Offshoring is kind of over, says Wipro, as financials surge thanks to offshoring
- Reference: 1610613066
- News link: https://www.theregister.co.uk/2021/01/14/wipro_q3_2021/
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The Indian services giant yesterday reported its fastest growth in nine years, with Q3 revenue
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of $2.1bn, of which $2.071bn came from IT services, the latter at a sequential growth of 3.9 per cent. Margins for the segment hit 21.7 per cent, the best in 22 quarters. Net income reached $406m, a year-on-year increase of 20.8 per cent.[2]
Company president and CFO Jatin Dalal said the mix of work Wipro performed in pleasingly low-cost offshore locations, as opposed to in customers’ home nations, “has improved by approximately 6 percentage over the course of last four quarters.”
Customers seem to like it: across the quarter the company closed a dozen deals valued at over $30m, and those deals totalled $1.2 billion.
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CEO Thierry Delaporte said demand “has shown steady improvement in the last 6 months.”
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“The intensity of the sales activity continues to rise and the pipeline is robust. We are seeing heightened demand for our service offerings in digital transformation, in digital operations and in cloud infrastructure services in particular.”
A quick reminder: the world economy is in virus-induced recession. Yet Wipro said five of its four sectors saw growth above four percent.
Delaporte was asked about Wipro’s offshoring performance and suggested that the virus-induced increase in working from home is helping the company because it has taught customers that they can trust workers they can’t see in the office.
“So there's definitely a reflection from many clients, realizing that they can build, they can manage complex operations and operating model with teams that are in distance,” he said.
He added that organisations have come to realises that a core on-site team is critical. “It means you need to have pure team -- people who are really next to you, connected with you 100 percent, even more than before, which pushes the logic of having less partner but stronger partners, right?”
India will continue to have a unique position, in terms of concentration and quality of technology expertise
“And so … my view is that what we could offshore does not exist anymore. It's all shores, right? It's the model under which a lot of clients will want to operate going forward. It will imply some people being close to them and people being away.”
And the CEO said he expects plenty of those “away” people will be in India, because other nations just don’t have as much talent for Wipro to hire.
“That's why, in my view, India will continue to have a unique position, in terms of concentration of technology expertise and talent but also in terms of quality of the expertise,” he said.
The offshoring shift came about, in part, due to the re-org initiated by Delaporte.
The CEO also outlined some customer trends. Many, he said “are moving away from traditional IT models and adopting business tech operating models”.
Customer experience transformation programs are becoming front-to-back initiatives, including core transformation and not just on omni-channel experience,” he added.
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Cloud migrations, he added, are done. “Clients are moving beyond the lift and shift of the workloads, to the cloud, to exploit the automation native capabilities.” Which suggests off-premming – if we can coin a clunky phrase – is now perhaps an even more significant trend than offshoring. ®
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[1] https://www.wipro.com/content/dam/nexus/en/investor/quarterly-results/2020-2021/q3fy21/press-release-q3-fy21.pdf
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[4] https://www.theregister.com/2020/12/14/new_tshirt_slogan_my_job/
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[6] https://whitepapers.theregister.com/
Re: Nothing wrong with either
@claimed
Fair comment, provided you can find out what the outsource is doing (or, more critically for security) what they're not doing. This can be very hard. These days the outsource usually defines the contract (weird but true) and you'll find it's typically vague on detail, includes absolution clauses, and specifies a bare minimum of reporting (if any at all).
If you keep your tech in house to do of course lose some benefits (e.g. dynamic scaling), but at least you can have direct tabs on the state of play provided you make the effort.
In my experience, many businesses do indeed outsource under the impression that they are handing over the responsibility. They find out they were wrong when the outsource screws up publicly. But these are typically the businesses that wouldn't make the effort to find out the state of play even while all was in house.
Nobody and nothing can help the negligent.
hmmm...
It's been my experience - as a former employee - that "WIPRO" and "talent" do not belong in the same sentence.
“That's why, in my view, India will continue to have a unique position, in terms of concentration of technology expertise and talent but also in terms of quality of the expertise,”
Errr - really? Like @lansalot, as a former employee I can tell you that expertise was very hard to find out in the wider Wipro ecosystem. If anything, it was a case of companies being used as training grounds!
India employment culture and churn
My experience of offshoring to an in-house business unit based in India was that the Indian employees used the company I worked for as a training opportunity to get more experience/polish their CV, then used that additional experience to get a better paid position elsewhere in the local technology hub/city. It led to continuous employee turnover/churn, and the need to 'on-board' inexperienced employees all the time. Basically, we were training people to get better paid positions elsewhere, which was not a viable business proposition.
Of course, the company I worked for did not want to do the obvious and improve the pay and conditions for the Indian workers, as that would have made offshoring look bad. So we had to put up with the situation. I left not long after, so I don't know how things have ultimately played out. Being unable to guarantee that technical staff would be around for the duration of project roll-outs, let alone the full term of multi-year customer contracts was a big drag on efficiency - Fred isn't worth us any more: meet Joe, who comes to us straight from university/technical college. Please help him come up to speed. Rinse and repeat at the next project meeting. Continuity 'R' us, it wasn't.
My other experience of the large Indian outsourcers is that their project teams seem to be a bubbling maelstrom of people, or to put a positive spin on it - an extremely dynamic environment. Working out whether it cost-effective was above my pay-grade.
Re: cost-effective
It can be, if the project is well defined and the relationship well managed, however in most cases that doesn't seem to be the norm. Savings are usually short-term, and by the time problems come to light the exec originally responsible has taken their bonus and left for pastures new.
Impressive performance
"Yet Wipro said five of its four sectors saw growth above four percent."
who said accounting was dead?
Nothing wrong with either
Off-prem or Off-shore, just so long as you're not also letting responsibility Off-shoulder