It should have been like shooting fish in a barrel. But it seems that India-based offshore services firm, Wipro, must have had wonky sights. With the Rupee depreciating some 11% over the quarter, all its India-based peers (yes, even HCL) have seen significant margin boost – but not Wipro. Indeed, operating margins declined by 140bps yoy to 20.8%, only 80bps higher qoq. Archrival Infosys achieved a 440bps margin boost from the FX effect, which translated into nearly 2 points on the margin even after offsetting headwinds from lower utilisation and other factors. Wipro should have seen similar benefit.
CEO TK Kurien has now been a year in the job (see Wipro surges in Europe and turfs joint CEOs). But he seems to have spent much of the time shuffling the deckchairs (e.g. see Wipro top team – another one hits the dust) instead of perhaps steering the ship. Indeed on Kurien’s watch, Cognizant overtook Wipro as India’s third largest offshore services player (see Cognizant the new Number Three!). The gap will surely grow wider when we hear Cognizant’s numbers in a few weeks’ time.
We have entered a new year that by all accounts (and certainly according to our forecasts) will be as tough as last – perhaps more so. Kurien needs to get his crew back to their stations and focused on sailing the good ship Wipro full steam ahead, rather than spending time worrying whether they’ll be the next to find themselves sleeping in a different cabin.