Wipro Limited
Q3 2021 Earnings Call Transcript

Published: 13 Jan 2021

[Operator:]

Ladies and gentlemen, good day, and welcome to the Wipro Limited Q3 FY '21 Quarterly Investor Conference Call. . 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.

[Aparna Iyer:]

Thank you, Stanford. A very warm welcome to our Quarter 3 FY '21 Earnings Call. We will begin the call with the business highlights and overview by Thierry Delaporte, our Chief Executive Officer and Managing Director; followed by financial overview from our CFO, Jatin Dalal. Afterwards, the operator will open the bridge for Q&A with our management team.

[Thierry Delaporte:]

Aparna, thank you. And good evening, ladies and gentlemen, really wishing you a very happy new year. It's a true pleasure to speak with you today. Last year, we witnessed some very unprecedented times, and now with improved vaccine prospects, we are filled with optimism for 2021, and sincerely, are hopeful that it will be a much better year for the society, for businesses, our clients and for us. I'm also very happy to share with you that effective January 1, so just literally 15 days ago, we had gone live with our new organization structure, an important moment for our company. Let me now give you an update on our Q3 performance. I am pleased to share with you that we've actually had a second consecutive quarter of strong performance with healthy growth in revenues, acceleration in order booking, expansion of margins, sustained lower employee turnover and solid operating cash flows. Looking at it one by one. The revenue growth, 3.9% in reported terms, 3.4% on constant currency terms, is at the upper end of our guidance. Our growth was the highest in 36 quarters. The growth in revenues was broad based across sectors and market and led by a surge in volumes. On operating margins, we expanded ROM during the quarter by 240 basis points to 21.7%. This, again, is the highest we have achieved in the last 22 quarters. Expansion was led by driving excellence in operations, focusing on improving the quality of revenues. Several operating metrics are at our all-time best, including offshore mix, utilization, attrition and optimized subcontracting. Third, our overall order booking for the quarter grew double digit on a year-on-year basis. The order book was strong, across sectors and service offerings and had a good mix of both large and small deals, which is always important for us. We closed 12 deals with more than 30 million TCV and the TCV booked of these deals was over $1.2 billion. We also, as you know, closed our largest deal ever in Continental Europe with METRO-nom.

[Jatin Dalal:]

Thank you very much, Thierry. Good evening, good morning, ladies and gentlemen. As always, great to talk to all of you. We had an excellent quarter of execution. Our revenue growth was at -- just at the upper end of our guidance at 3.4% versus 3.5% at the upper end. Margin expansion of approximately 240 basis point resulted in our operating profit growth year-on-year of robust 24%. We had a higher ETR this quarter compared to Q3 of last year, 22.1%. Resultant our net income growth was 20.8%, that too improved significantly from our prior quarters. Let me now talk about the cash conversion. Our cash conversion during the course of the quarter was very robust. We improved our DSO days by approximately 6 days. Overall, after first two quarters of robust performance, we continued one more quarter where we delivered free cash flow at 133% of our net income and operating cash flow at 106% of our EBITDA. At the end of the quarter 3, we had $6.2 billion of debt of cash on the balance sheet, and net of debt, our cash was $5.2 billion.

[Operator:]

. The first question is from the line of Moshe Katri from Wedbush Securities.

[Moshe Katri:]

Congratulations on a strong quarter and happy new year, everyone. I just wanted to kind of get your feel on how long will, in your view, take for Wipro to be able to show growth rates that are comparables with some of their peers? And at this point, obviously, you've had better-than-expected results for the quarter. The quarter has been strong for many other peers in the sector. Are you still growing probably at half a rate compared to some of your larger peers? And what do you need to do to get there at this point?

[Thierry Delaporte:]

Moshe, thanks for your question. I think it's very -- if we understand the question, this is clear that we have defined a strategy to really go back to the leading board in terms of growth. We know it's going to take some time. We -- it takes first to walk before you run. And what we've said is that we would go from a situation where we hadn't stabilized the business in Q2 to a growth pattern and then accelerate, get to the same level of growth then our competitors and then accelerate after. It's going to take several quarters to get there. How many? I cannot tell you now. But what is clear is that we are seeing the journey. We are seeing the trajectory. And we are executing step after step along these lines. What we see as well is that with the increased focus on growth, with the focused investments into areas that we believe are going to drive higher growth than others, by investing in some of the markets that are key to our success, by investing in talent and so on, we will continue to support our journey and our road map. So bear with us, we will not be telling you, making you promise 1 or 2 years ahead of time. We are going to execute consistently, and you will see the consistency of the trajectory quarter after quarter. For now, it's clear that the demand is good. The market is good. And our level of optimism is easier.

[Moshe Katri:]

Okay. Just as a follow-up -- just to confirm what I heard, are you comfortable that some of the margin gains that you had in fiscal '21 are sustainable looking into fiscal '22? And obviously, the new pandemic-driven working or work-from-home model has given you guys a lot of flexibility. And the real question here is, what's sustainable into next year, what's not?

[Thierry Delaporte:]

Absolutely. Thanks, Moshe. Jatin, you want to take this one?

[Jatin Dalal:]

Sure, Thierry. Moshe, as you know, the margin momentum has three effective levers for Wipro; we spoke about it earlier in the day. One is the revenue improvement. The share revenue growth creates operating leverage on fixed expenses, that has helped certainly. Second is a significant offshoring over the course of last four quarters. Our offshore mix, as you can see in our data sheet, has improved by approximately 6 percentage over the course of last four quarters. And the third is, we have been able to manage our utilization in a very tight range, especially in quarter three, adjusted for leave, we have done quite well. So the first component of the saving, which is related with fixed expenses remaining at a lower level, given the situation of pandemic, will slowly go away during the course of next 6 to 9 months and that is the reality that we have to prepare ourselves for. But the revenue momentum, if it continues and offshoring, if it remains, then some of those advantages may stay within the operating margin. We'll have to see how situation pans out, Moshe.

[Operator:]

The next question is from the line of Sudheer Guntupalli from ICICI Securities. As there is no response, we take the next question from the line of Sandeep Shah from Equirus Securities.

[Sandeep Shah:]

Yes. Thanks for sharing some data points on the deal wins. The first question is, in terms of any quick learning in terms of a change in the operating model, which helps Wipro in terms of a faster creation of the pipeline or a conversion of a pipeline into deal wins? And just a related question, this quarter, we have 112 deals with a TCV of 1.2. So if I exclude the METRO AG, the deal wins at $500 million includes ACV, the average tenure of close to $45 million, $50 million. So Thierry, just wanted to understand whether these deal wins on larger size, are we making a practice to win every quarter? Otherwise, it may become sporadic and the deal win momentum may buy down in the coming quarter as a whole?

[Thierry Delaporte:]

That is true. That is true. Okay. All right. Sandeep, so question on the operating model first. The operating model we have built has the following strengths

[Sandeep Shah:]

Okay. Just a follow-up. Deal similar to the size of METRO AG, more such deals are in the pipeline. And just a question to Jatin, regarding the margins, with Q4 also, there could be a rate hikes as an impact. And peers are also announcing another round of wage hikes maybe in the next couple of quarters as one of your large peers has said next year would be a normal year. So -- and Thierry also said that our margins will continue to remain elevated. So Jatin, is it possible to believe that the current quarter margins may continue with the narrow band moment, which we -- generally, you make a statement around that?

[Thierry Delaporte:]

Jatin, maybe before you respond, I just take the big deal question, the first part, and I give this -- I'll let you the second one. So your first -- your question on the big deal was, okay, you want METRO, does it mean you're going to win one METRO per quarter, okay? That's the plan, okay? So here again, we have moved from a place where we didn't have large in to a place where we have won and now we are going to systematize. That is the logic of having created this big deal team, this large deal team. We have -- we are structuring it. We are putting expert's knowledge. You do not go after large deals the way you go after a smaller deal. You need to bring different type of talent, expertise and caliber, and we are putting that in place with the objective to obviously have a true big deal machine. For now, we have some in the pipe, and we are getting more. So this is the good news. But we are not yet at a place where we will have one every quarter. To you, Jatin.

[Jatin Dalal:]

Thanks, Thierry. Yes. So Sandeep, here is what we have articulated. We definitely had a great quarter in quarter 3 with a 21.7% operating margin. We definitely have investments in a front-line sales capability, consulting domain where we are hiring this cadre. We also have a host of investments on talent, which Thierry and Saurabh have articulated since this morning, which means that quarter 3 margins were on higher side, and in quarter four, we will not see those given these headwinds that we spoke about in terms of investments. Having said that, some of the benefits that we have seen during the course of last few months, which is that we have lower travel spend, we have lower facilities costs, those benefits will continue. We have an additional lever in terms of increased revenue momentum that should also play out. Offshoring has increased significantly over last few quarters, that will also hopefully sustain. It cannot go out overnight in quarter four. So some of the benefits will also continue compared to where we were in the beginning of the year, and hence, our articulation is that we will see a headwind of this investment. However, we will not go back to the levels that we were at the beginning of the year, but we will remain elevated from those levels.

[Operator:]

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

[Sandip Agarwal:]

Hello, can you hear me?

[Thierry Delaporte:]

Yes, Sandip.

[Sandip Agarwal:]

Congrats to the whole management team for excellent execution and reaching top end of the guidance. And also wishing you all Happy New Year and stay healthy, stay safe. So I have only one question, Thierry, is that what is our strategy towards these hyperscalers? How are we seeing the whole opportunity of the cloud? And also, are you seeing early signs of strong CapEx being pushed by the banking industry after a long period of gap? Are you seeing these 2 trends? And what is your -- what would be your strategy to get this delta for our revenue growth?

[Thierry Delaporte:]

Okay. All right. So thank you. So cloud for us is a big part. It is right at the center of our growth strategy, right? One, because we had a position on the infrastructure side, a significant investment that have been made over the last years. We have strong relationship with companies like AWS, Google or Microsoft. We've been with company like ServiceNow, like Salesforce and so on. We have invested, and we want to really continue to accelerate on the cloud. So definitely, at the heart of our strategy, what do we see? We see an acceleration, a significant pickup in different markets. While in America where the cloud journey has started some years ago. We see an acceleration from pretty much every industry, including from the BFSI sector and banking and insurance. In Europe, traditionally, a lot of companies were a little bit suspicious or careful with the public cloud adoption, and therefore, we're going a little slower on the cloud transformation. And I believe with the pandemic, they have realized the necessity to accelerate. And therefore, we see now an increase volume of business in the pipeline, in terms of cloud transformation in America, in Europe and in Asia. The relationship we have built with our partner are absolutely critical. I've actually gone to several clients together with the CEO of one of these large companies as -- together and I think there is an equal understanding on both sides, on the technology side, on service side, that when we are together able to offer a cohesive, unified proposal to a client, we reduce a lot the level of risks for him, and this is what has been happening. So I would say you probably -- I don't know if you realized also that in our 5 priority strategy laid out and presented to the market in October, actually, we have presented a point around the way we want to leverage our relationship with partners. We have created a very tall partner relationship team inside Wipro with a very senior leader managing this and Vice President managing each of these relationships, so that we are taking them to another level. There's huge appetite on both sides. And the first discussions, and I have engaged with all of them, obviously, on deals, not only at the corporate level but on deals. This equal appetite on both sides to work. And you will hear more about the type of partnership that we will build together with several of them.

[Operator:]

The next question is from the line of Sudheer Guntupalli from ICICI Securities.

[Sudheer Guntupalli:]

Congrats on a good quarter. Clearly, for Wipro, historically, H2 has been relatively better versus industry. Secondly, given the drop in the revenue run rate over the first 6 months of this calendar and the subsequent recovery over September and December, mathematically, there looks some more scope for residual recovery in March. In addition, we have also been talking about strong deal win momentum over the previous 6 months. So if you put these things into perspective, it looks like the outlook for the next quarter could have been tad higher. I would be glad to know your thoughts if we are being conservative here or if there is some other element?

[Thierry Delaporte:]

No. I don't try to be conservative. I really try to define together with Jatin and the leadership team where we believe we will land. So there's no -- don't read any game here. I think this is -- just realize the context we are in. We've had certainly a good quarter. We continue to have a good quarter four as well. We're in the context of the transition into the new model. This is going swiftly, but those are conditions that feel that probably we feel comfortable with the 1.5% to 3.5% growth for Q4, which I believe is a good one. And more importantly, Sudheer, also for us, the -- we have the ambition. We don't want to shine one quarter. We want to build solidly quarter after quarter and be consistent. And I think this is the rationale behind our communication as well. We are building solidly this growth engine.

[Sudheer Guntupalli:]

Okay. And just one question for Jatin. In terms of margins, of course, as you rightly pointed out earlier, some of the factors like when travel will resume and all might not be under our control. So we may not be able to hazard, I guess, over there. But in terms of some of the aspects like utilization, how comfortable are we at the current levels? Because -- are we comfortable that this will sustain or probably there will be a round of hiring, which can bring down the utilizations to an extent?

[Jatin Dalal:]

Yes. So we have done a good job on utilization over, I think, last 5 -- 6 to 7 quarters, and we continue to do a good job. I'll request Saurabh to share our talent planning strategy and how he sees the scope?

[Saurabh Govil:]

Thanks, Jatin. So, from a people supply chain, three aspects

[Operator:]

The next question is from the line of Girish Pai from Nirmal Bang.

[Girish Pai:]

Thierry, I just wanted to understand the nature of demand regarding cloud services. Do you see this being compressed over, say, the next 24 months to 36 months and after that it's kind of going to fall off? I'm basically talking about Infrastructure as a Service demand. That's question number one. And then I have a subsequent question on the TCV.

[Thierry Delaporte:]

I was smiling listening to your question at the beginning because I feel I've heard this question for several years already. My conviction is absolutely the contrary, Girish. So, I think in my mind, it's going to be more -- a lot more demand. The cloud environment is creating so much opportunity that companies will realize the potential of a true cloud environment on which they will want to develop new services, new solutions, new platforms and so on. And so, I think, for the foreseeable future, we will definitely serve on the cloud wave, but this is not a small wave. It's a very big wave and we are not at 30% of it.

[Girish Pai:]

Okay. Jatin, a couple of data points I wanted. This $1.2 billion TCV, is this completely net new? And the other question I had was, you were talking about restructuring of your -- collapsing the management structure from -- but people being reporting, like, 24, 25 people to 4 people. How much of gains do you think you can extract from this? These 2 points, $1.2 billion TCV, is this completely net new and the gains from the restructuring?

[Jatin Dalal:]

Yes, Girish. So, first is, no, it has both components in it, which means that our renewal as well as the new deals are part of this. And we are not sharing the mix. But Girish, especially for this quarter, it is easy for you to see a component of new because METRO-nom is sitting as part of this number and that you know is completely new. So even in the rest of the rest, if you apply a normal percentage, you will see that there is a significant component of new in this $1.2 billon. I'm just sharing a color on this quarter. We probably will not give that mix moving -- I mean, as a data point, but this quarter is quite obvious for everyone to decipher. Sorry, your second question was, Girish?

[Girish Pai:]

The gains from this collapsing of the management structure. You people reporting to just four senior top-level managers compared to, say, 24, 26 people. How much of gains do you see from that?

[Jatin Dalal:]

Sure. As we have said, for us, this is around creating a simpler structure for a greater revenue momentum, a superior investment focus and sharper accountability. It's not around cost. I'll request Saurabh to also add his perspective.

[Saurabh Govil:]

Yes. I think the reorg is about making the organization agile and more client-centric. So that's been the focus because our intent is to reinvest and we'll be seeing a lot of leaders onboarding in the coming quarter as well as in the next quarters, as Thierry called out earlier. So, don't see that as a cost exercise more, it is more about how do we make the organization more agile and client-centric.

[Operator:]

The next question is from the line of Abhishek Shindadkar from Elara Capital.

[Abhishek Shindadkar:]

My question is the revenue per employee. Now despite a shift in the offshoring, that number is flat on a quarter-on-quarter basis. So it seems it may have helped on the gross margins as well. So just wanted to understand how sustainable these gross margins are once we shift back to non-work-from-home environment? And the second question is for Thierry. Whenever a large organization of Wipro size goes through a reorg, there is substantial amount of margin lever. Now how much of the current quarter margins are coming from this reorg? And how much of it is kind of going to come over the next 2, 3-year period?

[Thierry Delaporte:]

Abhishek, frankly, I'll take that one. So one, we've shifted to this organization model on January 1. So again, this would not reflect much in terms of savings. But again, to insist on what Jatin said. Yes, agility is driving efficiency and productivity improvement, agreed. So, what it means is that we will be more efficient and have a better impact in the market. But for the rest, the simplification and the rationalization of our model, which is somehow reducing the need for many management roles, is actually freeing up a lot of opportunities to reinvest into our future. So that's how we are seeing. Remember, we're really focused and obsessed about growth and want to really invest and prepare us with always more differentiated solutions, better offerings and top talent. And so the way we see things is, we are constantly looking at ways to be more efficient, more nimble, avoid duplication, avoid inconsistencies, reduce layers of leadership. We have reduced the number of layers in our organization, increased the span of control. And all of that driving savings that we're reinvesting to our engine going forward. That is why, also, of course, we believe we will be able to accelerate our growth.

[Jatin Dalal:]

Yes. And Abhishek, I'll answer your first question. Revenue per employee as a metric is a great metric to track internally. It has various dimensions to it. First is simply the price increases, second is offshore mix, third is the type of services that you are selling. Obviously, DOP could have a much lower realization than IT services. Then there is an element of fixed price versus T&M. So we do track this internally, and we are quite happy with the progress we have made over the quarters. But difficult to comment externally the movement and make it insightful for you beyond a point. But I can tell you that we watch it carefully every quarter, and we have comfort in the way we have moved. More prominent impacts in recent times has been on offshoring, as I called out before, as well as accelerated growth that we have seen in our digital operations and platforms business.

[Operator:]

The next question is from the line of Rishit from Nomura.

[Rishit Parikh:]

Just two questions from my side. We talked about some of the investments around sales, expanding the strategic markets and hiring premium management, right? When do you expect that process to get completed? That's one. And second is, if you could just provide a little more color on what is the quantum on wage side that you've planned in the next quarter?

[Thierry Delaporte:]

Rishit, I'm sorry, I really did not understand anything. You came very muffled. It was difficult to understand. Can you -- any chance you can get closer to the phone or...?

[Rishit Parikh:]

Let me repeat the question. We've talked about investments around sales, expanding into some of the strategic markets and hiring some of the senior management roles, right? Could you provide us a sense of when do we expect those investments to be complete? That's one. And second, if you could just provide some color on what quantum of wage hikes have you planned for the next quarter?

[Thierry Delaporte:]

What quantum, what -- sorry, what -- the first question, I understood. What quantum...?

[Jatin Dalal:]

Quantum of pay hikes.

[Rishit Parikh:]

Quantum of wage hikes.

[Thierry Delaporte:]

Okay. Okay. Quantum of pay hikes. Okay. Okay. All right. So I'll take the first one, and Saurabh, I'll give you the second one, okay?

[Saurabh Govil:]

Sure.

[Thierry Delaporte:]

So to be honest, it's Rishit, it's an ongoing process. We are going to be active on talent acquisition, very active, probably more than what you've seen us in the recent past. And so we are going to, obviously, you will see -- every time we bring new talent in our world, we have many key roles in the organization that will onboard top talent in the near future. And I'm not talking here about 6 months from now. It's literally in the -- it starts in the weeks to come and that's going to be throughout the year 2020. Certainly, my view is that by the end of Q4, which is the first quarter in the new model, we will have more or less all the key roles filled in, all the main key roles filled in. But then we'll continue to stack if this is a journey, as I said, several times. So we will not consider we've arrived after 3 months. We'll continue to constantly invest and constantly look for the best talent in the industry.

[Saurabh Govil:]

Rishit, on the wage hikes, as we have called out, three things

[Rishit Parikh:]

Sure, sure. And just -- I did not hear the earlier response. But the quantum is -- the wage hike cycle will be as usual in the next year, right? Is that what you're sort of aiming for? Or...

[Saurabh Govil:]

So we will -- it's early because our next cycle typically is in June. So we will take stock of that at an appropriate time depending on what's happening in the market industry kind of stuff. But as of now, we have planned it for the people, and close of the date, we'll take stock on what we do for the next year.

[Operator:]

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

[Dipesh Mehta:]

A couple of questions. First about, we are seeing significant increase in impairment charges. And if -- just for it, EBITDA margin expansion is even more substantial. So if you can provide some color how you expect these impairment charges to play out over the next couple of quarters? And second question is about India SRE business. It's showing significant turnaround. Do you think it is now more sustainable from operational performance perspective? Or you think we need to work around more to get more sustainable performance from India SRE?

[Thierry Delaporte:]

So I'll take the second question on the SRE, and I'll let you Jatin answer the one on the impairment strategy. So looking at the SRE business. So we have confirmed or reaffirmed our strategy focus in the SRE business in India. And from a top line standpoint, I think we are being a lot more selective and specific about the type of deals we are looking for. And on the other hand, I think that, frankly speaking, Sanjiv Singh who is now Head of Operations for Wipro since January 1, has done an excellent job to normalize, improve the quality of the operations, bring discipline and best practices inside the organization. And so I think the work is done on the margin. I will let Jatin complement. But on the margin side, it is certainly for good. It's not a one-off.

[Jatin Dalal:]

That's right, Thierry. Dipesh, so -- as you have seen, this is also not one quarter phenomena. Systematically, we have improved this margin by completing the unfinished projects by ensuring that the risk level in current execution is significantly lower and the surprises are well anticipated and dealt with, and they no longer come to additional expenditure to the company. So overall, we feel very comfortable with the trajectory of performance on ISRE both from the quality of revenue standpoint and margin standpoint. However, this quarter numbers are obviously on a greater scale of 20% and that I don't think will sustain. It will remain early single-digit margins on a medium-term basis, that is our anticipated view of the sector. If it improves further, we will be also -- we'll be, of course, happy to share with you. On impairment charges, yes, there has been some acceleration that we have -- we had to take in the current quarter regarding one particular item, which is built in the impairment charges and we don't anticipate that to recur. So it would be a one-off in the current quarter.

[Dipesh Mehta:]

Is it possible to quantify?

[Jatin Dalal:]

Yes, that is reflected in the financials. And beyond that, we have not shared a color on that, Dipesh.

[Operator:]

Ladies and gentlemen, we take the last question from the line of Nitin Padmanabhan from Investec.

[Nitin Padmanabhan:]

Happy New Year to all of you. I had a question, it's a little theoretical. So if you look at the pandemic, I think incrementally, clients are having more work being done offshore. And what do you think in terms of by when they possibly reach country risk thresholds or any such thing? And would you think that this is here to stay? Or there's likely to be a reverse shift on-site at some point? So that was my question.

[Thierry Delaporte:]

It's an interesting question. I can -- look, you see it's only prospective at this point in time. This is trying to project. If I reflect on the discussion I've had with our clients, what has happened over the last 9 months? They've learned -- if it wasn't the case before, they've learned through this crisis that they can work with teams that are not at the office. So distance suddenly has become a different problem or less of a problem, or at least a problem that they could not picture handling and that they actually realized they can handle. So there's definitely a reflection from many clients, realizing that they can build, they can manage complex operations and operating model with teams that are not -- that are in distance. So that's the first point. The second point, obviously, is that there's also organization that if you do so then, you also need to have a small or smaller very, very connected team locally. So it's actually really the 2 different aspects that play. One is, now we know that we can operate with a global model. We can operate with people working from home, and frankly, wherever your home is, right? But also, it means you need to have pure team -- people who are really next to you, connected with you 100%, even more than before, which pushes the logic of having less partner but stronger partners, right? And so this is -- clearly, my view is that what we could offshore does not exist anymore. It's all shores, right? It's what -- it's the model under which a lot of clients will want to operate going forward. It will imply some people being close to them and people being away. Whether it will modify the percentage, up or down, it will be to be seen. But certainly, if there was one proof of what has happened over the last 9 months, we can provide an outstanding support to a company and service to a company, including strategic services with distance.

[Nitin Padmanabhan:]

Sure. That's helpful. As a follow-on, I think do vendors typically have country-risk metrics? And if that's the case, would they mandate having maybe offshore, but in other countries, other locations as well? And the second thing is, considering that there's such a strong pickup offshore for everyone, do you expect wage inflation at some point? And by when do you think the industry would reach a point where wage inflation would be a point to worry?

[Thierry Delaporte:]

Okay. So I'll let Saurabh on the second point, although I could comment as well, but I'll let Saurabh -- the first one, I would say -- and obviously, it's -- there's many companies, many clients who decide to have different platforms to leverage around the world and not necessarily limit to one single country. It can be the choice, and we can choose different places in South America, in Eastern Europe, in other places in Asia. What is clear though is that at the end of the day, it's tough to know where this market and the scale and the quality of the talent is not evenly spread around the world. And so you know that depending on the choices you make, there will be, at some point in time, a limitation in terms of scale. That's why, in my view, India will continue to have a unique position, while in terms of concentration of technology expertise and talent but also in terms of quality of the expertise.

[Saurabh Govil:]

And on your second part, very typically when we're seeing huge demand and huge hiring here in the market is, we will see a pressure. But as of now, we don't see we are coming out of period where the demand was less 2 quarters back. So we are very comfortable right now. But we'll assess that if it goes forward. But in any cycle, if the demand is high, there would be a pressure on wage but not at the moment.

[Operator:]

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

[Aparna Iyer:]

Thank you, Stanford. Thank you all for joining the call. In case we couldn't take any of your questions, please feel free to reach out to the Investor Relations team. Wish you all a very Happy New Year, and good night and good day.

[Thierry Delaporte:]

Thank you. Bye.

[Jatin Dalal:]

Thank you, and bye.

[Operator:]

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