Wipro Ltd (WIT) 2018 Q3 法說會逐字稿

Good day, ladies and gentlemen, and welcome to the Wipro Limited Conference Call.

(Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Aravind Viswanathan.

Thank you, and over to you.

Thank you, Margaret.

A warm welcome to our Q3 FY '18 earnings call.

We will begin the call with business highlights and overview by Abid, our Chief Executive Officer and member of the board; followed by financial overview by our CFO, Jatin Dalal.

Afterwards, the operator will open the bridge for Q&A with our management team.

Before Abid starts, let me draw your attention to the fact that during this call, we may make certain forward-looking statements within the meaning of the 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 the SEC.

Wipro does not undertake any obligation to update the forward-looking statements to reflect events and circumstances after the date of filing.

The conference call will be archived, and a transcript will be available on our website.

Let me now invite Abid to begin his address.

Thank you, Aravind, and ladies and gentlemen, I wish you a very happy new year.

Let me talk about Q3 first and then our view of the demand scenario and then my usual update on our strategic themes.

In Q3, we grew 0.9% sequentially in constant currency, in line with our guidance and we continue to show the improving trajectory.

On the demand environment, we continue to differentiate our -- with our strong digital capabilities and have gained further strength in our BFSI business, which has grown now over the last 4 quarter at 4.2% CQGR.

Our healthcare business, as we had said, is bottoming out and we have delivered good performance in Q3.

Performance in our ENU business has been impacted by some customer-specific issues in spite of a rebound in the energy part of our ENU business.

Our investments in Latin America continue to deliver results, and over the last 4 quarters, the LATAM business has grown by 10% CQGR.

We continue to see strong growth in our digital e-business and it has grown by 5.1% compounded quarterly growth rate over the last 4 quarters and now constitutes over 1/4 of Wipro's revenues.

We continue to invest and rapidly expand our consulting portfolio as reflected by our fourth quarter CQGR of 7%.

As you would have noticed, our top 10 clients have grown 2.9% CQGR over the last 4 quarters.

So overall, we have been seeing an improving trajectory of growth and our Q4 guidance further reflects that.

While there are some customer-specific uncertainties, calendar year '18 commentary from our clients looks positive, and we believe that we are on the right track for FY '19.

Let me now give you an update on the progress on our strategic themes.

We are seeing ticket sizes and stand-alone digital deals increasing as customers are moving to next level of digital adoption.

As an example, working for a retail bank, we are modernizing their entire retail banking program.

This is one of the largest banks in the world and we are using our cloud ERP platform, with a sales force to provide them a seamless and connected customer experience across all touch points and utilizing IntSights to offer personalized services, products and pricing to about 40,000 bankers.

From a reskilling perspective, now almost 90,000 technical employees are trained and certified in digital.

Let me talk about client mining.

The number of $50-plus million accounts, as you will notice from the datasheet, in our portfolio has moved from 33 a year back to 41 this quarter.

In Q3, our customer satisfaction has further improved by 410 basis points, and we see very good traction in our large accounts and our ability to cross sell as well as renew our existing engagement.

Our global fashion retailer in Europe, where we've been servicing them in the traditional space, Wipro has been chosen for a large-scale retail transformation program to transform the core buying and merchandising function and also deliver a digital and unified front-end functionality for their store operations.

We will provide a scalable set of business processes and systems to enable single view of inventory, assortment and pricing optimization, accurate demand forecasting and fuel a massive expansion of the retailers, spanning across 11 countries in Europe and the U.S. We will be leveraging the various ITs and methodologies and digital offerings that we have invested in to be able to deliver this engagement.

We continue to move on nonlinearity, creating IP, and we filed more than 200 patents in the first 9 months of the year, with our total patent applications now crossing over 1,800.

We saw multiple successes of our artificial intelligence platform, Wipro HOLMES this quarter.

The anomaly detection program is being used by clients ranging from U.S. networking company to a supermarket chain in U.K. to detect potential duplicate transactions in supplier invoice payments and detect payments to wrong vendors based on duplicate invoices across similar vendors.

This leverages the cognitive capability of HOLMES and analytics so that we are able to deliver multiple use cases across domains, leveraging the HOLMES platform in the business process as a service base.

On automation, the Wipro HOLMES-based optimization solutions are now deployed via 89 unique bots for more than 275 of Wipro's customers, totaling to about 2,650 instances of bots deployed to deliver significant service improvement in the Run services, testing services as well as business process services.

This has enabled us to deliver additional productivity of about 1,500 FTEs in Q3 and a majority of these FTEs are in the L2 bucket, which is that we have moved from the lowest end of the pyramid being automated by robotics and AI to the next level in the pyramid of work.

As a result of IT and automation, our revenue per employee has increased by 7% in the last 4 quarters.

For an Australian financial services client, we vastly improved their customer experience by reducing the onboarding time from 48 hours to a few minutes.

For a European energy major, we automated 40% of ticket resolution through HOLMES, 65% of application health checks and eliminated 66% incidents in their data center operations.

So these are significant savings and service improvement, both to the customer as well as how we deliver those from a productivity perspective.

We continue to remain very committed to localization with U.S. exceeding 55%, Latin America, 95%; Europe, 66%; and similar progress in U.K, Singapore, Saudi Arabia and other geographies where we are focused on localizing.

A very unique thing that we're able to do to be more innovative, especially in our largest market, is we have leveraged Topcoder, which is our crowdsourcing platform, to be able to create a veterans community, to provide opportunities on a crowdsource basis to current and former members of the U.S. military.

On ecosystem.

In Q3, we made the 13th strategic investment through Wipro Ventures in Headspin, which offers a mobile experience management platform.

Overall, we had 20 joint wins with our Wipro Ventures portfolio companies in Q3, taking the total wins to date to 50-plus for FY '18.

We are increasingly gaining mindshare using the combined capabilities of our ecosystem.

And one example of that is an MNC in Brazil in the life sciences space.

We brought together Wipro's IP, which is a Data Discovery Platform and Wipro ventures partner Avaamo.

Where in the Avaamo chat bot addresses questions pertaining to root cause analysis and predictive insights.

For example, you could ask a question, which product will perform better or which region will perform better.

And leveraging both the chat bot as well as the Data Discovery Platform, the customer would get responses, which are generated by the analytical engine of Data Discovery Platform and delivered by the Avaamo chat bot.

Through our Horizon program, which is our entrepreneurship program, we funded 2 additional initiatives in the areas of integrated threat management and cloud security this quarter.

We are working on a total of 14 themes, including artificial intelligence, autonomous vehicles, cybersecurity, Industry 4.0, IoT and a few others.

Industry analysts continue to increasingly recognize Wipro as a leader across various new services, including digital automation, RPA, AI and so and so forth.

Just to give you a sense, in 2015, we were positioned as leaders in 34 such analyst reports, which is up to 126 now in 2017.

In digital space alone, we are in the leadership quadrant in 19 reports.

This enables us to get a lot of traction with our customers in terms of being able to get the opportunity to bid at some of our new accounts.

We are happy with the overall progress that we are making in our transformation journey and our investments continue to pay dividends.

I will hand over to Jatin for some detailed color on our financials.

Thank you, Abid, and good day, ladies and gentlemen.

As always, it's pleasure to speak to you.

Let me start with our revenues.

IT services revenue for the quarter grew by 0.9% in constant currency.

Revenues in U.S. dollar terms for the quarter remained flat due to weakening of euro, GBP, AUD and CAD on reported terms.

On margins, our reported margins for the quarter were 14.8%.

We recorded a provision of INR 3,175 million, consequent to insolvency of a customer post balance sheet date, which has impacted our margins in Q3 by 240 basis points.

Adjusted for that, our normalized IT services margin for the quarter was 17.2%, within a narrow band of our margins in quarter 2. We were able to mitigate the impact of ForEx and client shutdowns through automation and productivity improvements.

We continue to make significant investments in HOLMES and our automation suite.

We generated productivity of over 1,500 parts per man at level 2 and above levels in quarter 3. These initiatives have helped us increase our revenue per employee by 6.9% over last 1 year.

On the ForEx front, our realized rates for IT services in Q3 was INR 65.74 versus INR 65.40 for quarter 2. The net impact of currencies on margins was adverse 50 basis points.

The effective tax rate for quarter 3 was 21.7% compared to 22.7% in Q2.

Reduction in the ETR is largely due to devaluation of deferred tax, assets and liability at the revised corporate tax rate in U.S. effective January 2018.

In fact, on our future ETR is expected to be marginally positive.

Net income for the quarter was INR 19.4 billion, a decrease of 11.6% sequentially and 8.2% year-on-year.

Adjusted for the customer insolvency event, net income was flat sequentially and increased 4% on year-on-year basis.

Now let me talk about cash flows.

We generated operating cash flows of INR 30 billion in quarter 3. For the first 9 months of FY '18, we have generated a total operating cash flow of INR 77 billion, which was 14.2% more than the same period last year.

Net cash at the end of quarter 3 was $2.5 billion.

We have -- we had about $2.4 billion of foreign derivative contracts as hedges as at the end of quarter 3.

Coming to capital allocation, we concluded the buyback of 343.75 million equity shares, which resulted in a total cash outflow of INR 11,000 crore.

Today, the board has declared an interim dividend of INR 1 per share.

Let me talk about the outlook for quarter 4. For the quarter ending March 31, 2018, we have guided for a revenue growth in IT services of 1% to 3% sequentially in the constant currency, as mentioned in our press release.

Our focus is to continue to -- continue building the revenue momentum, which would enable us to maintain constant currency margins in a narrow band on a full year basis, adjusted for the one-time impact for the customer insolvency that we had -- that we have taken in quarter 3.

We'll be very happy to take your questions from here.

Operator, you may open the lines now.

(Operator Instructions) The first question is from the line of Moshe Katri from Wedbush Securities.

Can you elaborate more on what you said regarding some of the -- I think you mentioned contract-specific issues with a handful of clients.

Are we talking about renewals?

Maybe some color there.

And then I think Financial Services had a decent performance during the quarter.

Can you also talk about what you're seeing there in terms of the buying behavior from clients with a forward-looking into kind of here into calendar year 2018?

So my specific comment on customer-specific uncertainties was in the context of the calendar year '18 or FY '19 commentary where we feel quite optimistic in terms of the next year compared to this year.

And the only uncertainties that we see would be specific to certain customers in terms of some of the headwinds that they are facing in their business, and hence the implication on us of those headwinds.

Otherwise, on a macro level, we see a positive outlook for the next year.

So these are not customer contracts or stuff, it is more in the context of trying to give you a commentary for the next year.

I think (inaudible).

Financial Services?

Shaji -- go ahead, Moshe.

Sorry, I cut you off.

Just going back to Financial Services and the color there.

Yes, I was just alluding to that.

So I've got Shaji Farooq on the line with me, who's the President of our Banking and Financial Services.

And I'll let him give you some color on our BFSI business.

But broadly, if you look at our BFSI business, given our investments in the digital areas, whether it is on the customer experience in the front office side, whether it is on the back office and HOLMES-led automation, whether it is business processes and service in business utilities, all of those investments are being lapped up by customers quite well.

And that is what is enabling us to be able to increase our market share in the BFSI space.

Over to you, Shaji.

Yes.

Thanks, Abid.

Fundamentally, the way I look at it is that we are facing two opposing forces, right?

And I think I mentioned that in the last time we spoke as well.

The Run business, the traditional business, continues to come under pressure and we are seeing opportunities there for consolidation, but like when any consolidation begins, it tends to be highly competitive and the probability for winning and losing is probably even.

And there is choppiness in quarters there, it will be extremely variable -- you'll obviously see pick up from the Run business or you might not.

However, good news is that the Change business as we predicted a while ago is in fact becoming -- taking center stage.

What is requires to take advantage of that is a very different model of engagement and a different approach to solutioning and delivering excellent solutions (inaudible) to our clients.

These are the factors that are giving us an opportunity to really make a difference to our acquired businesses.

And consequently, our chain business continues to do well, despite headwinds that we expected and anticipated from the other side.

Overall, it's been in a very a strong story, we feel very good about it because this is the seventh consecutive quarter of growth -- consecutive growth quarter for us in BFSI.

Looking ahead, obviously, I feel in the near term, I continue to feel optimistic.

In the long term, I think definitely, the move -- the shift towards change bodes well for the industry in general.

Even as the industry itself changes, we, as Abid said, have to change as well and our investments and digital are definitely paying off because we do bring unique combinations of capabilities that resonates with our clients.

Great.

And just final question, what was the digital mix during the quarter?

And what sort of growth did you have there?

Sorry, was that a question for me or I couldn't -- I lost part of that question?

My question was, what was the digital mix during the quarter and what sort of growth did that generate?

So the digital revenues, as I said, is about 25.1% of our total revenues, which has grown over 4% Q-on-Q basis.

Our next question is from the line of Sandeep Shah from CIMB.

Just a question in terms of the Energy & Utilities, the sector, it has -- this quarter it has been down by 6%.

So you alluded that Energy is doing well but the Utility, there is some issue.

So I think it looks like one of the bankrupt clients could be within that.

And second, also, there was some litigation, which was going on with one of your U.S. Utility clients.

Can you give us some color how these 2 accounts would have been predicted in terms of guiding for fourth quarter as well as their impact in FY '18 -- '19, sorry.

So the risk that we see from any customer across any vertical is reflected in the guidance of 1% to 3% that we have given for Q4.

But broadly, as I said, the Energy vertical within the ENU business is doing quite well.

We have some customer-specific challenges.

And also, ENU sits on the intersection of Middle East in ENU where we are undergoing restructuring.

And some of that becomes visible in the performance of the ENU business unit.

Okay.

Just second, I think, Abid, you said that FY '18, FY '19 you are more optimistic.

But if you look at for Wipro, generally, the 1Q is seasonally softer.

So this time you believe that your industry level growth, which you have started now through a guidance for fourth quarter, may even continue in the first quarter and we may break the jinx in terms of a seasonally weak quarter?

I'm not asking for guidance, I'm just asking directionally, based on the deal pipeline, client interaction, your confidence.

Even the start of the FY '19, you may start with an optimistic outlook?

Sandeep, I will invite Abid to respond.

But anything on Q1, no matter what we call, will be a reflection of our sort of sentiment or thoughts around Q1, which we don't want to speak specifically.

Abid's input was more around overall.

As we enter calendar 2018, how do we see momentum vis-à-vis what we have seen in past?

And my request is, you look at from that color.

Our next question is from the line of Sandip Agarwal from Edelweiss.

So Abid, I have a very specific question.

This -- already you partly, probably answered it.

But I wanted to understand a little bit more detail.

Some of the commentary which have started coming in, in the ENU vertical is quite positive and we have seen some kind of ramp up in numbers as well.

While I understand there is some customer-specific issue and some portion of Utilities weak.

But overall, do you think that the recovery in the oil prices is already showing up in your conversations with the client?

Are they ready to spend more now after a long time?

Or let me put it this way, can we say that worst of ENU is broadly behind?

And second, on the digital side, while you mentioned that Q-on-Q growth is 4%, 5%, but still the kind of growth we are seeing in even larger peers, that kind of growth we are not seeing in Wipro's number yet.

So is it because we have a very strong pipeline, which has not yet started to fire?

So what kind of sense you can give us there, it will be very helpful.

Yes, so again, ENU I do believe that in the oil sector we are seeing some very good traction, both on spend on the traditional services but more importantly on the digital transformation, IoT, cloud migration, kind of, areas.

So I'm quite optimistic on our ENU business.

And on digital, I think digital is a lot of book-and-build, project-based business, so there is a little bit of volatility that we do see from one quarter to another.

But otherwise, we have a very healthy pipeline.

We have a very healthy revenue growth if you look at it on a slightly longer-term basis, we have been doing quite well on digital, and our penetration across our customers on digital is very good.

I've got Rajan Kohli on the line who heads Wipro Digital, and I'll have him give some color on how we see our Digital business.

Thanks, Abid.

Just to sort of reinforce the point that Abid made, over the last 4 quarters, our average quarterly growth has been upward of 5%, so that's quite healthy.

From quarter-to-quarter, sometimes as large projects get over, we do see some differences.

But over a full year period, it is quite a healthy growth.

And we expect that this momentum to continue because the pipeline in digital is growing faster than the overall pipeline.

And also the type of projects that we are beginning to do now have significant downstream business attached to it.

A lot of the pilots, proof of concepts, are now beginning to turn into projects at scale.

And also penetration into our top 50, top 100 clients has been quite significant for us.

So overall, Digital has been a very positive story, both from a qualitative perception as well as from numbers and performance.

Thank you.

The next question is from the line of Shashi Bhusan from Axis Capital.

I might have missed it, what was the impact of customer insolvency in this quarter on revenue?

So Shashi, there was no impact on revenue on the profit, it was 2.4% at operating margin line.

And any tail impact on revenue in the next quarter guidance from this customer?

Shashi, yes, of course, there is an uncertainty on the ground.

But that has been factored in our guidance, that range that we have given to you.

But you're not quantifying the impact that might be possible in Q4?

No, Shashi.

We have not quantified that separately.

Our next question is from the line of Ankit Pande from Quant Capital.

My question is first a little bit of clarification on just the last question.

Is it that the impact on revenue is not meaningful?

Or is it that there is none of the insolvency?

Yes, the impact on revenue from quarter 4 and forward is meaningful.

But that has been factored in the guidance.

Okay.

And on the margin side, you're saying that -- are you saying that the guidance on the margin is maintained excluding the impact of this insolvency, am I right?

Yes, Ankit.

The way I explained in my opening remarks was that if we did not have that one-time nonoperational impact, it -- margin would've been higher by 2.4% compared to what we reported.

Okay, great.

So it was only sort of backward-looking statement.

Could you, also, talk a little bit about the intersection of our Digital traction with BFSI?

And I was trying to sort of figure out if digital needs a sales force of its own or kind of stand-alone on its own as part of growth momentum is concerned and not be impacted by seasonal headwinds from other sectors?

So as we have seen over the years that BFSI, as a sector, adopts new technologies the earliest.

And we see that happening in this cycle, too.

Given our early investments in digital, across the board, all of the services, whether it is on the front-end side, which is the mobile banking, whether it is on the back-office side, which is the AI and cognitive, leveraging our HOLMES platform, whether it is on the cloud migration and the ATI refactoring of applications, we see traction across the board.

And while we have Wipro Digital, which takes care of the design and engineering piece and the transformation of ways of working, with the reskilling of both our sales force and our workforce, a significant part of the delivery and significant part of the downstream sales for digital at scale is done within the business unit itself.

And they leverage Wipro Digital as and when it is required, like they used to leverage the other service line in the traditional manner.

So another way to ask this is that the downstream was from digital, there is not another -- yet another competitive bidding-like situation and it's sort of almost sole search kind of situation.

Is that now -- is that the correct understanding?

That is correct.

And you know, I would like Rajan to give us couple of examples and illustrate.

Thanks, Abid.

So I -- obviously, Wipro Digital has a pool of flattishness.

They have very little of the traditional sales force.

We continue to sell through accounts and verticals and that continues to remain our go-to-market.

But the talent that Wipro Digital has is at the intersection of consulting and digital.

And this talent helps them identify business problems their clients want to solve and answer the question about what and how for those clients.

And they work very closely with the vertical sales team and the domain teams that fit within the verticals.

As for downstream implementation for large-scale projects, Wipro Digital works very closely with all the service lines and put them together.

What we are seeing in the market is that clients buy our solution irrespective of where that capability comes from within Wipro and Wipro Digital helps stitch that solution together for us.

Great.

And one final clarification, Jatin, if you could, please.

Has freshman hiring been rather strong this quarter?

I was looking at some of the extra training and utilization figures, which were less changed downwards compared to some of the other utilization metrics?

This is Saurabh here.

On the freshman hiring, we continue to hire on campus and this quarter, also, we have hired.

And hiring across the globe is happening, as you see, localization has gone up.

So hiring is robust.

It's specific to the requirements from a skill perspective, both laterally as well as at the campuses.

On utilization, very clearly, we see a scope of improving utilization, the headspace.

And did this quarter primarily is driven from the follows which we have seen.

The next question is from the line of Ashwin Mehta from Nomura Securities.

Just wanted to check on this insolvency.

If you can let us know which geography does this client belong to?

And secondly, if I look at the receivable impairment that seems to have been taken, am I getting it correct that it's somewhere close to almost INR 275 crores?

Yes.

So Ashwin we have not shared the geography, we have shared that, that belongs to Energy and Utility segment.

And the number, ballpark is fairly accurate.

But if I were to look at even a 120-day receivable, this appears to be a more than $100 million client for you.

Is that correct?

So Ashwin, I would -- we have shared the details and we have also shared that, yes, the revenue uncertainty that not having this customer will cause, will be meaningful.

But certainly, that is factored in our guidance for quarter 4. Also, the fact that the total impact that we have taken is a combination of the investments that we have made in the customer during the early phase of our large, long-term deal and which won't be recoverable due to the event that has taken place.

So it's not just receivables, but it is also the investments.

The next question is from the line of Ravi Menon from Elara Capital.

Just want clarity on the healthcare side, I thought that we were expecting a fairly soft quarter for Healthcare and Life Sciences.

I was expecting a recovery but not such a sharp recovery over there.

Was this due to some seasonal help from HPS?

So as I said last time that the worst of Healthcare and Life Sciences from our perspective is over, simply because we had lost a significant amount, over $125 million in run rate, in the business unit.

So after that, we do expect it to continue to grow.

While the softness and the level of uncertainty will continue because in this specific space where there is uncertainty, which is the ACA space.

But all other parts of the Healthcare and Life Sciences business are showing robust growth.

So as you see, on constant currency basis, it has grown almost about 2.5% this quarter.

And we expect it to have positive momentum going forward.

Great.

And secondly, on the India, Middle East restructuring, I thought we were over with most of that by the first half of this fiscal.

But now it seems to be persisting, as you mentioned about the Energy drop this quarter.

How long do you think it will be before the India, Middle East business stabilizes?

So all of our restructuring of the -- the Wipro-specific restructuring of the India and the Middle East unit has been completed.

The leadership changes that we were bringing in, the business model changes that we were bringing in.

India has done quite well, both from a revenue and profitability perspective.

Middle East is showing positive traction.

The ENU and Middle East intersection that I referred to is more the market dynamic in Middle East.

One of their largest markets there, which is the Kingdom of Saudi Arabia, that is where we see a certain level of uncertainty with changes that are happening there and the impact that is happening on some of our large clients over there.

That is the cause for uncertainty.

But the Wipro-specific issues that we had in the Indian and Middle East business, we are done with, and I feel quite good about that business now.

Our next question is from the line of Rahul Jain from Emkay Global.

As per the number that you have shared on the digital side of the business, it appears that the growth on the nondigital piece is around a decline of 4% in the 9-month period from the run rate that we exited in Q4 FY '17.

So in light of this, when we say that we want to achieve industry-specific growth, how we see when 75% of the business is actually declining for us.

And what is the kind of benchmark that we are assuming when we see industry growth?

Is it similar to the Nasscom growth rate of the previous year?

Or is there any other number that we have in our calculation?

So the way I would like to answer this question is, this transformation is quite a disruptive transformation, so we should not be surprised by disruption of the legacy business.

The question is that gross growth of digital, whether on the net basis, is able to deliver a higher level compared to the disruption happening in the legacy business.

And there is, obviously, certain juice in the legacy business as well, but it is invariably associated with digital transformation of some sort or the other.

So we are seeing some good traction in that, also, because there are cases where an incumbent might not be able to deliver on the Run services, the level of automation that we are able to deliver with our HOLMES platform and we win deals and business over there.

So our focus on the core or legacy business is not any less, but definitely you can't expect the level of growth happening there.

There might be some market share growth which happens.

There will be some level of automation and productivity-led decline that will happen.

So we should see that in light of those changes happening as part of the transformation.

So as you said -- rightly said, the impact would come on the absolute basis just because of the automation factor.

Plus, you've also alluded that there won't be any growth from a -- from a new spend on the Run side of the business?

So this -- and you've said that we can win more market share.

So do we expect market share to contribute as enough as 5% to 10% of incremental business?

And if that is the case, why we were not able to demonstrate the same in the current fiscal?

So Rahul, I wouldn't put the number around this.

I'm giving more of a directional commentary of what we see in the margin.

The next question is from the line of Sumeet Jain from Goldman Sachs.

Just wanted to continue from the previous question.

Even if I take your guidance for the next quarter of 1% or 3% and assume that you might end up at the top end, that would imply probably a Y-o-Y of constant currency growth of somewhere around 5% to 6% growth.

Can you just give a highlight, does this 5% to 6% growth you're comfortable?

Or is that you aspire to grow higher than this in FY '19?

So Sumeet, as I've been talking about over the last about 8 quarters that I have reported, that we are undergoing a transformation both at the company level and at an industry level.

And we've identified certain company-specific issues and transformations that we are addressing.

And then there is certain industry-level transformational opportunity in which we are investing.

So you need to look at our numbers in light of both of them.

What I believe is that we are done with a lot of the heavy lifting that we have to do, which would be Wipro-specific.

And even in this quarter's result, if you look at our numbers, our consumer business has grown on a constant currency basis about 5.6% year-on-year.

Of course, the BFSI has grown in double-digits, our Manufacturing and Technology business has grown about 5% year-on-year.

And we've started to see a recovery of the Healthcare and Life Sciences, while it has a negative year-on-year growth, it has a reasonable quarter-on-quarter growth.

So on a broad basis -- and I talked about Indian and Middle East and some of the other markets.

So on a broad basis, we think that our company-specific transformation and restructuring that we were -- are required to do, we are done with and seeing very robust growth on our top account portfolio.

Our top 10 clients have grown over the last 4 quarters about 3% quarter-on-quarter growth, which is quite healthy.

There will -- so from all of this, it gives me confidence that from whatever is the average industry growth, we will be able to match it going forward.

Now when you look at it on a quarter-on-quarter basis, you will be able to see that visibly, relatively sooner.

When you compare it on a year-on-year basis, you will have to wait for about a year or 4 quarters to elapse to be able to see the numbers comparable on a year-on-year basis.

I think that is how I would look at and interpret our commentary.

No, that's helpful, Abid.

Secondly, I want to understand on the digital side, we're hearing the projects are now scaling up whereas some of the competitors say that most of the deals are still pretty small and discrete and more in DevOps and Agile framework, that the kind of work keeps changing every 3 to 6 months.

So from your standpoint, given that you have a pretty early lead into these digital projects, what are you seeing when the projects are scaling up, the preference of the clients to stay with the first-stage vendor who has helped and started the consulting stage, are they the preferred choice for the extended part of the project?

Yes, we've seen that.

I think in digital, one of the things that I've said from the beginning, it's a very consultative sell.

It's not an RFP-based sell.

And invariably, the trend that we see is that it starts with consulting and design.

We have very strong capabilities in design, as you know, Designit, the acquisition that we did.

And then we tucked in Cooper as well, which is working very well.

That kind of gives us a toehold, it helps customers solidify their initial thinking, do some proof of concepts and pivot the way Rajan just explained.

And then when they move to digital at scale, in all likelihood, at least the examples that I can think over the top of my mind without RFP gets single source to the provider who has done the initial part of the work.

That is what, at least, we have seen in the Banking and Financial Services space and the consumer space.

The 2 verticals where there is the highest traction on digital right now.

So I do believe that it's not a very RFP-based business that we get on digital, it is evolving business.

But we are seeing it go to scale to great extent.

Now there are, obviously, parts that are moving to digital.

And all of this that I talked about is more on the application and customer experience side, digital marketing and those kinds of areas.

There is a whole digital component in the infrastructure space, which most likely the infrastructure incumbent gets it, which is the cloud migration part.

But given our strong relationships in some cases, those may come through RFPs as well where we are able to bid and win and have a little bit of market share movement or opportunity to get in through cloud-based transformation or HOLMES-based automation on the wrong side, which would also be part of the change of the programs and will be part of our digital revenues.

The next question is from the line of Neerav Dalal from Maybank.

I had a couple of questions.

One, in the financial services, you spoke about consolidation gains as well as gains in terms of digital.

Is there a split or something that you can guide us on in terms of what is the higher share, what is the lower share?

Something on that side.

Neerav, I'm not clear about your question.

But essentially, in BFSI and in other verticals also, what we are seeing is that there is a level of opportunities that exist where we are incumbent to be able to make proactive propositions to transform to digital.

And there are opportunities where we may not be incumbent, but given our strong investments in the digital space in -- for example, in the last quarter of the -- many deals that we have talked about, one of the deals is a competition account where we were not even present, but in the sales force area, where we have leadership, and through our Appirio acquisition, we were able to (inaudible) with that account.

And hopefully, once we have landed, we'll be able to expand it together.

Okay.

And anything to look into the top 6 to 10, there was a big decline in that bucket.

So anything to look into it?

Any comments on that?

I think if you see some decline in our quarter number, it is more to do with the impact of furloughs because different verticals have different impacts on furloughs.

And depending on what bucket you see, it may have more or less impact on furloughs.

But structurally, I think, as I said, our overall top 10 accounts have grown by just under 3% CQGR for the last 4 quarters.

And I feel quite comfortable from a mining-our-top-clients perspective.

The next question is from the line of Abhishek S. from Equirus Securities.

Just wanted to understand the top customer growth on a Y-o-Y basis, came up from 25% to 70% while the top 6 to 10 growth kind of accelerated from 10% to 20%.

So just wanted to get a sense on what is a sustainable number and how should we look at it from a calendar '18 perspective.

So Abhishek, we want all of them to grow as fast as they can.

There is no real sustainable number or a guidance number that we are giving there.

Obviously, if the company has to grow, the -- there -- large accounts have to lead the growth.

And that you have seen in quarter 4, quarter 1 and quarter 2. Quarter 3 was impacted because of furloughs, as Abid spoke about in the earlier part of the call.

But we definitely feel quite good about the way we have been able to turn the mining in the company, and we are quite hopeful that FY '18, '19 to -- the top accounts will continue to lead the pack.

So just to follow-up to that.

So the deceleration, especially on a Y-on-Y basis (inaudible) top one is more related to furloughs than the account -- the growth peaking out.

Is that a correct way to look at it, right?

Yes, so on a Y-on-Y basis, there is also a factor of some accounts coming in and coming out.

So I would much rather look at the momentum that top accounts are able to create on a sequential basis.

And as a bucket, if they are growing well, we are quite comfortable.

So I wouldn't -- if I see a particular number, I wouldn't react to the Y-on-Y number because the composition could have -- could be different.

The next question is from the line of Sandeep Shah from CIMB.

Yes, Abid, just on the large deal traction, I think whatever has been announced, which we can get it through the -- your public domain.

So it looks like there are a lot of deal wins which Wipro has got it.

So can you just let us know what is different here or better?

Is it more to do with the industry-wide phenomena, where the client traction was more in terms of a faster decision making?

And you believe that the deal win momentum can continue entering CY '18, FY '19?

I'm quite optimistic looking at our pipeline and our order book and wins that the momentum will continue.

One of the things which I've seen quite specifically is if I compare last year, what we were seeing was that the deals were primarily digital deals but they were small in size.

Even the legacy deals were not coming as large deals because a lot of the RFPs have -- had dried up and customers were not coming in trying to outsource a large legacy program.

Now, as customers have decided on the technologies pack in digital as they are clear in what they want to do in digital as they've experimented and gained confidence on digital, they are willing to do digital on scale.

And those deals we have seen with increased sizes.

And invariably, a large deal will have a digital transformation component.

And that I do see coming more and more as customers accelerate their digital transformation.

And I do think that Wipro will get its -- more than fair share of those deals simply because of our strength in the digital space across -- articulated of the front office and what digital means on the front office, the middle office and what digital means for the middle office and the back office and what digital means over there.

We have investments and capabilities across the board for digital transformation, and that is kind of working well for us.

Okay.

And together with that, you also believe the outsourcing decision making is actually moving up, especially in the U.S?

We do see a good level of pipeline.

I wouldn't say that the decision making is happening any faster than before.

Only thing is, last year, if you were talking about -- sitting in this time in January last year, of course, there was a lot of uncertainty.

The elections had just completed in the U.S, people were waiting for the new administration to come in.

Brexit was quite new in U.K. Compared to last year, this year we see a level of -- a higher level of certainty and a higher level of clarity in terms of what customers want to do.

So that way, the answer is yes.

But otherwise, I wouldn't say compared to last -- couple of quarters, there is any specific uptick or change in the speed of decision making.

Okay.

And Jatin, as you have said, for the bankruptcy client, there is an impact, which is meaningful.

Can you also give us some color about the client in the U.S. utility space where the litigation is going, whether most of the impact is already reflected into the numbers or may come going forward?

If you can give some color on that.

And will it be a meaningful impact?

So Sandeep, since we have talked specifically about the customer which went into bankruptcy, we are -- we were able to offer.

But right now, since the whole situation is subdued, I'm no longer -- I'm not giving a specific comment on that litigation or the relationship.

What we always said that we have valued relationship with the customers, we believe that we delivered a good project for which we actually won a project -- an award from customer.

And overall, the matter is -- dates back many years.

And overall, we remain confident of our position.

Beyond that, we don't want to comment.

Our market of our customers and what we have our aspirations from them is reflected in our guidance that we have given this quarter.

Ladies and gentlemen, that was the last question.

I now hand the conference over to Aravind Viswanathan for closing comments.

Thank you all for joining the call.

In case we couldn't take any questions due to time constraints, please feel free to reach out to the Investor Relations team.

Have a nice day.

Thank you.

On behalf of Wipro Limited, that concludes this conference.

Thank you for joining us and you may now disconnect your lines.