Wipro Ltd (WIT) 2021 Q4 法說會逐字稿

Ladies and gentlemen, good day, and welcome to the Wipro Limited Q4 FY '21 Quarterly Investor Call. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Ms. Aparna Iyer, Vice President and Corporate Treasurer. Thank you, and over to you.

Thank you, Stanford. A very warm welcome to our Q4 earnings call. We will begin the call with business highlights and overview by Thierry Delaporte, our CEO and Managing Director; followed by financial overview by our CFO, Jatin Dalal. Afterwards, the operator will open the bridge for Q&A with our management team.

Before Thierry starts, let me draw your attention to the fact that during the 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 SEC. Wipro does not undertake any obligation to update the forward-looking statements to reflect the events and circumstances after the date of filing. The conference call will be archived, and a transcript would be made available on our website.

Over to you, Thierry.

Aparna, thank you. Good morning or good evening, everyone, and thank you for joining us today. It's definitely good to be able to speak to you again this quarter. I hope you've been staying safe. Perhaps some of you may now be vaccinated. But if not, I really hope you have access to the vaccine soon. In fact, talking about that, I'm happy to share that for our colleagues based in India, we will be organizing vaccination camps in our campuses as per the guidelines set by the government. And we will reimburse the cost of vaccination for not just our employees but their families as well. Small but much needed relief in a tough year for everyone around the world. But thanks to the grit and perseverance of our entire team, we are stronger and more resilient than ever before.

As you would have seen, our Q4 performance was built on top of a momentum we saw in the last quarter. We have reported a solid growth in revenues, healthy order bookings and frankly, great execution resulting in robust margins. This sets the stage for the next quarter and the next financial year as well. Now let me give you some more details on the results, right?

Let's start with the revenue. Our revenue growth during the quarter was 3.9% in reported terms and 3% on constant currency terms, which is at the top quartile of our guidance range. I'm very pleased to tell you that this is the best fourth quarter results we have reported in the last 10 years. This was led by a good volume growth. And despite the steep decline in the first quarter of the fiscal year because of the pandemic, we bounced back to finish the year with I would say only a marginal decline of 1.4% year-on-year.

Now let's look at the demand. The demand environment right now is robust, and our overall pipeline is pretty healthy. In fact, our total contract value of order booking in the second half, H2 '21 grew by 33% year-on-year. That is the highest total TCV we've ever reported. You may ask what has led to this performance? First of all, I would say there is an increased activity in the market that we have leveraged very well. But secondly, our numbers reflect the large deals we've been able to close. We have closed 12 large deals, resulting in a TCV of USD 1.4 billion. This TCV includes a megadeal that we closed during the quarter in our Americas market, which can/should lead to revenue of over $1 billion over the deal duration.

I probably previously talked about how M&A is going to be an integral part of our business strategy. And you see that in the last 2 quarters, we've announced acquisitions across several key markets, including the U.S., Europe, Latin America, Australia, India. This acquisition have strengthened our local presence and our service offerings. During the quarter, we've also announced our largest-ever acquisition, Capco. This acquisition of Capco will strengthen very significantly our position in the global financial services market, it's very clear. We are quite excited to onboard some exceptional domain experts and leadership talent in that space. We remain hopeful of closing this transaction as early as possible.

We also, you would have seen that, announced the acquisition of Ampion, an Australian-based provider of cybersecurity, DevOps and quality engineering services. This acquisition will help us definitely expand our footprint in Australia and accelerate our growth in the Asia Pac region. Our strategic mergers and acquisitions over the years have created a vibrant new age and diverse community of talent around the world. Some of you may have noticed that on April 1, '21, we retired some of our individual acquired brands. And we united 7 such previous acquisitions, thereby truly integrating everyone under one brand, one identity and one mindset and ambition that now allows all of us to go to market as one Wipro.

The fourth point is on margin. Our operating margin during the quarter was 21%. It's a 340 basis points increase year-on-year. Our operating metrics have shown consistent improvement with utilization and offshoring being at its highest ever. I am pleased to share that we released, as promised, salary increments and promotions covering approximately 80% of our employees effective January 1, 2021. We are pleased with our rigor in execution, which has also resulted in operating margin of 20.3% for the full year, an expansion of 200 basis points in the financial year.

Now what speaks of our focus is that we completed Q4 in an entirely new operating model. This was, in fact, the first quarter under the new organization structure that if you remember, I had announced in November '20. So essentially, we undertook the biggest type of transformation of the company, and so little to no disruption in our market focus. Our results that are out. Change takes time, but I'm pleased to share that we are now well settled in the new ways of working, with the spotlight probably on our customers' needs.

There is now a new cadre of leadership that has joined the existing executive team. All key positions have been filled. I'm really proud to say that my senior team is truly diverse and brings to me the kind of inclusive leadership that is not so typical of our industry historically. But it's imperative that we build local talent and improve ethnic and gender diversity. Of course, a lot more needs to be done, but I want to take a moment to note the progress we've made.

Now let me add some color to the underlying business performance. All our numbers are in constant currency for ease of reference. Important to note, there is significant traction across all our markets, which means our growth is broad-based and therefore, sustainable. In Americas, we grew 3.5% sequentially, with most of the sectors showing strong growth. Our deal closures will provide a solid platform for next year. In Americas 2, we grew 4% sequentially. That led by a surge in volumes. The demand in the BFSI sector is strong across all service offerings. The manufacturing business is recovering, while our energy and utility business is likely to remain slightly volatile.

Our European markets have delivered a sequential growth of 3.7% on the back of several large deals that we've had through the year. United Kingdom and Ireland, Benelux, Germany grew collectively by 5.6% sequentially.

Finally, our APMEA markets declined slightly. But frankly, that's due to a conscious exit in some of the low-quality businesses in the Middle East market. But what I want to highlight is that all the other regions collectively have grown by 3.6% sequentially.

Now looking at our global business lines. The iDEAS global business line, which constitutes applications, data and engineering, grew by 2.1% quarter-over-quarter. This was led by a greater demand for our service offerings with digital experience and data and engineering services. Our other global business lines, iCORE grew by 4.3% quarter-over-quarter with all the 3 service offerings. That is to say digital operations platform, cloud infrastructure services and our security practice growing well.

Another indicator of how broad-based our growth was is to note that our top customers, our top 5, top 10 customers have grown well ahead of the overall company. Now let me give you a sense of the kind of deals we are winning. That also gives you a picture of the current business landscape. One of the best example is what we already announced the 5-year deal with Telefónica, O2, which was signed in February '21. As we look at our customers' buying patterns, this deal truly represents a lot of what we are seeing across industries. And I will illustrate it through 3 aspects.

One, almost all customers believe that now is the time for radical renovation of their IT environment. While there are many strategies and approaches to the top to bottom overall of the ITSA, the goals are similar, to significantly change the speed, the efficiency, the cost, the effectiveness of how IT support business grows, innovation and customer experience. Wipro is very well positioned to serve customers across this spectrum of IT transformation.

Second, cloud is at the center of customer conversations. Cloud is, in fact, becoming the computing platform for a large percentage of infrastructure and applications in the future. Whether the conversation is focused on cloud migration or cloud-native applications, multi-hybrid public or private cloud, customers are seeking Wipro's partnership in cloud to help them shift their operating models as well as innovating across the enterprise value chain. So we are coinvesting in business value and outcomes for our customers, demonstrating our long-term commitment to them while supporting their funding model. As deals becomes more integrated, transformational and require greater innovation across the ecosystems, we expect more conversations in this area.

Another deal that we have won with similar contour is the European mapping and location data company that are selecting Wipro to partner in their cloud and digital transformation journey. As part of that engagement, we promise to set up next-gen hybrid cloud operation centers and build futuristic apps in the mapping domain. We will leverage our HOLMES, AI robotics platform to enable a fully agile and DevOps organization, improving productivity and enhancing user experience for the customer.

And finally, on to our outlook for the next quarter. We are guiding for a revenue growth of 2% to 4% outside of Capco and Ampion. This will translate into a year-on-year double-digit growth of 11% to 13% for this quarter. This guidance reflects the environment we are operating in, no doubt, our increased focus on the market and our improved execution rigor. We recognize that we are competing for quality talent, and we are fully prepared to lead the war for good talent. We are investing in building talent at scale. We have implemented several interventions to retain diverse talent as well. In parallel, measures are in place to ensure the supply chain does not slow down our pace of growth. This includes, but it's not limited to, one, promotion cycles across bands; two, skill-based differentiated bonus; and third, the rollout of the much deserved salary increases for our senior colleagues in June '21. Our margins in Q1 will reflect these investments for growth.

To summarize, I would say that we are pleased with the current business momentum and be optimistic -- and we are optimistic about strengthening that momentum going into the new financial year. All our key markets are growing on a year-on-year basis. And that's the solid foundation we are starting FY '22 on.

A final but a very important point that I must make today is on the philosophy that Wipro has been passionately practicing for the last 10 years that our business should not be detached from the evolving climate crisis. So I want you to know that our growth ambition fully incorporates our decarbonization efforts and builds on our ESG road map. In the coming days, you will see us make some significant announcements on these fronts.

More on that later, but now let me hand over to Jatin for his comments on the financials. Jatin, over to you.

Thanks a lot, Thierry. And good morning, good evening to all of you who are joining our earnings call. Once again, a great pleasure for us to host you. Let me give a summary of our performance. As Thierry spoke about, we delivered our quarter 4 in the top quartile of our guidance range at 3%. In reported terms, this was 3.9% sequential. And this comes on the back of 2 good quarters where we delivered in quarter 3, a 3% sequential -- 3.4% sequential growth and before that 2%. So overall, we are tracking a good trajectory as we complete this financial year.

Our operating margin in quarter 4 was 21%, which is -- compared to 17.6% of quarter 4 of last year, was 340 basis points up. We feel quite well about the kind of execution that we were able to achieve in quarter 4 and deliver this operating margin. We delivered for the full year, 20.3% operating margin for IT services. And this was a 220 basis point expansion for the full year.

I'll speak about ETR. For the full year, our ETR was 21.8%. The ETR was lower in quarter 4 because of a couple of tech matters getting settled, and we got some upsides on that, but we delivered 21.8% of ETR in quarter -- in the full year of '21 compared to 20.2% of fiscal 2020. Resultant, our net income for the full year grew 11%, and our EPS growth for FY '21 was 14.6% Y-o-Y.

Let me speak a little bit about ForEx. We were able to achieve a healthy realization of INR 73.83 for every dollar in quarter 4. As we ended the year, we had about $3.2 billion of ForEx hedges, of which about $450 million were hedges for certain capital investments we have made in our subsidiaries and are not for the normal inflows for our sales proceeds. So from that perspective, we remain in the range -- our historical range of $2.6 billion to $2.8 billion. But as I said, we have topped it up with certain capital protection hedges that we have executed in quarter 4.

Let me speak about cash flow. In quarter 4, our cash flows were a little lower. As you know, our DSOs are significantly better in quarter 3, and it -- they go up slightly in quarter 4. Typically, in the beginning of the year, there is a little more time taken to issue fresh POs, and by the time you bill against those POs, the collections typically slip slightly into April, what should have come in March. So therefore, typically in quarter 4, we have a slightly higher DSO compared to quarter 3. So that has one impact. But I'm pleased to say that in this quarter 4, we have improved our DSO by about 8 days compared to quarter 4 of last year. So effectively, year-on-year, you would still see a strong improvement in cash collection.

Second thing is that we have also -- because of the bank holidays and a few other things that impact the cash payout, we have paid 4 salaries in India in this quarter. Of course, this doesn't impact P&L in any manner, but cash flow does get impacted. So Q4 cash flow has been slightly lower than what we would like. But I'm very pleased to say that for the full year, we have had very robust cash flow generation. Our operating cash flow as a percentage of net income is 137%. And our free cash flow as a percentage of net income is 119%.

You would have seen that our net cash, net of debt has come down at the end of March and compared to December end, it was $5.2 billion in December end, which is $3.6 billion at the end of March, and that is pretty much reflective of the buyback that we have completed of $1.3 billion in the course of quarter 4. Overall, we have a strong balance sheet, a healthy P&L, and we look forward to FY '22. We have guided for 2% to 4%, as Thierry highlighted in his opening remarks at the constant currency exchange rates that I mentioned as part of our press release.

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

(Operator Instructions) The first question is from the line of Sudheer Guntupalli from ICICI Securities.

Jatin, just a clarification, METRO AG, any change in the integration time lines? And of the 2% to 4% guidance for June 2021, what is the contribution you're expecting from METRO?

Yes. Sudheer, thanks for your question. We are not breaking out a specific deal or customer contribution to guidance. But certainly, it's a deal where the large component of the ramp-up -- principal component of ramp-up is happening from 1st April.

Okay. So the ramp-up is effect from 1st April?

Yes.

Yes. Okay. And my second question is to Thierry. In terms of the deal wins, if you can add further color on the renewals and net new deals. And what are these deals into, which areas are these deals into?

So Sudheer, so if I look at the performance or, let's say, the activity on the sales front in the organization, one, we've mentioned the fact that if you look at our top deals, our key accounts, our large accounts, if you like, they are driving growth. They are growing faster than the average of the organization, which is what it should be. And so that's a reflection of the fact that in our existing account, we are expanding our position through renewals or through new areas. What we are doing in these accounts is certainly, obviously, reinforcing our position by expanding, leveraging the different solutions and offerings we have inside the organization. So increasing the number of our accounts that have more than 1 or 2 offerings from Wipro supporting them.

Besides that, we have had a very solid and strong performance in generation of new opportunities in accounts we don't have -- in new accounts. And so I would say, frankly, you're right, to be able to drive growth, you really need to work on 2 legs. We always say you need hunters on one side who are going after new accounts, and you need to have farmers who are really growing existing relationships. And what we've seen over the last 6 months is that we've had some good wins driven from hunters, so in new accounts. But over the last few months, the acceleration in our existing account has picked up as well. And so that's a reflection of the good activity in the market.

One last question from my side. It has been sometime since you had put the organizational changes into effect. And we have seen a lot of leadership additions and changes over the past few months in the organization. So how do you think the employees of the company are taking these changes in terms of the satisfaction levels about the organizational changes? Any color on that will be helpful.

Sudheer, every week, I organize a call with about 25 employees in the organization really selected based on their birthday. So it's really people in the organization, oftentimes at junior levels with whom -- to get a feel but also obviously connect and know them but also get a feel for how things are perceived. And we are getting a lot of very good return on the direction taken. I think there is a great level of energy in the system of ambition as well. And I would say of confidence in the organization. So people are being really warm to the change in 2 new phases.

I would say we have also -- obviously, as you said, we've onboarded quite a significant number of senior leaders in our organization in very different roles. At the Executive Committee level, 5 new members have joined the team over the last 3 months. And I think what's happening is really positive. On one end, they're very excited to join Wipro and get to know better the culture and the values of this organization, the spirit that makes it so special. And -- but they're also bringing a different perspective at things from different organizations that they've worked with. And the way they are being welcomed by the Wipro organization is really good. I can tell you, very pleased with the way those new people are integrating very rapidly and very actively in the organization.

The next question is from the line of Ryan Campbell from Wedbush.

It's Moshe Katri. Can you hear me?

Yes.

Moshe Katri from Wedbush. A couple of follow-up questions here. First, did you disclose the mix from digital during the quarter and the growth rates there?

Moshe, we have not shared that number as part of the communication that we have done.

Yes. But let me take that one, maybe. So what we feel is that -- I know that some of the companies continue to report on what is digital or what's not. And what do we feel is that it's becoming a lot more and more blurred, frankly. And so -- and frankly, we are approaching percentages anyway where it becoming the majority of the organization. So it's not really serving the way the evolution of technology works. So what we are doing is we have picked more specific offerings. The inside, obviously, the space around digital and cloud and so on, to really drive high growth.

Now to give you a view on the cloud, the cloud business for us, it's about 1/4 of the revenue of Wipro. That's growing double digits, high double digits, right? If you look at security, it's growing double digits. If you look at digital customer experience, this is growing double digits. So we see that growth everywhere. There is no doubt to your question, if I try to read the question is, there is no doubt that the pandemic has accelerated the transition or the rotation from, I would say, legacy solutions and offerings to digital and cloud and data. And that's been also one of the reasons why we are (inaudible) and accelerating our growth, frankly, because we are well positioned in this space.

Okay. So if I ask a question a bit differently. From your estimates, which part of the revenue base is not growing or actually shrinking at this point?

What would be shrinking is asset AV infrastructure business that is not in the cloud that will be nondifferentiated services because by definition, there is a -- there would be a cost pressure only that would weigh on your revenue line. Those services are certainly being rapidly replaced by cloud data engineering, security and so on.

Okay. And then which part of the bookings for the quarter was actually from renewals? And maybe there's a way to look at this also from an annual perspective for the fiscal year, which part of bookings came from renewals versus new logos?

So Jatin, you tell me if we have that. But what I can tell you is that the performance in bookings over the last 6 months does not come from, I would say, a pickup of renewals -- an unusual pickup of renewals versus previous quarters. In fact, not the case. A lot of the growth we've seen is coming from new opportunities we've driven, either proactively in our existing accounts or lease partners in other accounts. And so frankly, I would tend to feel that at least I would say, and I would let you, Jatin, add. But I would say that there is not more -- there's not a bigger proportion of the bookings in the $7.1 billion TCV signed, that is coming from renewal than what we would have had typically in the previous quarters.

Absolutely, Thierry, I mean you articulated correct -- I mean, in terms of the texture of this. And only additional data point, Moshe, is, we haven't broken -- I mean, we have not broken down this overall TCV that we have booked. But we can talk about the $1.4 billion of large deal that we have signed, and most of it is new. And very little of renewal there, to give you color of -- additional color as to how the business has come.

That's great. And then final question to Thierry. Since you've announced the Capco transaction, did you have some more time maybe to look at it? Are you feeling more confident, less confident about the prospects here? And any sort of incremental color will be helpful.

So Lance Levy and I are connecting continuously, okay? We are talking. We are, obviously, impatient to go through all the different steps to complete the process. We will, by the way, complete the process on time, within the time frame that we had defined for it. The outlook, I cannot consider. The deal is not done. I need to apply some reservation to the view, but it's positive. I can tell you it's positive. The trend is positive. The opportunities identified to rapidly connect the Capco and the Wipro sides of BFSI business on specific accounts as being -- there's a long list. As you can imagine, over the last month as we are talking to clients and connecting with them, they're absolutely expressing impatience to start to engage with the Capco team and start to really reflect on what it means and how we can leverage our new position and our capabilities to serve them more.

And so to your point, which was get a sense or feeling for my level of confidence, one, I've never -- no one -- I mean, we are, and I know, Rishad, our Chairman, shares this view as well from a strategic standpoint, this was absolutely the right thing to do. Second, I think the process leading to the completion of the deal is running well. And third, everything I've heard in terms of momentum and market impact at the moment on the Capco side is positive. So hopefully, soon more to come, but it's an exciting outlook for us.

The next question is from the line of Manik Taneja from JM Financial.

Yes. So my question is regarding the supply side environment. While you've spoken about giving hikes to the senior staff from June, just wanted to get some sense on the wage hike cycle for the overall staff for FY '22.

I'm sorry, I've not been able to understand your question. It's reference to the supply side, but can you repeat?

Sure, Thierry. So my question is with regards to wage hike cycle for the overall staff for FY '22. Any thoughts on when do we plan to roll out wage hikes for the entire staff? That's question number one.

And the second question was with regards to pricing trends in the market. Just wanted to understand are you seeing more progression towards skill-based pricing now given the fact that customers have got much more accustomed to offshore delivery? And do you think that will be a margin lever for the industry as a whole over the next few years?

Okay. So let me take the point -- the question to -- and Saurabh, I'll give you the first one on the compensation evolution, the hikes in organization. So on the first one, which is the price evolution. So definitely, I think it was very clear at the beginning of the pandemic that the shock on the overall performance of a lot of companies in different industries has led them to drive significant cost reduction program here and there. I don't think they have necessarily reduced the spend in IT. They've certainly asked for efforts and discounts and some (inaudible) at that time, but that was more to help short term. From an overall spend, I don't think there is going to be a slowdown. If anything, in fact, there's going to be an increase of the spend for technology over the next quarters.

Pricing, I would say, it's -- what I would say is I have seen times where there was a tremendous pressure on price. I don't think we are in this period. I have seen period where -- but I've never seen a period where there's no normal pressure. So what I would say is, of course, if you are working on solutions that are differentiated, price, client is ready to pay the right price to get the right service because transformation -- the stake -- what is that stake in the transformation is a lot more than what they potentially may save a little bit in the technology spend. So I think at the end of the day, to your question, I would say, yes, there is a pressure on pricing, but not more than what we've seen for many, many years, frankly. And second is, when you're on the right offerings, when you provide the right talent, the clients are willing to pay. The clients want to have the right talent. They want to have the best capabilities you can offer, and that is, for sure, a requirement.

Saurabh, you want to may be complement that one and take the first one?

Sure, Thierry. Thanks, Thierry. So Manik, on your question on overall wage hike for FY '22, let me explain to you a bit. In Q4, effective 1st January of this calendar year, we have given hikes to 80% of our employees, the junior employees. And for the balance people, we are doing it effective 1st June. This is a normal cycle that was -- in Q1.

We are also doing a couple of other things. This is -- one is that we are doing bonuses for -- skill-based bonus across the organization for the key skills which are hot skills in the market today where you want to (inaudible) our employees. So that also we are doing. And we will have across the board, across the company promotion cycle happening in June. So a number of interventions are happening for people.

As regards to the normal cycle for FY '22, we have just given it 3 months back, we will -- for junior employees, we'll take a call. As you know, we have called out that our supply chain will not be a constraint to manage the growth environment. And at the appropriate time, we will take a call when it's to be given. But our endeavor is to remain competitive and make sure we ring-fence the right skills, critical and high-skilled people in the organization. Hope that answers your question.

Thank you for that response. I guess in the press conference, you mentioned that the wage hikes that were given by us in December were differentiated and ahead of industry. So just wanted to get some thoughts there.

So yes. So what we have given for people in the January cycle, we believe that our increases for the -- a, we have differentiated our increases based on performance and criticality. Second, on skill. And whatever increases we have given to people are much more aggressive than what we have seen in the industry. That's the point I wanted to make, what we have given to the people in January. Does that answer your question, Manik?

Yes, sure.

The next question is from the line of Dipesh Mehta from Emkay Global.

A couple of questions. First about -- I just want to get a sense about the overall reorg. And now whether leadership team is in place because last quarter you indicated by Q4 end, we will be largely done. So if you can provide some update on it from leadership team perspective. And overall transition is largely behind us.

Second question on the progress made on global account executive. So empower accounts manager-related thing. That is, I think, one of the key focus areas. So the progress made so far and how we should look that playing out over next few quarters.

And the last question, Thierry, because -- and I think you indicated some $7 billion deal intake for fiscal. So is it comparable with $1.4 billion which we announced in Q4? Or how one should look at that number?

Okay. Okay. Okay. Understood. Understood. So let me start on the first one, which is the organization. So yes, on January 1, we have rotated the organization from a global sector model with 3 dimensions and about 27 P&Ls to an organization by geographies and sectors inside geographies with 4 P&Ls and 2 global business lines supporting those 4 P&Ls. So that's a much simpler organization that has implied a significant redesign of the organization to work on the processes, to work on the role of everyone and obviously, realign all people including leadership to this new model. We have set the objective to be ready by January 1. And what we have said about -- at the last communication a quarter ago is that we would -- we will consider that by end of the quarter, we would broadly be done with the transition, if you like. The reality is that we have shifted to the new model on January 1. And we probably by the end of January, early February, we've been at pretty much full speed in the new model.

So the speed -- I'm personally, myself, I've been also very impressed by the way the organization has adjusted to this new model. And our leaders have jumped into their new role and taken -- and the reason for the success in my mind is that, one, there is a clear spirit of what Wipro. So people want to work together and really share the successes and work together with our clients. Second, there is an absolute focus on the market. And from that standpoint, I think it's been a success. We've seen it in the sales performance month after month. And so as expected, a lot less people time spent on internal matters, less internal frictions between silos, less discussion about whose P&L this is.

But a lot -- and maybe also last -- or not maybe, but also less people focusing on operations, if you like, and many more of our leaders in the market connecting with clients and focusing on closing deals and delivering deals. So that's on the organization. My view is we are mid of April, the organization change is behind us. Yes, there are, here and there, things that we need to adjust and improve, but that's absolutely normal. For us, the organization is up and running in the new setup and it's working.

Your second point was on the account executive. So the global account executive, the GAE's role that we developed as part of this new operating model on January 1. Here, I would say certainly it's a journey because for people, it is a change in the responsibility, in the scope of operations. They have a lot more accountability. They are more accountable in front of the client, but also in front of the company, but then they are given more power to really drive this accountability. And I would say the progress has been really good. The fact that our accounts -- our large accounts have been driving the growth of the organization in Q4, and we'll continue to do it in Q1 is a positive aspect of that. I want to say one thing also on this account executive on this GAE role, the reaction, the response from our clients has been very strong as well, very positive. And that has definitely helped. Because when your clients are showing satisfaction in the way -- in the change we are implementing internally, it gives a lot more sense to the change and I guess people are -- it's a lot easier to adjust to it.

Third is the clarification on bookings, understood your point. So the $7.1 billion is the TCV performance for H2. So that includes Q3, Q4. And indeed, this is the highest-ever performance in TCV for Wipro in a semester. Okay. Did I respond to all your 3 questions?

So one clarification on the last part. So large deal, $1.2 billion and $1.4 billion, and this $7.1 billion includes everything? That's what I want to understand.

That's right, Dipesh. Yes. So $2.6 billion is large TCV and total is $7.1 billion.

And this is only for H2, we are saying. We are not saying for full fiscal.

That is right. This is only for H2.

The next question is from the line of Nitin Padmanabhan from Investec.

The first question is, would you be able to provide any tentative sort of assumptions that you might have in terms of when Capco and Ampion would sort of begin to add to revenue or when it would close?

We've said before the end of June, and it will be before the end of June. So that before the end of the quarter, they will be part of the family. We are confident that they will be part of the family. This is regulation steps, right? So this is also a process where you have to go through different approval process in different countries, not something that we are running ourselves. But it will get completed before the end of the quarter.

Sure. Fair enough. And secondly, I just wanted to check, looking at -- I think in the prior quarter, when we recorded $1.2 billion in deals, and I think METRO-NOM was $700 million, you had suggested that it's -- you said sort of a deal win that sort of may not be replicable considering we had a large deal within that. But this time, you've actually sort of delivered $1.4 billion. Now going forward, based on the pipeline that you see, do you think what you've achieved in the first half, some of these large deals, do you think that something we should sort of expect from Wipro going forward on a consistent basis? Do you see a pipeline and underlying momentum that would allow you to sort of at least be above $1 billion consistently?

This is certainly the objective. This is certainly the objective. That's why we are building this large deal team across Wipro with very, very tall talents who will really bring their experience of going into large deals and help us craft those opportunities of deals and build a pipeline. We have deals in the pipe. And so we may continue to close several large deals, but it's still not the machine that we want to have that is producing systematically a certain number of large deals per year. And so I think we are seeing the acceleration process. We are not there to the point where we say, okay, the engine is working full speed, and we will produce x number of deals per period, okay? So that's the most -- that's the best answer I can give you.

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Excuse me, this is the operator. Mr. Padmanabhan, your voice is breaking.

Yes, apologies. Is it better now?

Yes.

Yes. So when you look at the deals that are out there, is cloud licensing incrementally becoming a larger proportion of deals versus what it was in the prior year?

Cloud overall is about 1/4 of the business of Wipro, and it's growing several times more than the average of the company. So it is going to get a large proportion of our business.

Sir, actually -- sorry, apologies. I was referring to the cloud licensing revenue per se, which is actually split out into the product business. So I was just trying to understand going -- if you look at the deals out there that are there in the pipeline, is cloud licensing incrementally becoming a larger proportion of the deal structures than what it was in the past?

It is, but I will not differentiate in terms of numbers, but we see that, yes.

The next question is from the line of Sandeep Shah from Equirus Securities.

Just wanted to understand that post 6 months of new organizational level changes, closing 2 megadeals is impressive. So Thierry, just wanted to understand, is it largely the operational simplification which is driving? Or is it something else in terms of some flexibility on contractual terms or other things which is also driving this kind of a megadeal wins?

No, no, no. I mean, it's hard to respond to your question because have we strategically changed our approach on legal terms or commercial terms, I don't think so. I think it is probably more that we are engaging more proactively with our clients on larger opportunities. Just maybe something that we didn't pay enough attention to in the past. And so it's really more the result of us connecting at multiple level with our clients, leveraging our expertise of the industry and our understanding of their landscape and priorities and really be proactive in crafting these opportunities. That's -- to me, that's where I see the inflection point.

Okay. This is helpful. So just a follow-up. How is the megadeal pipeline has been shaping up for you with a more proactive approach with the client as a whole? And is it resulting into a material increase in your pipeline versus what it used to be earlier? And just a last follow-up question to Jatin. For the Capco sources of finance, any color of what proportion could be through debt and what proportion could be through internal accruals?

No, we are really looking at all options, and we'll finalize what works best for us right now. So we have not yet finalized how -- what would be the proportion. That's the current position.

The first question, if you can answer -- yes.

Yes, yes. Yes, yes. So I'm getting there. So on the large deals, so yes, as I said, we certainly see more large deals that -- or large opportunities than what we were looking at in the pipeline in the last 6 or 9 months. What is certainly clear also is that we are having a lot more CXO engagements with our clients than probably we had before. And I think it's evident, it's obvious that these large opportunities are generated in these CXO interactions. And so yes, we are seeing more opportunities in the pipeline.

Is the pipeline big enough yet on large deals? For me, no. That's -- obviously, that's why we are building this big deal team because I know by experience that we can really take it to the next level and turn it into a very systematic approach with a strong machine. But it's starting to produce some results because, frankly, as you picked out -- picked up, winning 2 very large deals in a row in 2 quarters hadn't happened ever, I guess, at least for many, many years in the organization. So I think it's definitely the result of our focus on it in our go-to-market activities.

Okay. Okay. And if I can just pitch a last question, Jatin. On the margins, entering FY 2022, some portion of wage hikes for seniors still pending for FY '21, which will come in FY '22. And on top of it, there would be FY '22 wage hikes. And on top of it, there would be a consolidation of Capco-related margin headwinds. So can you give us some sustainable range which we can model for FY '22? So that would be helpful.

Yes, Sandeep. Let me just share that there is obviously investments that we need to make in talent, and we spoke about it at length in press and here. We will also continue to make investment in solutions and frontline talent, creating world-class GAEs for organization. So those are the investments we need to make. But we should be also mindful of some of the synergies and the benefits that the growth gets, and growth certainly provides operating leverage on fixed expenses, but more than that, it enables us to deploy our campus hires faster into projects, rotate our experience hires faster into new opportunities. So it is going to be

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as we go through FY '22, which would be certainly a very different year than what FY '21 has been.

From our commentary standpoint, we do feel that what we had said at the time of our Analyst Day that the range that we were there then in, which was around 19%, 19.2%, was something that we believe is sustainable. And there will be, in addition, a dilution of Capco and the impact on the year will depend on many things, including the date from which we consolidate them and sort of synergies that we are able to generate quickly on sales side, working together with Capco.

So -- but we have spoken about the dilution that we'll need to take for the first year, not from the profitability of Capco, but principally, the investment that we'll make in terms of management incentive plan as well as some of the acquisition accounting-related intangible charge that we'll have to take. Put together, that 2% dilution is what we see. And our endeavor would be to obviously continue to work hard. You have seen the way we have executed in last few quarters. But right now, these are the 2 anchors that we have given in the past, and we would like to stay with those 2 anchors.

So just a clarification, you are saying after Capco also our margin can be close to 19%?

No, no. No, Sandeep. My point was that the range that we were operating in, in addition, we will have an impact of Capco.

Ladies and gentlemen, that was the last question. I now hand the conference over to Ms. Aparna Iyer for closing comments.

Thank you all for joining the call today. In case we couldn't take your questions due to time constraints, please feel free to reach out to the Investor Relations team. Have a nice day. Thank you, and good night.

Thank you very much.

Thank you. Bye.

Ladies and gentlemen, on behalf of Wipro Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.