Wipro - Earnings Call - Q4 19/20

Transcript

Operator (participant)

Ladies and gentlemen, good day and welcome to the Wipro Limited Q4 FY20 Quarterly Investor Conference Call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. 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 (VP and Corporate Treasurer)

Thank you, Stanford. Warm welcome to our Q4 FY20 Earnings Call. We will begin the call with the business highlights and overview by Abidali, our Chief Executive Officer and Managing Director, followed by a financial overview by our CFO, Jatin Dalal. Afterwards, the operator will open the bridge for Q&A with our management team. Before Abidali 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 of 1995. These statements are based on management's current expectations and are associated with uncertainties and risks, which may cause the actual results to materially differ 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 the events and circumstances after the date of filing.

The conference call will be archived, and the transcript will be made available on our website. Over to you, Abidali.

Abidali Neemuchwala (CEO and Managing Director)

Thank you, Aparna, and good evening and good morning, ladies and gentlemen. I'm joined by my entire executive committee, that is the Wipro senior leadership team, virtually today, as we practice social distancing and have adopted ourselves to the new normal of working as a leadership team. We will share with you the results for the fourth quarter and full-year performance for the fiscal year 2020. But before I do that, I want to thank the leadership team, all of the 180,000+ Wiproites globally, our customers, and our partners for their untiring efforts and perseverance as we transformed ourselves into this new normal and enabling us for delivering on our commitments to all our stakeholders.

These, as all of us know, are unprecedented times, and I'm extremely proud of how the entire team has come together in the face of this crisis and worked 24 by seven to ensure the safety and well-being of each other while continuing to serve our clients. The fact that we've been able to stick to the earnings release schedule that was published several months back is a testament to these efforts. On our Q4 and full-year performance, as you might have seen, our Q4 revenues grew by 0.4% in constant currency terms within our guidance range, and for the full year, we grew at 3.9% in constant currency. The first two months of the quarter were strong for order book closure of large deals and ramp-up across all of our projects.

But in March, as the COVID health crisis rapidly deteriorated in key markets like U.S., Europe, U.K., and the lockdown in India, we clearly saw an accelerated impact to our business. Let me talk a little bit about our response to the COVID crisis. As we realized earlier in China and then in the Philippines, we quickly activated our COVID-19 Global Crisis Management Task Force, headed by Bhanu, our Chief Operating Officer, and consisting of various cross-functional teams of business continuity planning, our Chief Information Officer, our Chief Information Security Officer, our HR team, our Facilities Management Group, Corporate Affairs team. And our topmost priority was and remains the safety and well-being of our people.

With a lot of cooperation across not only internal but even external stakeholders, including the administration in various jurisdictions, we were able to move by early March most of our people in global offices to be enabled to work from home. On March 15th, we changed the working arrangement for our support employees based in India to work from home and started enabling the 165,000 billable client-facing employees to work from home. The initial effort, obviously, was about getting approvals from our customers to be able to do that. Then, just before the lockdown, to enable work from home, we moved a massive number of desktops, acquired additional laptops and data cards, and transported them to our people's HOLMES.

We also created additional capacity in our cloud VDI and VPN using our own offerings around these areas to be able to enable a large number of our employees to work from home. In parallel, we reached out to our customers, briefed them on the measures we were adopting, and sought their approvals. All of these hectic efforts ensured that today, 93% of our employees are approved to work from home by our customers, and 90% of our employees are actually engaged in delivering projects globally and services to our customers in a work-from-home mode. In the past few days, our teams have settled into the new ways of working. Managers are conducting daily stand-up calls to track people, their welfare, their well-being, and the customer service delivery is being managed through this.

I'm pleased to report that our SLA performance has been stable, and we are collaborating well with our customers on delivering our commitments to them. Most of our customers have appreciated our business continuity planning and our ability to help them. While there are many examples, I would like to share a couple of examples with you. The first one is of a large bank in the U.S., which wanted to launch a full-fledged digital solution to support 1000s of small businesses and their employees under the fiscal stimulus program initiated by the U.S. Treasury to get financial relief under the U.S. CARES Act, which is popularly known as the PPP.

A team of committed employees from Wipro took this up as a challenge, worked closely with our cloud enterprise platform partner, and started working on 3rd April and built a solution in about 72 hours, which happened also to be a weekend. We ensured that the application went live on 6th of April after incorporating a few regulatory changes by the U.S. government on existing systems and providing a new front end to be able to originate loans. On the first day of going live, 22,000 PPP loan applications were processed, resulting in loan disbursement to the tune of $5.5 billion. This has made a significant positive impact not only to our customers' business but to the society at large. After that, we've had three similar engagements with different banks in providing similar services.

Another example that I want to provide is of one of the largest and busiest airports that we service in North America. We had to manage an orderly shutdown of international traffic besides being prepared to handle cargo planes delivering essential supplies like food and medicine from across the globe. This meant enabling and equipping most of the airport staff to work from home and ensure that they could continue to access all business-critical applications without any issues. We happened to provide infrastructure services to this particular airport, and as you know, airport employees are not attuned or accustomed to working from home, and this was a big change for them. We enabled change management across the employee staff, and over 800 people were enabled to work from home in about 48 hours. These are employees of the airport beyond the Wipro teams which service these employees and the customers.

And we guided their employees over phone. We manned walk-in support kiosks in Virtua mode, helped them do various monitoring across locations, trained them on MS Teams, which was deployed for collaboration, and enabled their soft phones features, among many other things. Totally, across our customers, we have enabled over 500,000 client employees to be able to work in this new normal. There are many other examples across our various service offerings where we are seeing an opportunity to help our customers tide over this crisis. Talking a little bit about the demand environment, while we are very satisfied with our actions in ensuring the safety of our employees and ramping up capability to service our customers from home, we are still very much in the middle of the crisis and the economic turbulence that it has caused.

Based on various estimates, the global GDP growth rates are expected to decline by at least 2%. This assumes that the virus peaks in the April, May, June quarter, but if the peak goes into the July, August, September quarter, then the decline could be even more dramatic. This is likely, obviously, to have a significant impact on our customers' business and earnings, and hence, cascading effect on their IT spends. We already see instances of budget reductions, cuts in discretionary spend, requests for temporary discounts and pricing pressure, and restructuring of existing spends. Sectors like retail, hospitality, airlines, energy, especially oil and gas, and the auto segment in the manufacturing business are experiencing a more immediate and deeper impact.

Given the uncertainty in the environment and the inability to predict the course of the health crisis, we have decided to temporarily suspend our practice of providing quarterly guidance, and we will resume when we have increased the certainty, when we see increased certainty of both the demand and the supply-side constraints that this crisis has created. During the crisis, our priority will be to remain a trusted partner of our customers by staying close to them and enabling them in here and now, and focus on proactively positioning our offerings, especially focused on efficiencies like modernization, cloud automation, cybersecurity, analytics, etc., to gain market share in strategic accounts as well as make the most of consolidation opportunities that this could provide. As we expect the revenues to decline during the quarter, it will put a significant pressure on our margins.

We will have trade-offs to make on hiring, on salary increases that become due in this quarter in terms of the annual salary increase, discretionary spend that we have within Wipro, variable costs such as subcontracting, facilities, etc., and defending revenues and gaining market share will continue to remain a priority as we look at opportunities to get more efficient. We do anticipate that our working capital requirements will increase in the near term, but our gross cash in our balance sheet does provide us the confidence that we will emerge stronger and better. In the end, I would like to reiterate that the environment is tough, and as we all know, when the going gets tough, the tough get going, and we believe that we are coming into this crisis in a position of strength.

We will remain steadfast in our goal of employee safety and well-being, business continuity, staying close to the customers, and committing ourselves to the new normal. I wish you all the very best. Please stay safe and stay strong, and I will hand over to Jatin to give the highlights of our financial performance.

Jatin Dalal (President and CFO)

Thank you, Abid. So, as you know, we came within the guidance that we had given for quarter four. I will talk most of the numbers relating this being the last quarter of the year to the overall financial performance of the year. Our Rupee revenues were 4.2% growth for this fiscal. We expanded our operating margin in IT services segment by about 0.2%-18.1% for the full year. That helped us grow our operating profit to 5.8%. We further got help from other income, which grew this year.

As some of you know, we had larger cash earlier part of the year, which was pending the buyback that got completed in September. Our other income grew 8% year on year. Given some of the tax announcement that we saw during the year, our effective tax rate was lower by about 1.7% during this year, and therefore, overall, we were able to grow our net income to YOY at 8%. Because of the reduction in number of shares, outstanding shares, as a result of buyback, our earnings per share growth for FY 2019/20 was 11.2%. At the end of the year, we have about $3.4 billion of net cash and $4.4 billion of gross cash. Overall, we have forex hedges of $2.7 billion in a very narrow range of what we have been maintaining.

Our realized rate for this quarter was 73.95 compared to 72.09 of the previous quarter, so we did have benefit coming to the P&L because of better realization. Overall, we feel we have a good cash position, a strong cash position to continue to look at opportunities that such an environment may present in form of consolidation. We also had a good year on operating cash flow and free cash flow. We delivered operating cash flow as a percentage of EBITDA around 81%, and free cash flow as a percentage of net income on a very similar number, about 80-81%. We had a slightly lower operating cash flow and free cash flow in quarter four, as some of you may have noticed, and that was because we had four salary payments, which happens once in a few years in India, and that impacted both our numbers by approximately 30%.

So the numbers that you see as a conversion of operating cash flow to EBITDA or operating cash flow to net income, but the 30% number I'm giving is with reference to both operating cash flow as percentage of EBITDA and operating cash and free cash flow as percentage of net income would have increased by about 30% if we were to make adjustment on account of that. We did have a slightly higher DSO in quarter four because we did see some disruption on regular payment cycles that some of our customers undertake. As in the last two weeks, a lot of the organizations were going through the teething issues on BCP, but we have had a good first two weeks of quarter one, which gives us confidence that we will catch up on some of those inefficiencies of quarter four. This is all I had.

We'll be very happy to take questions from you.

Operator (participant)

Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may please press star, then one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star, then two. Participants are requested to use handsets while asking a question. Anyone who wishes to ask questions, please press star, then one. The first question is from the line of Nitin Padmanabhan from Investec. Please go ahead.

Nitin Padmanabhan (Analyst)

Yeah. Hi. Good evening, and thanks for taking my question. So first, I just wanted your thoughts on the price cuts, the cut in discretionary, and extended payment terms.

Now, if you could just give some clarity there in terms of, one, what proportion of clients do you think will end up asking for such concessions? And do you think these concessions are even on a price-cut basis? Is it very temporary? Two, is there any vertical-specific cuts where you think it's more sort of prevalent? And finally, do you think something like an IMS also will bear those price cuts if it were to occur?

Abidali Neemuchwala (CEO and Managing Director)

So Nitin, we are seeing both. There are certain verticals and certain organizations in those verticals who have a fundamental question mark on their business model, and there we are seeing a relatively more permanent impact, I believe. But a lot of requests we are getting is near-term postponement or deferment of discretionary spend.

On the run side of the business, obviously, we see both requests coming in for higher efficiency, which does result in lower revenue, but also there are opportunities that we see along with that of a certain level of consolidation that we would look forward to. Infrastructure business or IMS that you referred to, a large amount of it is cloud work that we do, and we are seeing an accelerated movement to the cloud because it enables not only efficiency, but it also enables better working from home and virtual working in this new normal. That is why while we will see some pressure on the run side of the infrastructure business, we see an equal amount of opportunity both on the back-end modernization, automation, cloud, etc., as well as on the front-end of enabling. We have our own IP called VirtuaDesk.

There's a very strong offering around VDI and enabling virtual desktops, and we are already seeing good traction as customers adjust to this new normal by investing in collaborative tools and collaborative working across that. From the IMS, we'll benefit.

Nitin Padmanabhan (Analyst)

Sure. But would you be able to characterize what proportion of the clients are actually asking for deep cuts? Is it a large proportion of clients at this point in time, more than half or something, or how should we think about it?

Abidali Neemuchwala (CEO and Managing Director)

So the way I would think about it is there are ongoing conversations with a lot of clients. In some cases, we are also being proactive. We are very close to our customers.

We see opportunities that have always existed, and there is an element of acceleration of those opportunities that we can bring, which would obviously reduce cost for the customer, but at the same time, could be revenue opportunities for us. It would be very difficult to quantify what percentage of clients are asking for this, but there's a small % which have come upfront from verticals that have been very severely impacted that I talked about: retail, travel and hospitality, oil and gas, the auto segment within manufacturing, and others. But we see opportunities that we are going proactively with the offerings that we have, which are very specific to this COVID crisis and from our experience from past recessions that could be leveraged in an environment like this.

Nitin Padmanabhan (Analyst)

So if you look at GFC and look at things now, how would you characterize the difference in terms of what clients are seeing in terms of impact? Do you think that what you're seeing now is a little worse than GFC because everyone is impacted versus this specific sector? Then how would you characterize it?

Abidali Neemuchwala (CEO and Managing Director)

So it is as bad if not worse than GFC, but we are still very early. So the focus in the last three weeks or so, if you take mid-March, has been really across the two main geographies, Europe and U.S., from a demand side and India from a supply side got impacted. Right now, the focus of our customers and our own focus has been primarily to get up and running and business continuity. Some of these conversations are just getting started as the second phase of managing the crisis.

So I would say it's a little early to say whether it is going to be how worse it is going to be compared to the global financial crisis.

Nitin Padmanabhan (Analyst)

Great. Thank you so much and all the very best.

Abidali Neemuchwala (CEO and Managing Director)

Thanks.

Operator (participant)

Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in this conference call, please limit your questions to one per participant. For any further questions, you may come back for a follow-up. The next question is from the line of Mukul Garg from Haitong Securities. Please go ahead.

Mukul Garg (Analyst)

Thanks for taking my question. Abid, just wanted to follow up from this previous question on discounts. We have heard from industry participants that clients, in specific cases, are asking for discounts up to 50% off existing rate card.

Can you give us a sense of what type of discounts are you seeing from a monetary point of view? And are they, at least as of now, primarily focused on Q1, or is that something which will spill over to Q2 or Q3 as well?

Jatin Dalal (President and CFO)

So hi, Mukul. This is Jatin. Yes, there is certainly significant pressure on price. I think what has changed from GFC time is that a large portion of our business has now become fixed price.

So while immediately we will certainly have to take certain reductions in terms of both top line as well as profitability, but when you are able to lock in a business on a fixed price basis for, let's say, a three-year, four-year time frame, you have higher confidence of working through your automation plans, your pyramid, your on-site offshore mix to be able to get some of those productivity benefits back into margin at a later point in time. I won't comment specifically on the quantum of margins. I think there is also one big realization, if I may put it, in the market about the quality players for which customers would be willing to sort of stay with and not just go on price. And I think Wipro has done well vis-à-vis responding very swiftly to our client requirements.

We were, I think, first off the block vis-à-vis how we responded to some of the work from home requirements. And that, I think, is also a source for us to be able to stay in the portfolio on the strength of that execution.

Mukul Garg (Analyst)

Understood. And Jatin, in terms of duration, current conversations are mostly Q1 constrained, or people have started looking at a slightly longer term as well in discount discussions?

Jatin Dalal (President and CFO)

Yeah. So these are. I would answer it in two parts. Number one is whenever a crisis like this happens, the reaction of a customer is here and now and this year. So that is part one. But I also believe that right now, even customers are thinking through their strategies for the rest of the year or next year.

So some of these conversations are just beginning, and they will evolve over the course of this quarter and probably early part of next quarter. And we will have to stay with those, remain resilient, and make sure that whatever we are doing is in the interest of the relationship that we have with customers over a period of time and what we can further build on that over future periods. So it's not a 15-, 20-, 30-day phenomenon where everybody is coming to you, and then you decide, and then you are back to a normal work as usual. This is going to unfold, I think, as we see various parts of the world coming back to their business and various parts of the industries reflecting upon their own economic prospects for 2020 and 2021.

Mukul Garg (Analyst)

Got it. And if I may just get one more question in.

Abid, while we all understand that the visibility on businesses is quite low and hence guidance is difficult, but can you give us a sense of the impact on individual sectors, especially on the energy and the BFSI side? What sort of hits are you seeing, especially as you mentioned during prepared remarks that you were expecting a decline this quarter?

Abidali Neemuchwala (CEO and Managing Director)

So as I mentioned in my remarks, definitely the aviation sector, both airlines and airports, the overall travel and hospitality sector, oil and gas due to the oil price, retail, a lot of retailers, except food and grocery, have almost shut down their stores, and they are having a huge impact. The auto sector, especially in manufacturing, where not only the demand side but also the supply chains have been adversely impacted, are the, I would call them, high-impact verticals.

On the other hand, some of the other verticals, like communications, where the surge in the use of bandwidth, the surge in entertainment and media segments in terms of consumption of their services. We are seeing utilities, for example. We are not seeing a major change. In banking, we are seeing both tightening of the belts and primarily driven, as all of you are in that same industry, by interest rates and volatility that is seen. On the other hand, because of the quick response of various governments on the fiscal stimulus, there is also a positive impact on the banking industry, where they will see more activity around refinancing, originations of loans and grants enabled by the PPP equivalent programs across jurisdictions and so on and so forth.

Logistics, we have a few logistics customers where there is a new paradigm of supply chain management and logistics, where we are seeing some traction. So more important than just the sectors alone, we are staying very close to each customer organization, enterprise, and customizing our interactions and offerings and strategies to the strategies that these individual organizations are adopting in their context to be able to make the most out of it. Obviously, the ability to quantify at this point in time is very difficult. Otherwise, we would have guided because a lot of things are in flux right now. But hope the color I gave you helps you with the sector-wise feel that we are getting. Obviously, the healthcare, medical devices, life sciences, where we have a lot of strength, has both kinds of impacts because we are enabling a lot of hospitals.

We are enabling a lot of our customers in the ecosystem to be able to provide COVID-related services. We've ourselves invested a lot directly in, for example, a design of a new ventilator, which is more of a prototype design, but a lot of that expertise could be leveraged, analytics-based solutions around predicting and developing models and so on and so forth. But also, on the other hand, a lot of the hospitals, as they prepare to take care of the COVID impact, a lot of the elective surgeries and elective procedures have been put on hold. So if you compare from a normal occupancy of a hospital versus what they are occupied today, actually, they are less occupied in most. Just if I take U.S., for example, except for New York or a hotspot, in most other places, the hospitals are running at lower occupancy.

And that has a cascading effect on their financials and IT spend and how we service them. So at this point in time, I would say there are a lot of moving parts, and quantification of that would be quite difficult.

Operator (participant)

Thank you. The next question is from the line of Moshe Katri from Wedbush Securities. Please go ahead.

Moshe Katri (Analyst)

Hey, yeah. Thanks for taking my question. My question is more kind of maybe broad-based. What is management planning to do in terms of balancing, on one hand, protecting your revenues versus protecting your margin base? What sort of trade-offs are you willing to take? And then in that context, obviously, if demand does slow down, what happens to your bench? What sort of utilization rates are you willing to kind of sacrifice in order to kind of preserve your bench at this point? Thank you very much.

Abidali Neemuchwala (CEO and Managing Director)

Moshe, great question, and I will take the help of a few of my colleagues in answering this. But from a Wipro perspective, as you would expect any reputed organization to do, very quickly, we formed three teams within the organization led by my three CXOs. The first team that was formed was on the crisis, managing the crisis itself and providing business continuity. And that was led by Bhanu, supported by a ton of people in the organization. The second team we formed under Jatin, which has all of our presidents of our business units, which is looking at the opportunities that come out both here and now as well as in the future, and how do we, from a customer perspective, address those opportunities. And I'll ask Jatin to give a little more color to the activities that that team has been undergoing.

And the third team has been formed under Saurabh, which looks at cost overall, but also employee policies that are more empathetic in this crisis for our employees globally, as well as opportunities that we need to look at for driving efficiency and the entire talent engineering areas, as well as the corporate social responsibility as a responsible corporate citizen that we would do in times like these are all headed by Saurabh. So I will ask both Jatin and Saurabh to give a little more color to you on a little more specifics of what we are trying to do to answer your question, Moshe.

Jatin Dalal (President and CFO)

So Moshe, I think one of the positive aspects about a crisis like this is that it resets the table in terms of what we can do for a customer.

One of the key focus areas for Wipro through this is really how do we emerge out stronger. I'll tell you some of the fulcrums on which these changes are taking place. Number one is, for example, some of the constraints in our business, which meant that you must have, in most places, you must get a person to a work or get work to a person. This was fixed places, either in your ODCs in India or work locations of customers overseas. That paradigm is completely shifted. Assuming you have 100% agility, you should be able to theoretically capture every possible demand that is out there to be captured. Number two is that the models of engagement from customers is changing.

In a distributed environment like this, where a customer wants an optimal outcome, your ability to provide a reliable, robust response and reliable, robust outcomes to the customer matter a lot more than working in a silo within an organization of our customer for some specific skill that we could provide. The character of an organization comes in as a big differentiation in this case. We are looking at fundamentally what we could do in times like this from a market offering standpoint and from our ability to respond very swiftly to customers' requirements. For example, we have spoken for some time about our additional investments and emphasis on what we call as big bets. Two of those big bets were really cloud and cybersecurity.

I don't think there has ever been a better time to be a market leader in these two areas than today. So we are working through horizontal offerings, some of which Abid spoke about in his opening address, where we very swiftly responded to customer requirements, as well as domain-specific, be it banking or energy and utilities, which we could very quickly take to our customers. And I would say one very emphasized aspect of our response to this crisis is how do we emerge stronger. I'll request Saurabh to talk about some of the cross-sections.

Saurabh Govil (President and Chief Human Resources Officer)

Thanks, Jatin. And Moshe, to your question in this, how do we remind us will be or is rather that we manage the cost implications in the short term but are equipped to move with agility as and when the demand picks up.

And that's the way we are looking at our entire supply chain in terms of how do we look at hiring, how do we look at bench, how do we manage people, including how do we look at subcontracting, how can we make sure we deploy our people given the degree of bench happening. So all these moving different parts of the supply chain will be the levers for us to ensure that in the short term, given the impacts, we should manage the cost. But as and when things stabilize, we are quickly in a position to come back. And that's been the intent in terms of going deep on this one.

Moshe Katri (Analyst)

Understood. Thanks for the color. Be safe.

Operator (participant)

Thank you. The next question is from the line of Ankur Rudra from JPMorgan. Please go ahead.

Ankur Rudra (Analyst)

Back to you on the industry.

Abidali Neemuchwala (CEO and Managing Director)

Excuse me, this is the operator. I'm sorry to interrupt. Mr. Rudra, your voice is breaking.

Ankur Rudra (Analyst)

Is it clearer now?

Operator (participant)

Yes, better. Thank you.

Ankur Rudra (Analyst)

Okay. Thanks for taking my question. So the question is, if you look back at the previous crisis that you faced, including GFC and the other ones, what are the main learnings you can take away from that? Play differently this time in terms of all the balances between revenue optimization vs cost optimization.

Abidali Neemuchwala (CEO and Managing Director)

So Rudra, when we compare ourselves having navigated the crises, the two most important things are, number one, in a crisis, there is a race towards quality partners or providers that the customer trusts. And today, if you look at our customer satisfaction, it is at an all-time high. We just completed our annual customer survey, and our customer scores are over 90% on customer rating and over 66% on NPS.

Second is everything that we did in the first two or three weeks of crisis management. We received a lot of appreciation from our customers of not only enabling Wipro services to work from home, but in some cases, even helping the customers' own employees as well as their vendors who were struggling to enable business continuity for the customer, and all of that gives us the right to play being close to the customer and having the customer's trust, so that is one aspect. As I said, there are two aspects. The second aspect of that is having relevant offerings, and I think Jatin alluded to this earlier in his response to Moshe.

The investments that we've made over the last few years around digital, around cloud, around cybersecurity, even consulting is very relevant because it requires a lot of organizational change management, consultative, proactive propositions to be taken to the customers. All the investments we've made in client mining and our Mega and Gamma accounts in terms of client teams so that we are contextualized, we are relevant, we are aligned to the customer strategy as we take these offerings that are market-leading. We've got leadership positions in over 100 of the 150 analyst reports that we participate, which talks to the strength of our offerings.

That combined with the investment that we've made in client teams to be able to make them contextualized and relevant to our customers, including the investments in intellectual property, especially around homes and some of the automation, artificial intelligence, cybersecurity platforms, data analytics platforms that we have invested in are all very valuable. Topcoder, which is a crowdsourcing platform, which is very amenable to the new ways of working. So we have the strength of our offerings. We have the strength of client relationships, which are both important to be able to do that. And one of the things that we are very fortunate about, and we've been working on it as well, is the quality of our balance sheet to be able to help customers in this time of crisis. As you know, we've got significant cash available on our balance sheet.

We've worked on the quality of our revenues, whether it is unbilled revenues, whether it is our PDDs, etc., which give us a lot of confidence on our own internal strength to be able to structure deals with customers that are beneficial to them for the long term and provide us a competitive advantage as we work on those deals. So all of this kind of put together, I would say, whether you call it learnings or best practices of coming out as winners based on the experience of the past crises that we have all seen.

Ankur Rudra (Analyst)

Thank you. Very helpful. Any particular insights on the Wipro side, which may be different from last time?

Abidali Neemuchwala (CEO and Managing Director)

Saurabh?

Saurabh Govil (President and Chief Human Resources Officer)

Well, workforce management insights. Basically, the levers that I called out in terms of.

The impact from a Wipro insight, which we have on GFC, is that I think the only point that I called out earlier is that how we are in a position to take actions which are fast and required here and now, however, enables us to be agile to come back quickly. I think that's the biggest learning from a Wipro strategy. That's what we have seen. And you want to add something, Abid?

Abidali Neemuchwala (CEO and Managing Director)

No, I was just saying just to give an example, sort of talk about the enablement of work from home in terms of the managers and other reskilling acceleration that we are doing. I think the question was more around Ankur Rudra's examples.

Saurabh Govil (President and Chief Human Resources Officer)

Yeah. So as Abid alluded to, this pandemic has also pushed the boundary which we have never expected. So 93% of the workforce are enabled to work from home.

All managers are able to do daily calls, connected, stay connected, things which we have not done. Example very clearly is doing a book closing or carrying results which were planned and going out with them. All these very clearly are pushing the boundaries for us, which have not happened. So that is one. Second, I think reskilling. So that will be another part in terms of how people who are coming off to the bench as different volumes are happening and different ramp-downs and ramp-ups are happening. How do we equip them to move for the newer ways? So I think that's another one, and having a Topcoder platform and a TopGear platform for us is another opportunity for us to train people and make them ready. So the nimbleness for us to make our workforce ready as and when the demand comes will become the key.

And all our actions and activities will be focused towards that during this period. And that's the focus as we move forward.

Ankur Rudra (Analyst)

Thank you.

Operator (participant)

Thank you. The next question is from the line of Parag Gupta from Morgan Stanley. Please go ahead.

Parag Gupta (Analyst)

Hi. Good evening, everyone. So Abid, the question that I had for you is that you did mention that some of the clients you have, especially in the three to four verticals that you talked about, are seeing significant challenges because obviously their footprint of impact is much higher. I just wanted to understand how much of the impact on these customers, in your view, is temporary and how much of it could be permanent.

I'm just basically thinking of, are you seeing any of your customers who are running the risk of potential bankruptcies, which in this case may not be just a temporary impact on your business, but actually could be permanent loss of revenues? So if I could just get some sense on that from you. And then I'll ask my second question after that.

Abidali Neemuchwala (CEO and Managing Director)

Parag, we have Srini Pallia, who's the President of our Consumer Business Unit, which has seen the earliest brunt of this. So I'll ask him to give you some color on it. And then it could be followed by Angan, who heads our Banking and Financial Services business, to give you a little more color in terms of what he's seen in those two verticals, what both of them are seeing in those two verticals.

Srini Pallia (President of Consumer Business Unit)

Thanks. Hi, Parag. Srini Pallia here.

Like I think Abid mentioned, that retail, travel, and hospitality industries had a significant impact in both of the industries that are part of the Consumer Business Unit. Now, if you look at the specific segments within that, which are harder to hit, includes apparel and fashion retailers, the home improvement retailers, specialty retailers, and of course, airlines and restaurants and hospitality chains. Now, if you look at the analyst reports, they say that some of these retailers and department stores may shut shop for the next six months as well. Right? So what we saw initially post-COVID is that there was a hyper demand for grocers, which we expect to normalize in a month's time. Again, across the board, there's a significant pent-up demand for online commerce and also automation that Abid talked about.

So to us, at this point in time, the way we see it as retailers are looking at our health, especially I guess around last-mile inventory, last-mile delivery inventory, and omnichannel trucks. So at this point in time, the visibility that we have within some of our customers are they've stalled many transformation programs. They've put a hold on discretionary projects, and thereby, there's a reduction in developmental work, especially on projects. So if you were to look at a crystal ball and look at what's going to happen with IT.

Operator (participant)

Parag, the line for Mr. Srini Pallia has dropped. Please stay connected while we reconnect him.

Abidali Neemuchwala (CEO and Managing Director)

Angan, you want to go in the meantime?

Angan Guha (CEO of Americas & Member of Executive Board)

Yes. Yes. Abid, thank you.

So Parag, from a financial services standpoint, and I think Abid as well as Jatin mentioned this earlier, see, the interest rates are currently almost getting to zero and also could be negative. So that obviously has an impact apart from the COVID situation. So in the medium term, I've seen a lot of discretionary spend getting stalled at this point in time. So there is obviously an impact in the medium term. But equally, just like Abid said, I think there is a big opportunity in terms of vendor consolidation, in terms of working on the run side. There can be enormous opportunities. So from our perspective, while the future is very uncertain and it's difficult to predict, we are staying close to our clients. We're working with our clients very, very closely.

We are making sure that we deliver to all the SLAs that we have signed up for. We've been fairly successful, and we will continue to do that. So we will keep the long-term client and our employee interests in mind in whatever we do.

Parag Gupta (Analyst)

Great. Thank you. I'm just assuming that Srini is not back on. So I'll just go ahead with my.

Srini Pallia (President of Consumer Business Unit)

Yes, sorry.

Sorry, Ankur. I'm back. I don't know for some reason. I don't know where you last heard me.

Abidali Neemuchwala (CEO and Managing Director)

So you basically talked about omnichannel, and last mile is where retailers are asking for help, and they are holding discretionary spend. So that's where we lost you after that. Okay.

Srini Pallia (President of Consumer Business Unit)

So Parag, at this point in time, we are still working with our customers in some of the new ways which are typically driven by COVID-19, essentially around curbside pickup that I was talking about, which helps shoppers to collect merchandise from store associates. There are some engagements where we are helping our customers around store traffic and social distancing through video analytics. A lot of customers, obviously, they have a lot of, they want to liquidate the inventory post-COVID. Adaptive pricing and dynamic pricing becomes very important from a competitor benchmarking perspective. And also home delivery for those retailers who have been not fully fledged on e-commerce or omnichannel. So these are the areas that we are focusing on. So we think that while the overall IT spend will come down, but there will be key niche areas that the retailers will need help.

Angan Guha (CEO of Americas & Member of Executive Board)

That's where we continue to invest our time and effort, if you will.

Parag Gupta (Analyst)

Great. Thank you very much. Abid, my second question was for you. I guess for Wipro, we were basically now looking at two potential headwinds. One is the headwind of COVID and how that flows through. The second is obviously the fact that you have decided to move on does create some amount of vacuum at the top level. Is there any change in views and how, or to put it differently, is there anything that we should be keeping in mind as to how Wipro can manage these turbulent times, especially with you also potentially moving on at some point in time? Thank you.

Abidali Neemuchwala (CEO and Managing Director)

Parag, I will let Saurabh give a little bit of an update on the CEO succession as he's been doing it very closely with the board.

But I wouldn't classify that as a headwind. The company that I lead, I feel very confident. I talked about our customer satisfaction, which is at the highest level. Our offerings where we have a certain leadership position and recognized by the stakeholders, intellectual property, our strong balance sheet, a very strong leadership team, and an energized sales force of the customers. So it is quite good in terms of a strong foundation which I'm leaving behind. And a testimony of that is that we announced my stepping down on January 31st. And while COVID was somewhere a small speck in the background, it was obviously not what it is today. And we spent from middle of February to middle of March, as I articulated, preparing for it as we started first seeing it in China, and then we started preparing for it and executed quite well in March.

As I promised on the request of our chairman and the board, that I would continue till my successor is announced and on board and continue business as usual. I think the whole crisis management has proven that. The credit goes more to the team which made it happen because we have a deep leadership bench. We have a great team leading this organization. So I would definitely not classify it as a headwind. If anything, it is an opportunity for bringing in fresh ideas and thinking afresh in a new normal that we are going to land ourselves in a few weeks from now. Saurabh, you wanted to get an update on the succession process?

Saurabh Govil (President and Chief Human Resources Officer)

Yeah, Parag. So as Abid said, 31st January, we have announced, and the board, along with the governance committee and the nominations committee, is working. We are well on track on the process.

It's moving extremely well in the entire process. It's not got impacted by the pandemic in any way. And we should be in a position to announce our new CEO in this quarter. So it's very much on track there. But as Abid said, he's very much there till the new CEO comes. So it's all business as usual for us.

Parag Gupta (Analyst)

Got it. Thank you very much and all the best.

Operator (participant)

Thank you.

Saurabh Govil (President and Chief Human Resources Officer)

Thank you.

Operator (participant)

The next question is from the line of Diviya Nagarajan from UBS. Please go ahead.

Diviya Nagarajan (Analyst)

Thanks for taking my question. And I think quite a few of my questions have already been discussed here. But just one follow-up on what we've talked about is what you're doing for customers right now in terms of enabling work from home. Could you kind of run us through what kind of project sizes and opportunity that really is?

So we talked of, for instance, enabling Microsoft Teams in one of your customers. What are the kind of project sizes and durations you're looking at here? And what kind of a potential opportunity could this be as more customers try and implement these in the next several months?

Bhanumurthy Ballapuram (President and COO)

So Diviya, this is Bhanu here. I will try to take this question. So we are looking at two to three different kinds of opportunities as we enable our customers through this process right now. The first, like you mentioned, is to get the customers enabled for their organization to work from home and operate in the new methods. If I look at, for example, within our own organization, for example, our chat messages between our employees has increased by about 47%. Our collaboration minutes have gone up by 26%.

Our usage of collaboration tools with respect to users has gone up by about 21%. So we see organizations trending significantly towards these virtual collaboration tools. So one of the things that we are doing for a lot of our customers is to quickly enable them to utilize these collaboration tools and make the work from home very effective for them. So that's the first kind of thing. And associated with that is all the cybersecurity capabilities that need to go with it. Right? So that's the first set of activity. The second set of activity is to help them with respect to the new opportunities that are coming in the short term because of the COVID crisis.

Abid alluded to some examples of how organizations are trying to introduce products to take care of, to take advantage of the fiscal stimulus that is being done in some of the countries. Similarly, there are organizations, for example, which are supplying to, let's say, nursing homes, and with all the lockdowns that are there in play right now, you need help in terms of optimizing algorithms, in terms of finding the right routes, and so on and so forth. Right? So there are multiple short-term opportunities that are coming. There are organizations which are looking at faster planning of their supply chains and so on. Right? So a lot of short-term opportunities of that type. Then there are a third set of opportunities that are coming in terms of organizations looking post-COVID, how would they look like?

For example, a lot of conversations about how the supply chain visibility and predictability should be there. What are the supply chain dependencies that the organization has, and how would they want to go forward and address those supply chain dependencies? There are questions about how much of process automation should be done, how much of the current work that is being done through our digital operations and platforms organization, how much more automation can be done in those areas. Right? There are a lot of questions around, there are a lot of conversations around what kind of new digital migrations can happen. Right? Obviously, all organizations have understood right now that migrating to cloud is one of the best things that has happened for them. Those organizations who have moved to cloud, they have been able to respond to this very well.

Those conversations about, "Hey, how do I go long-term into what should my architectures look like?" Right? We are looking at all the three sets of opportunities right now. Obviously, opportunity sizes do vary depending upon the depth of the organization and how widespread or how geographically spread that organization is.

Operator (participant)

Ms. Nagarajan, do you have any further questions?

Diviya Nagarajan (Analyst)

Yeah. Just a follow-up on that. Would it be fair to characterize the first two opportunity sets as being typically smaller-sized projects because you did talk about them being more short-term and the third set of projects being much more longer-term? Yeah. The timeline-wise, that's correct. But the first opportunity itself, for example, making organizations enabled to go and work from home, there could be some of the larger opportunities as well in that, depending upon the size of the organization and how ready they are right now.

Fair enough. And I think one follow-up, if I may, that NASSCOM seems to have started lobbying for the government to allow furloughs in the IT services industry. Is that something that you would consider if it comes to, I think you've talked about tremendous need to control costs, but would that be on the cards as one of the cost control opportunities?

Saurabh Govil (President and Chief Human Resources Officer)

Saurabh, we are absolutely. I think we are right now all options on the card and furloughs are very much on the card. It is a flexible option, and it helps us to come back quickly as is. So very much we'll explore across all the countries possible.

Got it. Thanks. And all the very best for the year.

Thanks, Diviya.

Operator (participant)

Thank you. The next question is from the line of Pankaj Kapoor from JM Financial. Please go ahead.

Pankaj Kapoor (Analyst)

Yeah. Hi. Thanks for the opportunity.

So my first question is on the guidance suspension. I was just wondering, is it more because of, relatively speaking, uncertainty on the volume side, or you are unable to look at the kind of pricing pressure that can come in, which is leading to this decision?

Abidali Neemuchwala (CEO and Managing Director)

Jatin?

Jatin Dalal (President and CFO)

Yeah. No, I think we articulated the key reason behind guidance is the fluidity of the situation. I wouldn't characterize it any other way. If we could size any angle of it and we would be able to provide, then we would have provided the guidance.

Pankaj Kapoor (Analyst)

I understand, Jatin. I'm just trying to figure out whether there is a lack of visibility in terms of customer demand for pricing only. So I'm just trying to understand that whether the volume can continue. It is just that the clients are coming to ask for pricing cuts and which we are unable to predict.

Or is it that people are more uncertain about the work itself so that there is a possibility of volume also contracting?

Jatin Dalal (President and CFO)

Yeah. It is both, factually, where people are reprioritizing where they want to spend, whether they want to spend, and when they want to spend. And then, of course, the pricing also comes into play. So uncertainty is on both the axes.

Abidali Neemuchwala (CEO and Managing Director)

And there is one more axis right now, which we think is temporary, but that temporary could extend till the lockdowns and shelter-in-place extend, is the ability to do certain type of work from home, which is about right now, in our case, about 7% of the work.

Pankaj Kapoor (Analyst)

Got it. And Jatin, the second question is on your ability to manage the cost in this time.

So you highlighted some of the pressures that you are facing, and you also highlighted some of the levers that you may want to use. As a net-net impact of all that, any sense which you can give in terms of whether you're able to manage margin in a narrow band, or you think that margin in the near term could come under significant pressure?

Jatin Dalal (President and CFO)

Yeah. So based on the visibility that we have, as less as it is, we are going to definitely go all out on the cost, Pankaj. But since the revenue side of the equation is fluid, one is not sure how well those two will marry. I think we should go back and see a Global Financial Crisis and see some of the margin behaviors. That's how we are looking at it to learn from past.

But our endeavor, of course, is to drop as less as possible. But these are uncertain times, Pankaj. So this is not normal where I can feel comfortable about a range or narrowness of that range kind of position.

Operator (participant)

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

Aparna Iyer (VP and Corporate Treasurer)

Thank you all for joining the call. In case you could not take questions due to time constraints, please feel free to reach out to the investor relations team. Have a nice day. All of you, stay safe and stay strong. Thank you.

Operator (participant)

Thank you very much. Ladies and gentlemen, on behalf of Wipro Limited, that concludes this conference. Thank you for joining us, and you may now disconnect the line.