Wipro Ltd (WIT) 2004 Q4 法說會逐字稿

Ladies and gentleman, if you wish to ask any questions [OPERATOR INSTRUCTIONS]. Your first question comes from the line of Moshe Katri from SG Cowen & Co.

Congratulations for a very nice quarter gentlemen! I wanted to first talk about the demand environment, may be you can talk about the demand by the various verticals that Wipro services on?

Sure, may be we can do that. We will ask our different SBU heads to speak about their verticals. We will start with Sudip Banerjee who will talk about enterprise, Girish who runs our financial services [inaudible], so I will cover that for him.

These are some enterprise solutions or verticals that we service our manufacturing retail, energy, and utilities, travel transportation, media and services, and healthcare. If we look at each of these verticals, in the past year we found that our travel transportation and media and services vertical grew year on year of 84%, so they ran a very strong demand engine and as we look into the year ahead, we think that we are going to see growth in that service line. Retail is another area where we finding lot of traction. Customers are coming back for industry solutions and our focus on solutions with respect to RFID or global research centralization are creating demand for us in that stage. In the energy and utility states, within that the oil sector is showing lot of buoyancy. We had strong client additions and in that particular sector, we think that the demand will continue to be high. As far as manufacturing is concerned, it is broken up into several subpractices, like automotive and pharma, and the ones which I would like to pickup are really pharmaceuticals, as we find that there is a great interest from pharma companies in the last 6 months and they are coming to offshoring bandwagon which they were not there earlier. So that follows the enterprise space and back to Vivek to follow the financial services.

On the financial services, what we are seeing is that our insurance business where we have a very strong position, continues to be the driver for growth, particularly in Europe, where we have relationships with pretty much every insurance company and we have seen growth there. In terms of banking, they have seen us to beginning to enter our multi-vendor creations where you will have to hold together, in other words, companies that were shore sourcing are now multiple sourcing and as a result we are able to get some breaks in that.

On the securities business, what we have done right is we are seeing a little bit of slowdown, not a slowdown in terms of reduction, but slowdown in terms of the rate of growth, I think that is still [inaudible] business for us and the company has a very strong position in big securities [inaudible]. In terms of the R&D businesses, I will now ask Ramesh Emani to talk about embedded and Dr. Rao to talk about the telecom business.

In the embedded business, you can probably classify the world under one segment, what I call the computing segment, which includes the computing hardware, software products, and then the storage and peripheral companies, that is one category and the other category is around the semi-conductor companies and the associated world like consumer electronics, automotive industry, automation [inaudible]. We have seen a revival in the semiconductor business. We have seen some slowdown in the market between the earlier quarters. This quarter we have seen a revival happening and we have seen a good growth. We have seen very good growth in the storage field where we are working with a number of storage companies. We are seeing a moderate kind of growth in the consumer and the automotive phase and we are yet to make a big impact in the automation and the avionics market. Because we are addressing so many varieties of the verticals, wherever there is a conflict in one of the verticals, we are able to see recovery in the other area, but overall, the R&D space is very dependent on the market field in terms of the overall [indiscernible] strategy growth and other parameters, so in that sense, I will definitely say in this market, we have a little lower growth compared to maybe some other verticals.

If you are looking at your top 5 or top 10 clients for the quarter, are we saying that at this point stable demand, increasing demand, what should we model for going forward, do you think, maybe moderate growth on a sequential basis?

I think if you look at our top 10 accounts, they grew at 9.5% of shore sequential basis, so I think we have had pretty good growth. I think it is really difficult for me to give you guidance at such a precise level down to account-wise for you to be able to do a modeling. I think, what I could do, just pull back, and I am sorry, I cannot you help anymore on that, to say we are seeing growth, we are seeing the overall strength moderate, we are seeing more offshore intensity, and as a result, as this quarter has indicated, and of a steady as she goes performance.

Finally, I do not see we can leave without talking about pricing, may be talk a little bit about the general pricing environment, looking at new deals, and then may be our pricing offshore and your top 5 or top 10 clients?

Sure. First, I am going to talk about the fact that the difference as we talk [inaudible] comes before the realization and pricing. This quarter we did see a drop in realization and that realization was driven on the back of not at all any [inaudible] realization, more price, not at all in any reduction in new account pricing, in fact the new account pricing continues to run nicely, a head up over our overall average. It was purely the result of a mix resulting from 2 factors, one is the service line mix and the second is a lower fixed price project, mixed into the overall revenue. That is something difficult to call, you just connect wherever revenue comes in and do the percentages at the end you try to sell every service as much as we can. Having said that, I will now focus in on pricing and answer your question about what is the outlook of pricing. While we are proud that we have had a very good track record of raising prices and realizations over the past several quarters, we have always maintained that this is not something that we want to forecast, but we take to the [inaudible] and then we can get, and the reason for that is that we want to be very flexible, competitive environments change, competitive dynamics change, and we want to be flexible.

In the war for new accounts, you have not seen any change in pricing inventory. In terms of existing accounts coming back and asking for price reductions we have not seen any change in that push. Finally and unfortunately in our quest for getting price [inaudible] and the customer [inaudible], we have also not seen any reduction in that business. I think, let's say, the pricing environment may continue to push every button you can get, we have had a pretty good track record, but we are just not going to fall out.

Your next question comes from Edward Caso of Wachovia Securities. Please go ahead.

Two questions. One is if you could get us updated on the Indian Government budget what is the timing, what the implications are particularly on the tax side, what implications there would be this year, and then I have one another question.

We had a demand this last year for the financial year 1999-2000 and since the

I think, he is talking about the FBT tax.

As far as FBT tax is concerned, as you know the Government of India has set up a high level committee who talk with industry and ready to be [inaudible] what are the kind of changes that has to be brought out and one of the changes the committee did make was that the genuine business is [inaudible] with market subjected to fringe benefit back. At this point in time, what is unsure, we expect much more clarity in the middle to end of May, when the final financial bill will get passed. At this point in time, we have not sort of acted any of that, in any case, the fringe benefit tax, whatever it is, will finally come to and will be not significant and when it comes it will be in the tax line.

Another question, you mentioned that you were getting traction getting into hold a defender situation that are previously been someone else's sole opportunity. If that sole opportunity was it of the multinationals or was it a some of your peer play peers?

A little bit of both.

Your next question comes from the line of Ashish Thadhani from Gilford Securities, Inc. Please go ahead.

There have been some hints of erratic revenue growth at some of your larger peers, just wanted to know if Wipro was experiencing any negative effects on revenue from certain trends, specifically 3 which you can take in turn. First, if there is any diminished urgency or diminished cost pressure at some of your clients. Number two, is the rapid transfer of work to offshore centers with lower billing rates is having any impact on revenue, any serious impact? And number three, is vendor diversification by clients to hold pricing down is having any impact?

If you look, let me take, first of all an overall trend, I think that we are seeing is that there is no overwhelming customer trend that is changing by the area. I think whether it is them, by offshore, whether it is them taking a look at the more with us. We are not seeing any significant trend and in your prospective of offshore, slightly our revenue goes for this year safely to account the fact there are offshore components grew from 42 to 45% this year from what it was a year ago. So, I think that we are not seeing any significant shift.

Also just to move forward is it realistic to expect a full blown consulting revolution towards off shoring, in broad terms how large is the aggressive market in consulting relative to the present and what are some of the key challenges that you might face and the timeframe during which your progress should be judged.

I think that first of all the big question comes how do you define consult and I think if you take a look at consulting beam, you know on the one side IT governance, IT architecture, IT strategy, the next level being business positive functional excellence, the third being competitive strategy, and the fourth being corporate strategy. I think that most of our revenue comes from the first two and I think that as you climb up that the amount of offshorability declines and if you look at the total consulting revenue we get across all of the consulting lines we have, the Wipro consulting fees, that is under banking and financial services, the utility consulting, the quality consulting, the technology consulting and then consultants we have embedded better in different verticals, we get about $70 million a year in overall revenue. The lot of that is in the first couple of categories I talked about, so there the offshore component is usable, but it also has a much higher on site component in a normal area and practice. Having said that in terms of our outlook with the overall industry, I do no think we know enough yet to be able to answer that. If I think about it in a very large you know multibillion dollar market, when we are at $70 million dollars, I do not think we have as good a view of the overall capability as you might be expecting. I think, we need to do this a step at a time and once we get a real view on the market, we will share.

You know the tax rate is expected to rise as some of your exemptions expire through 2009. You have any feel for what level and what timeframe your effective tax rate might peak?

I think, as you know, the tax permit is cease to be in 2009, we are expecting it to peak soon after that year, that means, the financial year 2009 and 2010 and from now to then of course we will have unit by unit some of them coming out and effective tax rate where more of it would be [inaudible] index.

Would it be a gradual increase or would it be a major step function in that 2009-10 timeframe?

Yes, it will be a very gradual movement, and also if you are seeing now, that our units are being set up in [inaudible], we just call the special economic zone, the service [inaudible] zone and that tends to have a little different kind of tax holiday, but net-net I think a certain amount of tax rate will go up by 2009-2010.

Your next question comes from the line of Trip Chowdhry from FTN Midwest Research.

Few questions here. First of all Vivek, it seems your Indian counterpart had a problem on realizing the opportunities presented by compliance especially they gave a reason that their quarter work was not so great because of Sarbanes-Oxley issues. It seems to me based on some comments that have come out of Wipro is that you were proactive and you had something to use the Sarbanes-Oxley as leverage and as an opportunity, I was wondering what prompted your thought process and how were you proactive while others were not?

You know first of all, I want to give a lot of credit to everybody else, I think we are very fortunate to be in this position and having been on the other side as well, I can tell you that there is no sort of singularity. I think that the way that we are looking at it is we launched SOXSOX practice about a year ago and even as a SOXSOX and Sudip Banerjee really under who gave us the successful launch to speak about it for a moment, but just looking at we saw the stranding preview on the SOXSOX side and you know and that was an opportunity to go after. Having said that with regard to this particular quarter, I also want to be sympathetic that you know while SOX may not have an industry wide issue, it could be an account specification with several accounts. We have been fortunate that it was not an issue in any of our accounts and if it was, it was not as an big issue and we were able to offset elsewhere, but it is definitely account specific possibility. I am going to turn it over to Sudip, who can talk about the SOXSOX practice

You know we started this SOXSOX practice about a little over a year ago and we saw market opportunity because there was a lot of work which companies were wanting to give out to people who had the expertise to be able to do this documentation, fill in those templates, make sure the reports are as per as the required formats, etc. So, we started by developing our own team of consultants who then did assessment studies and finally started winning projects and those projects we started wining about 9 months back. The major of the projects, first was purely consulting projects which means 4 to 6 weeks type of project but we have now moved on to projects where we are doing a lot of work for clients and our entire team on the SOX consulting side has gone up to 200 and we are working today with a large number of clients in North America providing SOX consulting and SOX execution. We look at this as an opportunity where we invested early and we are hopeful that over the course of next 12 to 15 months that this activity peaks, we will able to realize the opportunity in terms of having very good growth from this particular segment of the market.

Second question I had was regarding the competitive dynamics in which we play here especially in Europe as well as in US, I was wondering who is your win rate against the domestic, the US based big 5 companies and how do you see that changing say over the next 12 months to 24 months.

From a competitive land sketch standpoint you know I think [inaudible] point regarding consulting even with the scale that we have achieved in the business, we still as a company represent a small percentage of the overall IT services market. So, to say what the broad trends are, I do not know if we could really answer, I think we could just look at our own results, I think we are winning against multinationals, as often as I am sure we are losing, we keep statistics, our win rates continue to grow and our focus is then the past year or so to penetrate deeper our existing customers and on a strategic basis the new customers that match our ideal client profile so that we can grow and scale our opportunities with any companies based on a partnership model instead of a transactional discrete customer-by-customer engagement. So, from our own internal viewpoint we are winning more than losing.

I was wondering like, on your top 10 customers you have, you have been getting a lot of deals from them, I was wondering do you think you may have both, as well have totally saturated amount of IT stranding need to outsource and probably in some situation as another analyst pointed out there may be a trend towards multi-sourcing, I was wondering what is the Wipro's strategy to, number one to fall in some situation, say multi-sourcing as an advantage and in certain situations secure single sources like in certain customer base you are primarily almost 80% or 90% of their IT spend. I was wondering what dynamics you are staying and how do you see you know this industry evolving over the next few years.

Just let me give you a broad comment on this and I would ask Vivek to give you some more details on this. Frankly we see a large opportunity in mining our large customers. We think we are no where near saturation levels, we are nowhere near saturation levels whether it is cross standing across geographies, we are nowhere near saturation levels whether it is cross standing or cross verticals. And many of our large customers are multi-sourcing now anyway. I will let Vivek add a couple of answers.

No, I think that Aziz mostly covered it, I think that we are not convinced at all that we are reaching a saturation point even in terms of our share of stands or their overall stand that can be moved offshore. And also you see a demonstration of that in the last quarter we are at the top 10, we have grown about 9 plus percent, 9.6%, which is much better rate than it was our average growth rate revenue sequentially.

22 of our top 50 accounts will have double digit growth.

I do not think you should underestimate the amount of shift which is taking place to global sourcing which is sourcing in the same locale in which these large companies are located. So, the major opportunities when shifting from partners who have not yet built up very competent offshore center.

Next question comes from the line of Lou Miscioscia of Lehman Brothers.

If you look back at the fiscal year that just ended, I guess [inaudible]

Lou, can you speak up a little bit?

We look back over the [inaudible] year that you just ended broadly as an industry opportunity with a fantastic year, but it does seem like growth

We cannot hear you…

Comparison is growing for many of them …

.[inaudible] we are not able to hear.. I think you need to repeat that question [inaudible] speak up a little more.

If you look at fiscal 05 was a fantastic year for many of the Indian providers but when we look at fiscal 06 it does seem that growth is slowing year over year and even on a quarter to quarter basis. Could you come up with top 2 or 3 reasons why we are seeing this slow down in growth?

Are you asking about our sequential quarter growth going from 9% to about 6%?

He is talking about the industry as such where he sees the overall growth slowing down in the past few quarters.

I think that there is overall moderation technologies [inaudible] I mean think that you have had a bit of a snap back trend last year which is not there this year and I think that what we are seeing is the overall economic environment in the US topping at little bit and we are seeing that.

What you said is that most companies will look to cut their costs and that the growth defer something like this where the [inaudible] is so significant would maintain a higher level.

I think you are overly optimistic but look at our business and the great value proposition we have, we are in an okay position when business is good for a customer, we do well, and when business is bad for them, we do well, and when business is moderate for them, we do well. The only thing is when there are uncertainties. I think right now, nobody is seeing any dynamic uncertainties, just a softening and in that background, I think that customers are going to continue to push the lever, as much as to fight off inflationary pressures elsewhere.

Okay any other reason 2 or 4, do you think there was a down track just because of maybe stagnation growing into the election and after the getting into the elections, there was an unleashing of more extra business.

[inaudible] economics which is always dangerous. I truly believe that we have seen over the last quarter a softening on the consumer spending side and a softening on the industrial spending side from the interest rate side and if you add on top of that the inflationary process, companies are beginning to sort of you know tighten their sales and we are seeing that. We have all seen them begin to take a much more cautious [inaudible].

Just a one more quick one on your Indian APEC Technology business which was quite strong. One, could you explain why it was so strong and two would you expect for it to continue with the new fiscal year?

Suresh did you get the question?

If you could repeat it that would be good.

Yeah the question is that what are you seeing in strong growth in APEC and how do you see APEC and how do you see that going forward this coming year.

You see, APEC means APEC in Middle East we have been investing over the last 3 years now and you know it still has a lot of room to grow, a lot more we could be doing and we are focusing on it in terms of making sure that we have all our service lines focused in 2 specific markets, Australia and the Middle East, and so far as India is concerned, I think the market is certainly recovering and done pretty well and we kept ahead of the market growth consistently across all our service lines, product, servicing and software.

How do you look at the coming year?

I think the India market continues to look positive and we will continue to focus in terms of making sure that we stay ahead of the market growth. Asia-Pac Middle East are presently growing and I think we should be able to keep the same sort of pacing on the growth.

Your next question comes from line of Julio Quinteros from Goldman Sachs. Please go ahead.

Hi gentleman this is Vincent [indiscernible] sitting in for Julio. Just have a couple of questions. The first one, what are the margin assumptions that we need to factor for the June quarter, specifically would you provide us some more color on specifically could you provide us some more color on wages, [inaudible], ascending, and then depreciation trends that you are seeing for the June quarter.

Our overall guidance, as you know we give guidance only for the quarter in terms of the global acting services revenue only, but every [inaudible], like we have been seeing in the past, there are many levers on which we still work in terms of improving operation efficiencies. There are areas in terms of application of the currency as well as [inaudible] competition price which will impact us for the quarter [inaudible] quarter our expectation is that is what we exchange impact that it could have, our margins would be blackish.

Another question, how much more do you think that you can squeeze out from the efficiency gains that you talk about?

Let me talk about that a second. I think that the last year, we have seen a lot of [inaudible] of the G&A line and I think this year what we are going to see is some reinvestments [inaudible] as a percentage of sales. I think that if you look at the operation efficiencies that come from utilization, that come from basically to do more work offshore that comes from balancing between the operating projects. I think those are all the areas that continue to be one that we can push on and finally what is really exciting for us is early events we have had as we embrace new techniques to do our software development, we are beginning to see as much as 30% price incline as well as costs improvements and if we can grow that out and capture that benefit , that is an enormous value. So, I think that is one that you know one we are going to give up on losers, one we are going to [inaudible] push on and this is one pretty exciting.

Your next question comes from [Hershel Svididee], Private Investor. Please go ahead.

I have a few questions, one is how exposed are you to the US Auto Industry and what impact have you seen?

We have a fairly strong business in the automotive sector within our manufacturing vertical and that covers customers in the US, it covers customers in the Europe and customers in Japan. One of our clients' is in the US about whom you probably heard or read a lot, this is General Motors, and we have a fairly strong business with them. At this point in time, we do not see any eminent change in the way that business is moving forward.

Okay. Next is, I had brought a share [inaudible] and they are on the performing from the time I brought, now recent years for bonus share issue I would think that the share price would go down because there is going to be an oversupply and may be the demand is going to be flat or nearly flat. Now with this in mind, what kind of confidence can you instill in individual investors like me, so keep us [inaudible] with your company, investing in your company for a longer term, though the outlook for 3-year or 5-year period is really good, but in the short term what would you say?

I think if you look at the past few quarters, we have been able to host a very very deepened growth both in the terms of revenue terms as well as in the net income terms in terms of our market expansion that we saw. We have been able to improve [inaudible] parameters [inaudible] you could be a customer at our service line and the geographic penetration, I think all in all and despite the fact that there is a little bit of moderation in the demand that we are talking about. We think that also continuous to be the main frame, the right proposition on the Indian IT services company continues to be strong and therefore the medium to long-term we see a very sustainable momentum so far as the growth is concerned, and our objective of giving this particular bonus shares primarily to mature that we have more number of shares and hence it is liquidating the system we will be able to insure more participants in owning of the company.

In addition to development centers in India, I believe you have a few other development centers around the world, now what kind of mix in terms of service offerings are you doing from those development centers compared to those in India.

Just to give everybody answer fair chance I am afraid this will be the last question we will answer for you. I think that in terms of development centers outside India, we already have development centers in the US, in Europe. In the US we have them in Seattle, in Mountain View, we have in New Jersey, and in Canada we have it in Windsor, Canada, in Europe we have in Redding, in [Kheil], and in Munich and in Asia we have development centers in India as well as in China. We continue to balance the workload as customers require. We are [inaudible] in one country versus another and depending on where the demand comes in from we are then very open to move that around.

Your next question comes from [Nils Nelson] From Alliance Capital Management. Please go ahead.

Good morning and congratulations on your excellent results. Two questions. One, could you drill down a little bit further into your different levers you have on margin and which of those whether it is the utilization or the balance of onshore, offshore, which one or even in the [inaudible] segment, which one do you have the most confidence that you can push more aggressively. That is question one. Question two, can you talk a little bit within the pharmaceutical vertical where you saw the uptick with the [inaudible] US, European, adding more specific you can make on that would be appreciated.

I will be handling the first part of the question and then Sudip Banerjee will handle the second portion. In terms of the levers we have as Vivek explained, basically there are 4 major levers we keep the fourth, the first one is on the utilization, the second one is on the offshore consult and third one is in terms of the skill techniques, and fourth one is on the [inaudible]. If you look at the utilization for the last quarter, we ended up at 68% and the peak of the [inaudible] go back and see in the past it is about 71 or 72%, so that is the head space we have [inaudible]. [inaudible] in terms of total head count billed versus total head count in [inaudible] including the support staff, including the training [inaudible] together.

So on the utilization we have about 3 to 4 percentage points which is the key feature achieved in the past, so that is the head space we have. The offshore links that currently we are operating at 47%. If you look at the many of the industry peers they are operating on 48%, 49%, we increased at least 2 to 3 percentage head spaces on that front. On the [inaudible] we are making progress and we will continue to make a good [inaudible].

I am sorry could you just repeat the offshore utilization again.

Offshore currently we are 45% for the last quarter and we feel that there are about 2 to 3 percentage scope is that is also improving it. May not happen in the immediate term, but that is the scope, which is relevant.

And the revenue [inaudible] offshore [inaudible] is 45-55 [inaudible] peers are doing 48% so the [inaudible] 2% -3% for us to go from 45 to 48.

Pharmaceutical is the new vertical for us and we have acquired the first few customers within the last 12 months and between the US and Europe there is no particular pattern [inaudible] given in terms of the number of [inaudible] customers that we have from the two geographies. In terms of the prospects again, there are no particular pattern. They are having a lot of fractions we are seeing fractions from both the customers in the US as well as from Europe.

And what sort of functions are you guys doing for the pharma companies.

A whole host of activities. We are doing working the application development and maintenance area, we are doing [inaudible] implementation area. We are running a lot of pilots on the very specific pharmaceutical application by clinical base of management.

Your next question comes from the line of [Indiscernible]

Thank you, my question has already been answered.

Your next question comes from the line of [Avash Singh] of [CSC]. Please go ahead.

I was wondering that this quarter our Forex rate, the US dollar or rupee has suddenly dipped significantly. What was the reason for that?

The reason is primarily on 3 factors. One is the job in [inaudible] rate, the average December [inaudible] rate for rupee dollar was 44.70 which stopped at 43.70 for the quarter ending March, so that the significant drop in the rate of currency for process which is the pound sterling and Europe, and the third reason was that as we had said in the conference earlier, the rate at which we had [inaudible] are getting progressively at lower rate. These three factors contribute to the overall sliding rate.

I think they relatively look higher risky or little higher decline, because the coordinating [inaudible] is [inaudible] far superior as a result of which the data looks higher.

If I may just ask for a clarification, if our Forex rate, which we take it [inaudible] earlier and it was 45.1 last quarter, this quarter suddenly dropped to 43.8, so that is a significant drop to me as such.

What we have covered was primarily on the rupee dollar length. We still have closure to 20% of our revenues in non-USA currencies. They are open to the fluctuation of the market. The average rate of the pound sterling in December was 1.92 to 1.93 to the dollar and in the quarter ending was 1.87 to 1.88. Similarly with the Euro, it just removed 1.33 to the dollar to about 1.27 to the dollar. So this significant [inaudible] because of revenue coupled with the demand appreciation on the dollar, what [inaudible].

Can you just clarify how much this movement, what was its impact on the margin, and how much it impacted our margin price.

Basically, on the margin trend, appreciation impacted operating margin by 28%.

We have time for just one last question, it comes from the line of Mayank Tandon from Janney Montgomery Scott LLC.

I just wanted to get some clarity on that repeat order impact, that is a -0.8% on the operating margin line is what you said.

That's right, on the operating margin line, but if you include a statement level, where we include the currency and account for the changes between the Indian GAAP and US GAAP, we are kind of get negated

It depends [inaudible] between Indian GAAP and US GAAP on [inaudible] economy.

So on a consolidated basis, it is 0.8% negative impact on the operating line Also, if I could get one more housekeeping item, could you or Suresh please give the [inaudible] share count that we should use for US GAAP purposes for the quarter ended March.?

For the quarter ended March, going by the segment tables the rate you need to use in Indian currency was 24.44.

I am sorry, the share count, the diluted share count.

The diluted share count, I will just give it to you in a moment.

This will be impacted much later in our[indiscernible] approval and this will be sometime in about July or August timeframe. Number of shares outstanding will continue to be seen as it was of December end.

[inaudible] for year ending March 31st 699.92 million shares.

And that is what we should also do for the quarter ended March, just to be clear because which will give us 15 cents in terms of GAAP EPS.

We will just come back with you in a minute.

Okay sir.

Mayank we will give you off line that information to you.

Sure. Just a final question here. Vivek if you could please comment on Transfer your biggest account obviously this quarter seemed to actually grow almost in line with the company or a little bit lower and also if you could just talk about your BPO initiative that I think you mentioned upfront in your initial comment.

On the [transport] we do not have any specific comment on individual customers. In general I think we have had a very good role in all our top 10 customers and it is the volume growth for the software average of the top 10 would be 9.6%. I will hand over to Raman for the BPO.

See on the BPO strategy at this point of time, [inaudible] both customers that we service for BPO business of 38% of that business is the existing customers of our technology business. Also in terms of the pipeline and what we are seeing and the fractions that we are seeing that is with the [inaudible] customers. [inaudible] looking at higher value add, they are bringing in needs for transaction to certain kind of business where the domain knowledge which we have demonstrated on the IT side of the business, they want to leverage that on the BPO side of the business. So, what we are looking towards doing is consolidating that need and presenting a single front to the customer as we transfer our business towards the non [inaudible] side of the business in keeping the [inaudible] for customers.

[inaudible] the shares were 703 million

That is very helpful. And just one last question, can you comment on the higher [inaudible] for fiscal ‘06 [inaudible] even broadly just in general how it breaks out easily as you look as campus versus lack of recruiting.

You know, we do not specifically give any guidance with respect to the hiring [inaudible] but all we are saying is we are [inaudible] more volume result and consequently the hiring industry to that plan and so called as the mix of lateral and [inaudible] we already have been improving the percentage of mix of lateral and the lateralizing more fresh items and year on year we have been able to improve it by about 10 to 15% and we will continue to optimize on that lever.

We do not have any other questions, I think, thank you very much. Are there any other questions operator?

No we do not.

Thank you very much and if you have any further questions please do get in touch with me on my cell phone and the entire proceedings have been archived