's actually day-to-day operations for us. Yes, the world has changed, so does the the way our day-to-day operations look like, as well. The second aspect for me is connecting. So connecting with our clients, I've really started to engage basically on day one, and I'm spending time with clients to listen to them, to meet them, to understand what we are doing and how – you know what their expectations are. So, this is also incredibly important because, you know, I see – you know I have great passion for clients, great passion for, you know, spending time with them and building partnership with them. And equally important, as you can imagine, is really connecting with our employees. So, I've also started to engage and we'll do a lot more of that. You know, I'm a people person, so I like to connect, you know, physically, but, you know, it’s okay. In the current environment, obviously, I need to accept we all accept the situation and it may last. So, we are using the new technologies to really connect and actually it's working well. You can connect with people from different places at the same time; you can jump from one country to another in few seconds, and I've been connecting and will connect more with different thoughts, different groups, you know, senior leadership, young professionals, women at Wipro, best talents and so on and so on. And then, obviously, while we are doing so, we constantly emphasis on, you know, let's grow and the appetite for deals and clients will work on, you know, the bigger plan to redefine or to confirm our strategy, our vision, our ambition for the years to come and where I can potentially contribute to accelerate the growth, to build a cohesive team and continue to grow top talent to constantly challenge status quo inside the organization and see where we can be more nimble, more efficient, more productive, have less time internal, more time for our clients and for our employees, and finally, how we can streamline our processes and so on. So to respond rapidly to your question now, I would say, it's going to be a good balance between, you know, the need to dive into the operations, you know, and protect the safety and security of our people, and at the same time, work on a bigger plan. I don't want to jump on conclusions now, it's only day seven, but work on the bigger plan that I will come and share with you at some point in time.

Right. Just a follow on question, Thierry, on a slightly different note, while it’s early days, you know, what do you think, you know Wipro could have done better? Now, of course, it's only seven days for you at Wipro, but you have come across Wipro as a competitor value-add Cap. So what are your, you know, broad early thoughts if you can share that will be helpful?

Yes, I can tell you one thing, this is exactly what I will not do, jump at conclusions and compare with, you know Capgemini. I don't want to do that at all because I don't think it’s right after seven days and I don't think it leads to anything. I think I still need to learn and listen and observe and better – and get a better feel. There will be a point in time I will start to draw conclusions. What is clear is that, you know, the values of Wipro are completely unique. The sense of purpose of Wipro is completely unique. This is a global company. As you’ve said, I've known Wipro for 20 years. I've been competing with Wipro for 20 years, won sometimes, lost sometimes, but truly formidable competitor, and you know, what I would say after seven days is, yes, it's a global company with an even bigger heart than what I thought before. The energy in the system, the passion of the employees for the company, the love they have for Wipro is, for me, outstanding and I want to build on that in the years to come.

That's very well put, thank you. I’m just being a little bit selfish and I'll ask just one more question to Jatin, so please don't mind. You know, Jatin, just a question on the margin, I’m still trying to understand, you know, what drove the margin improvement given that your employee headcount decline was barely 1%, your utilization went up. So effectively, your volumes were flat, yet the revenues declined by 7%. With the 7% realization decline, I'm still trying to reconcile as to how you were able to manage profitability. And second is that, and I also thought that the employee cost on dollar basis declined by 9% on a quarter-on-quarter basis, which means that you have leveraged the variable compensation levers quite aggressively, so just wanted your thoughts on a couple of these aspects.

Yes, sure. I will speak about the first and I will also invite Saurabh to talk about the second one. So Kawaljeet there are parts of that walk which are unfortunately not visible externally. As I mentioned in my opening remarks, we have looked at very aggressively the variable workforce of Wipro beginning from day one of the quarter. So we were able to leverage a lot of internal talent that actually was utilized, that is number one, instead of variable talent. Second is that in some form, you know, utilization is also a factor of leave loss and leave loss, as you can imagine, has been relatively lower for the quarter. And, of course, that also plays into revenue, but that is one of the things which has kept utilization to come out even better than what it was in quarter four. And your third point on realization, I would say that the entire 7% drop is definitely not the realization drop. There is a part which is realization and there is certainly a part which is volumes, and as you would also appreciate that in a time like this, no company will have zero volume declines. So, we also have had a share of our volume decline and there is a part which is also realization. I want to talk a little bit on realization also. Realization typically has a few components. As you know, that one direct component could be price discount. The second is – but I will come on to it at the end, but in a business which is run at 60% plus fixed price project, there are impact on realization because of the element based contracts that we have in our infrastructure business where we are paid based on the elements that we are able to service. And you would appreciate that when elements go down, when, for example, a large manufacturing firm is not operating its plant there would be a dip in the elements which are serviced by Wipro, but I cannot overnight reduce the staff from those projects because they're all doing some specific work, serving specific elements or deployed for a specific technology. So, element-based contract has [sown into it]. Two, there is always a certain amount of change request, additional business that flows into existing fixed price business, which has impact on realization. This quarter, it has had an adverse impact because there was a sort of, at least in the beginning of the quarter, as you can imagine, a lot of decision making was on pause. So fixed price project has got impacted by that. Of course, there has been an impact on pricing also, but I would say that has been relatively smaller. And I’m confident that the variable part of the realization of fixed price projects, we should see an uptick as the environment becomes to normalcy during the course of next couple of quarters. On variable pay, I would say – I would request Saurabh to talk about it, but I would only make one comment that our operational savings has been significant in terms of the value and in terms of the might of execution compared to the leverage of variable pay. Saurabh, you want to add something to that?

Thanks, Jatin. So Kawal, exactly the – when we got into this entire thing about in Q1, you know, and the pandemic started, and you know, looking at revenue impact and costs, one of the things we had called out and which we try to do as far as possible was that we will minimize letting go people given that there is a significant volume drop. However, collectively the might of Wipro should come together in this time. Like in the previous year, for most of our people, we had given 100% variable pay, which was paid to them. The Q4 was 100% variable pay which was paid to all our employees. In the middle of this entire pandemic in the month of May, the leadership took a bigger cut, but majority of the people have got reasonable variable pay. So, as Jatin said, it has been a superior execution across all cost parameters rather looking at one specific area.

Okay, thank you so much and wish you the best.

Thank you very much. The next question is from the line of Rishit Parikh from Nomura. Please go ahead.

Hi, thanks for taking my question and Thierry welcome onboard. Just if I – if we looked at the outlook for some of the peers, they’ve started to talk about sequential improvement in 2Q, right? I wanted to understand what are we seeing from a demand perspective? And then, do we really see a recovery coming through? That's one and on the deal discussion side, how the traction is improving across clients and if you can just give a little more color on what the factor is that would be helpful? Thank you.

Yes. So, you know, we have said that we see stability in quarter two. However, you know that the situation is very fluid, so it is really, I would say, not in our place to say that, you know, this is the definitiveness that we see in the environment, but we certainly see – we certainly have much greater visibility than we had in the beginning of quarter one, but having said that, it's an evolving environment both from demand side, from – in – you know our largest market is United States, as well as on supply side where our largest delivery centers are in India. So, I don't think we are in a position to very, you know, accurately predict what's going to pan out. We’ll play it by the year, but we certainly see a greater stability in the current quarter compared to Q1. Second, you know, from an environment standpoint, we certainly believe that we should see – we should see an uptick in performance in the BU’s that I mentioned, SBU type communication. Health also should hopefully do better because some of the elective surgeries, etcetera, which got pushed out, probably they will come back. Some of the volumes related to that could come back. And rest, we'll play it by the year in the course of quarter two, Rishit.

Okay. And just one last question from a BFSI standpoint, the weakness seems to be slightly more, but our presence is fairly decent, right, in that space. So just wanted to understand what you are seeing from a BFSI perspective because some of the competition is starting to see improvement in that portion, at least, from the 2Q onwards.

Yes. Rishit, this is Angan. Can you hear me?

Yes.

Yes, okay. So, Rishit, this is Angan and I lead financial services globally, so let me give you a little bit of a color from a BFSI standpoint. So, Rishit, as you know, you know, most of the banks have bought into this cycle with a pretty robust balance sheet, right, because none of the banks wanted to be in the same situation as they were during the global financial crisis. So obviously, everybody is showing a balance sheet strength, and what that has done is that has, you know, made the banks spend a lot lower than what they were spending earlier, that – so that is one. There are two big uncertainties specifically with the unemployment at the rate it is, and U.S., like Jatin mentioned, being our biggest market, people are worried about delinquencies, that is one. And second, with almost a zero interest rate or could even be negative, you know, from a banks as well as the financial institutions perspective, they're very careful in terms of the uncertainties. And you would have seen the Gartner report. The Gartner has clearly stated that there will be a 4% decline in terms of the spending, but that said, there are also some green shoots, so we have seen a lot of discussions around the run side of the bank where people are spending to cut costs and we are participating very, very heavily in that part of the area, but the things are uncertain. So, you know, we will play it by the year, we will see how it goes. From a discounting perspective, I think we've done a good job in terms of Q1, but as things become more clearer, we will be able to be – give a much better commentary at this situation.

Alright, thank you.

Thank you very much. The next question is from the line of Sandeep Shah from CIMB. Please go ahead.

Yes. Thanks very much [indiscernible] Thierry. My first question is to Thierry. Just to understand, as you have said in your speech as well as in the press release that your agenda is on profitable growth and you will also agree that Wipro has been lagging the industry growth rate, while peers who have faced the similar situations have actually in their initial strategy has compromised the margin to get the growth turnaround as a whole while one of the peers wanted to do both hand-in-hand and was not able to do it successfully. So do you believe a profitable growth and a growth turnaround going hand-in-hand could be like a Catch-22 situation and maybe a difficult task where you have to first compromise a bit of a margin to get the growth turn around, so your plan and strategy around the same?

Okay. So yes, it's a very fair question. You know, in my answer, I'll be a little bit academic because I think that, you know, as you can imagine, with the – you know seven days under my belt, it's – you know it's – these kind of answers require, you know, specific to the situation of every business, but let's be clear on my priorities. I have the – I will drive an obsession for growth in the organization, obsession for growth, for growing our topline everywhere. But I mentioned profitable growth because I don't believe that you can, you know, negotiate one for the other. There's a possibility that maybe one quarter or two, you know, you get more of one and a little less of the other. These are – you know it can always happen, but on the long term, you need to drive both growth and profitability, and we can do it, we can do it. Growth, it starts with growth. That's also one important point. You know, you can drive profitability through cost reduction quarter-after-quarter, but it's very difficult to drive growth if you're not investing and hence your point on Catch-22. So, it starts with growth, okay. My view is that to drive growth, it’s going to be about certainly high energy, absolute focus on that, ready to focus the investments to the accounts that matter to us to the – you know, leveraging the offerings where we have strengths and the industries and the position we have in our industry. It will take some bets and we will take some bets and we will be bold in going after these bets. But the focus will be on growth, not to the expense of profit.

Okay, okay. Fair enough. Thanks and the second question to Jatin, just about the margin savings which you would have done, this is also held by work from home and the lockdown, but as the growth comes back, what percentage of savings which you have achieved in 1Q and maybe possible because of a full quarter impact in 2Q, would you retain when the growth comes back in a normal situation once the lockdown situation is much more normal versus where it is right now?

Yes. So certainly, there are certain expenses which will come back like, for example, we are at a historically low value of travel as you can see in our financials and that would come back as you climb back on activity. There would be – but at the same time, there would be certain expenses that we have had benefits for like the half the quarter or one-third of the quarter, in quarter one that will give its full benefit in quarter two, so there are some positive levers also there. The expenses that will come back with increasing activity, our endeavor would be that are commensurate with additional opportunities and growth that we are seeing. So in some form, you should get a lever from growth on those expenses, but overall, we see that we should be able to focus our energies in second quarter also on what we can do. We remain focused on cost just, you know, it's not a one-quarter journey. We’ll continue to question all the incremental spend that that are needed and we have to be very clear, Sandeep, that, you know, we have built a model for a different time and place, the operating model that was operating. And if we are not conscious of looking at every cost item and asking whether in the new world, this is also required or not required then we are not doing justice to that cost. So we’ll continue to look at, you know, areas that we couldn't focus in quarter one, in quarter two also. So I would really put it in three buckets, you know, the costs that will go up, the costs which will give its full benefits and also the third bucket with the costs that we have not been able to look at in the short-term, can we look at it now? So those are the cost plays, and therefore, I made a comment to Sudheer’s question that, you know, we'll try and keep it in a narrow band, of course, subject to the investment that we need to make and I think there we can compromise and what we need to invest for growth. We announced one acquisition, if we have to do, you know, we have to remain focus on strategic assets that we want to add that could also be diluting. So those investments, we will remain very open, but cost side, we will try and look at – continue to remain as close as possible to the – to line of execution.

Thanks. Thanks and all the best to management.

Thanks, Sandeep.

Thank you very much. The next question is from the line of Abhishek Shindadkar from Elara Capital. Please go ahead.

Yes, hi, thanks for the opportunity. You know, a part of the question was answered earlier, but would like to understand, you know, how did the demand or the, you know, deal bookings played out in June versus May and April? Any commentary or color in terms of the progression could be helpful. Thank you.

I’ll request Bhanumurthy, our Chief Operating Officer to answer.

Hi. Yes, in terms of the order book, you know, what we have seen is that during the latter half of the quarter, we see the deal momentum pick up. Our pipeline continued to remain very healthy and you've seen that, you know, we also announced a couple of good deals in our press release itself. And what we're seeing is that the velocity of decision making is still not at the pre-COVID levels. However, our order book remains healthy. It has improved year-on-year and our pipeline is robust. We're also seeing that in terms of demand, the nature of services that we have seen, definitely we are seeing a good pipeline for our offerings on cloud, ensuring that they – our customer employees are able to work from home and remotely. Some of the infrastructure services and our digital operations and platform services, and we are seeing a good momentum in these services along with our engineering and security services as well. So, we do see a good momentum on the order book side and, you know, our pipeline looks robust and healthy.

Thank you. Just a clarification, you said the book is – you know has increased year-on-year. If you can also compare it to March or pre-COVID levels that would be helpful. Thank you for taking my question.

Yes. So, you know, like we discussed, we don't disclose the individual size of the order book or the [indiscernible], but I can tell you that the order book has improved year-on-year comparatively, yes.

Thank you.

Thank you very much. The next question is from the line of Divya Nagarajan from UBS. Please go ahead.

Thanks and congrats on the strong execution in a tough quarter. Most of my questions have been answered, so I'm just going to ask Thierry a question more on a sector perspective, if I may? Thierry, in your experience on the services space, and specifically in the last few years, the changes that we're seeing in the IT services landscape, what would you think are the key trends that you think are going to accelerate because of what we're seeing in this downturn? And specifically, what is your – what has been your impression of the offshore sector as a whole in the last five years? And how the sector has handled this transformation to digital?

Okay, thanks for the question. So yes, the – you know I think we all recognize that the – we are in an industry where the reality of the day is not the reality of the day after. So things are changing rapidly. What – you know a couple of trends. One, we all agree on the fact that technology is more pervasive inside the organization that every company is investing in technology, and therefore, you know, enabling technology to address business issues. What we've seen over the years, over the last years is that there is a growing component of this technology spend that is being done outside, or not say outside, but that is being driven by the business and it's not only triggered, if you like, by the IT departments, Chief Marketing Officer are spending in technology, Chief, you know, Sales Officer, Head of Operations, Head of Manufacturing, Head of Supply Chain, different function leaders are spending in technology, and therefore, it's an evolution, you know, we need to adapt, and obviously, be the force of connection inside the companies between the business and the IT. IT is always required, absolutely essential to drive scale and security to all these investments and orchestrate if you like, those – the investment on those technologies. But I think it's clear that, you know, we have to be prepared to connect with CXOs and very different stakeholders inside companies to engage on strategic discussions where technology can play a role. Second, I think, you know, it's very clear that, you know, the company that have not invested enough in their digital transformation over the last years, I felt the pain during the crisis of the last weeks, and there will be an acceleration of their transformation over the next quarter. The level of adoption of cloud in the different markets is going to accelerate tremendously, and without – you know, not even talking about the potential of, you know, 5G for a lot of the technologies that we are talking about. So, I think, you know, I would say that, you know, the winners in the industry would be the one who have been able to adapt and shift the fastest to the evolution of this demand and be able to, you know, come on one side and work with the clients, the partners to drive efficiencies, simplify organizations, reduce the cost of running operations and so on. And on the other side, reinvest at least part of the savings to, you know, new technology and new ways of working, helping creation of new revenue streams, through innovation, and technology. So it's going to be about being able to adjust, being able to accelerate and stick as close as possible to our customers and hear and get a deep understanding of the challenges of each industry and be able to respond to it. Services need to be sector specific to address those needs – those requirements from our clients.

Thanks for that. Jatin, my question to you earlier comment that you have brought down your temporary workforce and replaced it with some of the slack that you had in the system because of this downturn. What would, you know, how would you kind of look at, you know, talent in building up the bench, as demand returns? Would it mean that some of the temporary workforce comes back or do you think that you have enough you know, slack in the system still, because utilization, as you said, has gone up a bit. Does that mean that you will have to then increase hiring as demand comes up how should we think about this equation?

So, we have right now sufficient availability of talent in the company. Having said that, you know, right now, you know, as we always say that we will hire for revenue. So, if there is a need to hire externally, we will definitely look at it, but the action that we took was a very straightforward, I would say, straightforward method of attraction that when we saw the reduction in some of our revenues, some of our own employees became available for work. And if we had a skill set which was available, with which we could service our customers, we did not need the cost of the variable workforce. And therefore, we sort of reduce that variable workforce and put our own employee to service those requirements. And if it goes up, then we have all the channels available for us to utilize it. Saurabh do you want to add anything to that?

Yeah, just to add, one is that, you know, in the – some of the geographies in the developed markets we have been able to put some employee on furlough and that's helped in our cost perspective, but our talent available for us and as an when demand comes, you can quickly get them back without hiring anybody. So it's a win-win for the employees for the company of not going and hiring people when the demand comes back or, you know, gearing us up for that. And the other one is also what's outsourcing and the Top Gear platform and how you utilize that. That's another advantage. We're seeing a lot of traction on Top Gear. In the quarter, we have seen a large demand on that one. These two would be other drivers in terms of looking at when demand comes back.

Thank you and all the best.

Thank you very much. Ladies and gentlemen, we will take our last question now which is from the line of Mr. Girish Pai from Nirmal Bang. Please go ahead.

Thanks for the opportunity. Just wanted to discuss the trajectory of recovery. You had your best quarter recently in 2Q FY 2020 of about just a little less than 2.1 billion, by when do you think you will get back to that number Jatin? That's question number one. Second question is regarding pricing. Do you see that the worst on the pricing front is behind us in 1Q or do you see that kind of coming back again in the succeeding quarters?

Yeah, Hi, Girish, how you are well. So, I think it will be too early for us to call when we'll come back to a particular number as Thierry mentioned in his opening remarks and the subsequent question that we really need to find stability, but you know, our endeavor would be to reach there as early as possible. I mean the focus will be on growth and focus will be on investment and focused effort to get that growth back. So, not able to quantify that timeline Girish. And your second question was, sorry?

The pricing, do you see that it's kind of – have you seen the worst of that or do you see that kind of coming? Because [indiscernible] customer too much of time to think about their spending plans, now that they kind of coming back to office and decide on budgeting going forward. Do you think you will actually see more pricing pressure going forward?

Participants we are requested to please stay connected. We have lost the line from Mr. Dalal. Okay, we have the line now reconnected. Sir, you may proceed.

Yeah. So, Girish I was just saying that, you know, we have worked very closely with our customers and I would look at pricing more as a realization for us. And as I had said earlier in another discussion that some of the realization which has got impacted, food starts returning. Yes, pricing will remain a theme in a tough year, but our endeavor has always been to work with our customers to reduce the total cost of ownership for customers and not necessarily make it a, you know, a win lose equation, but really work towards a win-win for customer as well as for us.

Thank you.

Thank you very much. Ladies and gentlemen, that was our last question for today. I know hand the conference over to Ms. Iyer for closing remarks. Over to you, ma’am.

Thank you all for joining the call. In case we could not take any of your questions, please feel free to reach out to the investor relations team. Have a nice day. Thank you.

Thank you very much members of management. Ladies and gentlemen, on behalf of Wipro Limited that concludes today's conference call. Thank you for joining us and you may now disconnect your lines.