BENGALURU: Wipro’s business process management services business is generating close to $1 billion a year in revenue, ahead of the company’s 2020 target, and has shown double-digit growth in the last two years, the head of that unit told ET.
The Bengaluru-headquartered IT services company had put in place a strategy to grow its operations management business in 2015. The target set was reaching $1 billion in revenue by 2020, 40% of which was expected to come from business-process-as-a-service (BPaaS). Wipro expects to beat that target, Nagendra Bandaru, senior vice-president and global head, business process services (BPS), Wipro, said.
“About 40% of our revenue already comes from BPaaS and revenue is almost $1 billion. We are coming in ahead of time,” Bandaru said. He said the company had a long list of changes it had made in the unit, including investing in technology and improving execution.
In the latest quarter, the BPS business pulled in over $243 million in revenue, according to the fact sheet on Wipro’s investor relations site. In the second quarter of FY16, the unit pulled in $179 million in revenue. Bandaru said the company was waiting to show progress on the strategy implementation before talking about it.
Wipro CEO Abidali Neemuchwala, who used to head TCS’ nearly $2 billion BPS unit, was key in crafting the strategy, Bandaru said.
The growth is being driven by the company’s acquisitions. In 2015, Wipro acquired HealthPlan Services, which offers BPaaS provider to the healthcare industry for $460 million. It has also invested in microservices such as Way2Go in the travel space. “Inorganic will always support organic growth. We are constantly looking at making investments in intellectual property,” Bandaru said.
The BPS industry has been growing much faster than the IT industry for the last year. Stand-alone BPS companies Genpact, WNS and EXL Services are all growing faster than their IT peers as investments made in digital pay off. The sector was previously believed to have been the most under threat as automation threatened to eat away at their revenue. “BPS companies have always cannibalised their revenues. The question has been who is going bell the cat first among all the competition. Companies have always given back productivity savings.
The resilience in its operations business will help Wipro reach its goal of returning to industry-level growth by the end of the fiscal year. But analysts say more will need to be done.
“The problem with Wipro has been consistent under-performance. But they have been making acquisitions more aggressively to combat the past weakness but I am not sure if they will return to industry-matching growth by that time-frame, but it is going in the right direction,” an analyst with a Mumbai-brokerage said. He declined to be identified. Bandaru added the company was also investing in developing better forecasting to ensure continued predictability of revenue as more deals become outcome-based.
Analysis by Jochelle Mendonca, india times