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Wipro and Infosys - AI and the Indian services sector

Stuart Lauchlan Profile picture for user slauchlan January 15, 2024
Summary:
Differing fortunes in their quarterly numbers, but AI focus brings commonality to Infosys and Wipro.

indai

Infosys quarterly revenue of $4.66 billion missed estimates by $10 million, while Wipro’s $2.67 billion beat market expectations, also by $10 million. 

Both companies boasted about their total contract value during Q3. Wipro closed $3.8 billion of orders, with fourteen deals booked with values greater than $30 million. Infosys reported large deal value of $3.2 billion, 71% of which was net new.

Thierry Delaporte, Wipro CEO, commented: 

Looking at the demand environment, I'd say, the demand environment overall remains cautious. Clients are still making conservative investments. They are looking for efficiency. They are more focusing on returns on investment and looking for better optimization, I would say, of existing investments. But we are seeing some indicators for growth.

Salil Parekh, his counterpart at Infosys, observed: 

In terms of the client discussions, we have not seen some sort of significant change in one or the other direction from what we were seeing last quarter. So some of the digital transformation work or some of that type of programs are where clients are not putting focus or attention, whereas the cost and the efficiency and now even consolidation, we are seeing more and more of that.

AI everywhere

Both firms also pitched their push into AI-related service offerings. Delaporte said: 

AI is now moving from the curiosity and experimentation stage to becoming vital to business strategy. In fact, we can confidently say that every long-term large deal now has an AI component. The substantial portion of our clients are looking for us to develop use cases tied to their business goals. They want us to use AI models to drive tangible results. AI is now embedded across most of our existing solutions and offerings.

In addition, every business line is working to launch new offerings that use AI. That's the way it is at the moment. For example, in our FullStride Cloud business, an area that's particularly hot when it comes to the use of gen AI is digital workplace services. Leveraging gen AI to lighten the load on service desk, deliver faster and better client services is now part of every RFP in this space.

Wipro is putting its money where its AI mouth is, he added: 

We have now 210,000 ‘Wipro-ites’ who have been trained on AI 101 skills. We have now rolled out personnel-based learning pathways for different roles and functions. Our goal is to actually ensure that everyone at Wipro has the skills to fully leverage AI in their everyday work and for AI-related client projects.

We are accelerating gen AI adoption internally as well by integrating the technology across our entire portfolio of platform. This is resulting in quality and productivity improvements across HR, marketing, sales, operations, finance, as well as software development and quality engineering and testing. Our investments in our ai360 ecosystem, combined with the strategic value our consulting business brings to clients, is the reason we are increasingly the preferred partner for our clients.

And the firm is able to cite real world end user AI engagements. Delaporte said: 

One of our largest deals in Europe this quarter is to transform digital workplace services of a multinational telecommunications company. This will help improve client satisfaction and reduce operating expenses. We will actually build an AI-powered platform for them that provides service desk, onsite, and remote support services for 100,000 users and 80,000 managed devices across 240 locations worldwide.

Now, in engineering, we are seeing strong interest for AI in the automotive and manufacturing industries in particular. Clients in these industries want AI to increase productivity and the R&D process and accelerate new product development. With Wipro Enterprise Futuring, we are helping clients accelerate adoption. We are leveraging Wipro's gen AI framework and studio to develop key assets at all level of the AI stack, including models, platforms, solutions. We will help clients with model development, performance, privacy and, of course, compliance. We're also building governance frameworks around responsible, sustainable, and ethical AI development.

In fact, we are working with a global healthcare insurer right now to develop a gen AI-powered knowledge research solution to transform their contact center. The goal here is to improve patient expense and operational efficiency by cutting the time it takes to analyze healthcare plan documents and response time.

We've also developed a gen AI-powered assistant for a Fortune 500 investments and insurance firm. This assistant improves quality and reduces the time spent in crafting personalized e-mail campaigns. Earlier results show very tangible growth in click-through conversion rates.

On the other hand, Infosys was less specific about the nature of its AI engagements. The firm last month disclosed that it had lost an an unnamed 15 year AI deal worth $1.5 billion, which had only been signed four months earlier. So perhaps it was understandable that Parekh stated: 

We are not, at this stage, sharing externally any views on revenues or projects and so on. To give you color what is happening today is, almost every discussion with clients involves some element of generative AI.

What we have now developed through Topaz [Infosys AI solution suite] is a set of areas where there's benefit cases, use cases, scenarios where there's impact, where we're working across a large number of clients on those in different scales, where there are some which are more pilots some which are programs….Our focus is very much on large enterprises who are our clients and the data sets within those enterprises, depending on the usage of where that Large Language Model is to be applying. And we have a very strong business in  data and analytics, which becomes the foundation for this generative AI work.

And then we are working to make sure that the benefits are felt across all of our service offerings. So we can start to see in new discussions with clients, productivity benefits, which are downstream coming from this generative AI. So at this stage, while we are not externally quantifying all of the elements I referenced, that’s the sort of color we are seeing across a large number of discussions.

That said, he did cite:

We are working with a large global bank to support them in their risk analysis program by using a large language model for them. We are working with a global food supplier to personalize food experience for their customers, and to make their operations efficient using official intelligence. We're working with a global retail company in defining their AI-first business transformation strategy.

But he emphasized that Infosys is making its own AI capabilities investments: 

We've integrated our generative AI components into our service line portfolio, creating impact for our clients. We have 100,000 employees trained in generative AI areas. We have developed a range of use cases and benefit scenarios across different industries for our clients. Some of these areas are related to client analytics, process optimization, sales, marketing, knowledge analysis, software development, self-service and personalization.

My take

A tale of two of the Indian services sector’s bellwether companies.

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