Please Share:: 
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Our interaction with Wipro's banking head indicates Wipro is taking the right steps to regain its
competitive edge. The recent changes, including increasing weightage of Individual performance
within variable pay and recruiting high quality domain experts, are increasing large deal activity.
We maintain Buy.
Making right moves to augment IT services growth
Our recent interactions with Wipro's banking vertical head indicates that recent changes
through sales reorganisation are leading to positive momentum in large deal activity. We
believe that these changes may not result in any material increase in deal wins in near term
given macro headwinds, however it would position Wipro better post the macro stabilisation in
our view.
Besides the verticalised selling in developed markets (versus earlier structure of independent
selling through vertical, geography and horizontals), the other key change include the variable
pay of senior account managers is now largely linked with individual/department performance
versus earlier model of 50% linkage to the same.
Besides the above, performance measurement of sales staff now includes four objectives i)
customer satisfaction, ii) employee satisfaction, iii) revenue targets from clients and iv)
profitability. The earlier performance measurement was largely linked to revenue targets.
Recognizing its lower scale versus many competitors within BFSI, Wipro has materially
increased its strength of high quality domain experts which were recruited from the BFSI
industry to differentiate itself versus competitors. This was in addition to Wipro's recruitment of
high number of client partners from consulting firms in last 12-18 months. This has led to
many proactive deal negotiations with large accounts versus the earlier reactive and less
coordinated approach of Wipro.
Besides reorganisation of sales force, Wipro has increased its focus on performance
measurement through weekly update regarding the large deal activity across clients and
across domains within each large client. This is also resulting in increased touch points within
large clients which will throw increased opportunity for client mining.
Within BFSI, Wipro claims that it has not lost any senior employees which it wanted to retain
post the recent sales reorganisation.
Changes leading to large deal momentum
Above changes is leading to increasing momentum towards large deals by Wipro resulting in
two large deal wins with combined TCV (total contracted value) of US$500m (as announced
in 1QFY11 results).
Both of these deals would generate incremental revenues for Wipro and are coming from high
end of the value domains including core banking and cloud enablement. Both the deals have
started as per schedule according to Wipro.
Our checks indicate that Wipro is now incrementally getting involved in various large deals
within its large accounts (mega and gamma accounts) due to its coordinated efforts and
changes implemented within sales organisation.
Not witnessing any abnormality through macro headwinds yet.
In line with peers, Wipro is also not witnessing any slowdown from recent concerns from
macro yet.
In line with our view, Wipro also believes that recently increased macro headwinds and
resulting volatility may result into delay in finalising CY12F IT budgets by clients.
It also expects clients may increase its focus on short term projects rather than committing for
long term till the stabilisation of macro headwinds.
However it believes that higher spend emerging through regulations and efficiency
improvement to continue even in CY12 despite recent headwinds from macro.
It also believes that current spend emerging from compliance/regulations in BFSI is just the
beginning with higher growth expected over next two-three years. Wipro has created a
separate practice related to regulatory services headed by a very senior ex-regulatory
personnel.
Our view
While these changes may not result into any significant positive surprise in near term given
macro headwinds, we believe these steps are likely to increase the large deal traction going
forward.
We continue to believe that risk-reward ratio at current valuations are favourable given
already low earnings expectation of the street from Wipro. We maintain Buy and believe that
current levels are attractive as we expect earnings momentum (versus expectations) to
improve from FY13.
Key risks include any severe deterioration of macro environment in US/Europe.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Our interaction with Wipro's banking head indicates Wipro is taking the right steps to regain its
competitive edge. The recent changes, including increasing weightage of Individual performance
within variable pay and recruiting high quality domain experts, are increasing large deal activity.
We maintain Buy.
Making right moves to augment IT services growth
Our recent interactions with Wipro's banking vertical head indicates that recent changes
through sales reorganisation are leading to positive momentum in large deal activity. We
believe that these changes may not result in any material increase in deal wins in near term
given macro headwinds, however it would position Wipro better post the macro stabilisation in
our view.
Besides the verticalised selling in developed markets (versus earlier structure of independent
selling through vertical, geography and horizontals), the other key change include the variable
pay of senior account managers is now largely linked with individual/department performance
versus earlier model of 50% linkage to the same.
Besides the above, performance measurement of sales staff now includes four objectives i)
customer satisfaction, ii) employee satisfaction, iii) revenue targets from clients and iv)
profitability. The earlier performance measurement was largely linked to revenue targets.
Recognizing its lower scale versus many competitors within BFSI, Wipro has materially
increased its strength of high quality domain experts which were recruited from the BFSI
industry to differentiate itself versus competitors. This was in addition to Wipro's recruitment of
high number of client partners from consulting firms in last 12-18 months. This has led to
many proactive deal negotiations with large accounts versus the earlier reactive and less
coordinated approach of Wipro.
Besides reorganisation of sales force, Wipro has increased its focus on performance
measurement through weekly update regarding the large deal activity across clients and
across domains within each large client. This is also resulting in increased touch points within
large clients which will throw increased opportunity for client mining.
Within BFSI, Wipro claims that it has not lost any senior employees which it wanted to retain
post the recent sales reorganisation.
Changes leading to large deal momentum
Above changes is leading to increasing momentum towards large deals by Wipro resulting in
two large deal wins with combined TCV (total contracted value) of US$500m (as announced
in 1QFY11 results).
Both of these deals would generate incremental revenues for Wipro and are coming from high
end of the value domains including core banking and cloud enablement. Both the deals have
started as per schedule according to Wipro.
Our checks indicate that Wipro is now incrementally getting involved in various large deals
within its large accounts (mega and gamma accounts) due to its coordinated efforts and
changes implemented within sales organisation.
Not witnessing any abnormality through macro headwinds yet.
In line with peers, Wipro is also not witnessing any slowdown from recent concerns from
macro yet.
In line with our view, Wipro also believes that recently increased macro headwinds and
resulting volatility may result into delay in finalising CY12F IT budgets by clients.
It also expects clients may increase its focus on short term projects rather than committing for
long term till the stabilisation of macro headwinds.
However it believes that higher spend emerging through regulations and efficiency
improvement to continue even in CY12 despite recent headwinds from macro.
It also believes that current spend emerging from compliance/regulations in BFSI is just the
beginning with higher growth expected over next two-three years. Wipro has created a
separate practice related to regulatory services headed by a very senior ex-regulatory
personnel.
Our view
While these changes may not result into any significant positive surprise in near term given
macro headwinds, we believe these steps are likely to increase the large deal traction going
forward.
We continue to believe that risk-reward ratio at current valuations are favourable given
already low earnings expectation of the street from Wipro. We maintain Buy and believe that
current levels are attractive as we expect earnings momentum (versus expectations) to
improve from FY13.
Key risks include any severe deterioration of macro environment in US/Europe.
No comments:
Post a Comment