Deleon Narcisse, research analyst at TBR, says Wipro will continue to lag behind main competitors such as TCS and Infosys.
The IT analysis report says that through the deployments of organically built IP and cost savings from a refocused business model, Wipro is improving the approach towards transformational IT services delivery.
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Over the Q2 2016 calendar quarter, Wipro experienced revenue growth of 5.3 percent and 0.6 percent sequentially, posting top line IT services revenue of $1.96 billion. We primarily attribute Wipro’s growth to its ability to develop flexible IT platforms and services offerings that address customers’ transformational IT needs comprehensively, as evidenced by contract wins involving the HOLMES artificial intelligence platform and LiVE Workspace offering secured during the quarter.
Additionally, the Bangalore, India-based company continues to realign its business structure to both improve service delivery capabilities and reduce development costs, demonstrated by the reorganization of the Global Media and Telecom, Manufacturing & Hi-Tech and Retail, Consumer Goods & Transportation verticals during Q2 2016.
However, despite the growth improvement, we anticipate it will take a few quarters before Wipro can revitalize its growth to match that of peers including TCS (8.1 percent YTY) and Infosys (10.9 percent YTY), as the IT outsourcing company must improve differentiation to win larger C&SI and managed services contracts.
As Wipro aims to expand across underpenetrated verticals, the company is leveraging specialized IP to differentiate from peers, helping lead to deal wins with new logos
With peers such as HCL Technologies utilizing similar expertise around systems integration and product engineering to address enterprise business and IT needs, differentiation remains key for Wipro to expand revenue streams within its smaller verticals such as Energy, Natural Resources and Utilities. In May, Wipro was able to secure a deal win with Vestas Wind Systems based in Denmark.
Under the deal, Wipro will be deploying its LiVE Workspace framework across Vestas’ global business environment, which aims to improve backend operations through a streamlined and secured portal to business applications at scale. As LiVE also features predictive monitoring and automation capabilities, Wipro is able to distance its workplace services stack from other India-based peers, which we believe helps the company win deals with customers seeking comprehensive business process solutions, as demonstrated by the contract win with Vestas.
Additionally, Wipro also won a deal with Thames Water during the quarter, under which Wipro will be utilizing its SaFeWater Rapid Deployment Solution to help accelerate business transformation for the company. Heading into 3Q16, we anticipate Wipro will continue developing and deploying specialized IP to expand across its other smaller verticals such as Global Media & Telecom, as the company looks to build new revenue streams and accelerate growth.
Partnerships with technology specialists enable Wipro to broaden the scope of its services capabilities, creating the image of a premier IT services vendor
During the quarter, Wipro was able to establish relations with new logos. Through alliances with technology partners such as Qlik and Xactly, Wipro is expanding the depth of its services portfolio to emerge as a more comprehensive IT services provider. In June, Wipro secured a partnership with electronic communication and workflow collaboration technology provider Symbility. As Symbility primarily delivers solutions geared towards the insurance and casualty market, we believe the partnership opens opportunities for Wipro to cross-sell its services to enterprises within Symbility’s customer channel, opening new revenue opportunities for Wipro within its core financial services vertical.
During the same month, Wipro announced the formation of a partnership with enterprise software developer Hortonworks around open-sourced big data and analytics technologies. By supporting big data platforms such as Hadoop, Wipro is positioning itself as a flexible services provider, which we expect to help boost analytics services opportunities for the company in the coming quarter.
Deleon Narcisse, research analyst at TBR