Wipro’s billion dollar bet on cloud business

Bengaluru-based information technology (IT) company Wipro Limited on Tuesday said that it plans to invest $1 billion in cloud technologies, capabilities, acquisitions, and partnerships over the next three years. The IT major announced the launch of Wipro FullStride Cloud Services, a portfolio of cloud-related capabilities, offerings, and talent that will help clients in their transformational efforts.

At present, Wipro employs over 79,000 cloud professionals and more than 10,000 people certified by the leading cloud service providers. Over the last one year, the IT firm has announced significant cloud-related deal wins including with Telefónica Germany/O2, Verifone, and E.ON, in addition to Germany’s Metro AG— which is one of the largest deals in Wipro’s history.

“Today, cloud adoption is at the core of any IT transformation initiative, and our clients have been turning to Wipro for help with this. With our $1 billion investment in cloud capabilities, and the launch of Wipro FullStride Cloud Services, we are in a far stronger position to simplify, orchestrate and accelerate the cloud journey for our clients,” said Thierry Delaporte, CEO and managing director, Wipro in a statement.

The Covid-19 crisis forced businesses globally across sectors to accelerate their digital transformation initiatives, including ramping up their cloud infrastructure, leading to a sharp growth in revenue from digital services for India’s top-tier IT companies. Tata Consultancy Services (TCS), Infosys, and Wipro during the recently concluded first quarter projected a large deal pipeline and robust demand for their digital transformation services among clients in the U.S. and Europe, their largest markets.

During the recently concluded June quarter, Wipro closed eight large deals in Q1, resulting in a total contract value (TCV) of $715 million.“It is witnessing a good mix of large, medium-sized, and smaller deals. Wipro has announced a number of cloud-related wins in different industries and geographies in the last few months. Wipro stated that cloud overall is about a quarter of its total business and is growing several times faster than the company average,” said Nirmal Bang Institutional Equities in a recent post earnings research report.

“Cloud adoption and innovation are an essential part of our IT strategy. For a company like Metro AG, that operates in 25 countries, quickly migrating to the cloud enables decentralisation, agility, speed and flexibility in engineering and development. We are delighted to have a multi-year strategic partner and leader like Wipro to support our cloud strategy and simplify a complex, technology ecosystem for our success and growth,” said Timo Salzsieder, CIO, Metro AG.

In December last year, Wipro signed a digital and IT partnership deal with the German wholesaler reportedly for $700 million.

During the April-June period, Wipro’s revenue from IT-services business stood at $2.41 billion, up 12.2% quarter-on-quarter. While in constant currency terms it grew by 12% quarter-on-quarter, its highest organic sequential dollar revenue growth in the last 38 quarters. Indian IT companies typically use the constant currency method to eliminate the effects of exchange rate fluctuations while calculating financial results.

As part of an initiative to simplify its organisational structure, Wipro early this year initiated its new structure. The new operating model has fewer profit and loss (P&L) in the structure. “Wipro has reduced the number of P&L from 26-27 to 4. This means lesser walls inside the organisation, less silos, and more opportunity for people to work together. Wipro has also replaced the existing structure of various strategic business units, service lines and geographies with four strategic market units (SMUs) and two global business lines (GBLs),” said Girish Pai, head of research, Nirmal Bang Institutional Equities in the report.

Pai further added that the simplification and rationalisation of the model is freeing up a lot of opportunities to reinvest in the company’s future.

Shares of Wipro closed at ₹568.55 a piece, marginally down 0.88% on the BSE on Tuesday, while the Sensex ended the day down by 0.68%.