Company Quick10K Filing
Wipro
20-F 2020-03-31 Filed 2020-06-01
20-F 2019-03-31 Filed 2019-06-11
20-F 2018-03-31 Filed 2018-06-28
20-F 2017-03-31 Filed 2017-06-02
20-F 2016-03-31 Filed 2016-05-26
20-F 2015-03-31 Filed 2015-05-26
20-F 2014-03-31 Filed 2014-05-19
20-F 2013-03-31 Filed 2013-06-12
20-F 2012-03-31 Filed 2012-05-16
20-F 2011-03-31 Filed 2011-06-16
20-F 2010-03-31 Filed 2010-11-12

WIT 20F Annual Report

Part I
Item 1. Identity of Directors, Senior Management and Advisers
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
Item 4. Information on The Company
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
Item 6. Directors, Senior Management and Employees
Item 7. Major Shareholders and Related Party Transactions Major Shareholders
Item 8. Financial Information
Item 9. The Offer and Listing
Item 10. Additional Information
Item 11. Quantitative and Qualitative Disclosures About Market Risk
Item 12. Description of Securities Other Than Equity Securities
Item 12.A. Debt Securities
Item 12.B. Warrants and Rights
Item 12.C. Other Securities
Item 12.D. American Depositary Shares
Item 12.D.1.
Item 12.D.2.
Item 12.D.3. Fees and Charges for Holders of American Depositary Receipts
Item 12.D.4. Fees Paid By Depositary To The Company
Part II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications To The Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 16A. Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D. Exemptions From The Listing Standards for Audit Committees
Item 16E. Purchase of Equity Securities By The Issuer and Affiliated Purchasers
Item 16F. Changes in Registrant's Certifying Accountant
Item 16G. Corporate Governance
Item 16H. Mine Safety Disclosure
Part III
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
EX-2.3 d897917dex23.htm
EX-12.1 d897917dex121.htm
EX-12.2 d897917dex122.htm
EX-13.1 d897917dex131.htm
EX-15.1 d897917dex151.htm

Wipro Earnings 2020-03-31

Balance SheetIncome StatementCash Flow

20-F 1 d897917d20f.htm 20-F 20-F
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 20-F

 

 

(Mark One)

Registration statement pursuant to Section 12(b) or (g) of the Securities Exchange Act of 1934

OR

 

Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the fiscal year ended March 31, 2020

OR

 

Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from                      to                     

OR

 

Shell Company Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of event requiring this shell company report                     

Commission File Number 001-16139

 

 

WIPRO LIMITED

(Exact name of Registrant as specified in its charter)

 

 

Not Applicable

(Translation of Registrant’s name into English)

Bengaluru, Karnataka, India

(Jurisdiction of incorporation or organization)

Doddakannelli

Sarjapur Road

Bengaluru, Karnataka 560035, India

+91-80-2844-0011

(Address of principal executive offices)

Jatin Pravinchandra Dalal, Chief Financial Officer

Phone: +91-80-2844-0011; Fax: +91-80-2844-0054

(Name, telephone, email and/or facsimile number and address of company contact person)

 

 

Securities registered or to be registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol

 

Name of each exchange

on which registered

American Depositary Shares, each represented   WIT   New York Stock Exchange
by one Equity Share, par value 2 per share    

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Not Applicable

(Title of Class)

 

 

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report: 5,713,357,390 Equity Shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ☒    No  ☐

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act, 1934.    Yes  ☐    No  ☒

Note – Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under those Sections.

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or an emerging growth company. See definition of “large accelerated filer, “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large Accelerated Filer      Accelerated Filer  
Non-accelerated filer      Emerging growth company  

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report.  ☒

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

 

U.S. GAAP  ☐    International Financial Reporting Standards as issued by the    Other  ☐
   International Accounting Standards Board  ☒   

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ☐    Item 18  ☐

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No  ☒

 

 

 


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Currency of Presentation and Certain Defined Terms

In this Annual Report on Form 20-F, references to “U.S.” or “United States” are to the United States of America, its territories and its possessions. References to “India” are to the Republic of India. References to “U.K.” are to the United Kingdom. Reference to “$” or “US$” or “dollars” or “U.S. dollars” are to the legal currency of the United States, references to “£” or “Pound Sterling” or “GBP” are to the legal currency of United Kingdom and references to “Rs.” or “” or “rupees” or “Indian rupees” are to the legal currency of India. All amounts are in Indian rupees or in U.S. dollars unless stated otherwise. Our financial statements are presented in Indian rupees and translated into U.S. dollars solely for the convenience of the readers and are prepared in accordance with the International Financial Reporting Standards and its interpretations (“IFRS”), as issued by the International Accounting Standard Board (“IASB”). References to a particular “fiscal” year are to our fiscal year ended March 31 of such year.

All references to “we,” “us,” “our,” “Wipro” or the “Company” shall mean Wipro Limited and, unless specifically indicated otherwise or the context indicates otherwise, our consolidated subsidiaries. “Wipro” is our registered trademark in the United States and India. All other trademarks or trade names used in this Annual Report on Form 20-F are the property of their respective owners.

Except as otherwise stated in this Annual Report, all convenience translations from Indian rupees to U.S. dollars are based on the certified foreign exchange rates published by Federal Reserve Board of Governors on March 31, 2020, which was 75.39 per $1. No representation is made that the Indian rupee amounts have been, could have been or could be converted into United States dollars at such a rate or any other rate. Any discrepancies in any table between totals and sums of the amounts listed are due to rounding. Information contained in our website, www.wipro.com, is not part of this Annual Report.

Forward-Looking Statements May Prove Inaccurate

In addition to historical information, this Annual Report on Form 20-F contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements are not historical facts but instead represent our beliefs regarding future events, many of which are, by their nature, inherently uncertain and outside our control. As a result, the forward-looking statements contained herein are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in the forward-looking statements, and reported results should not be viewed as an indication of future performance. For a discussion of some of the risks and important factors that could affect the Company’s future results and financial condition, please see the sections entitled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and “Quantitative and Qualitative Disclosure About Market Risk.”

The forward-looking statements contained herein are identified by the use of terms and phrases such as “ambition,” “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “objectives,” “outlook,” “probably,” “project,” “will,” “seek,” “target” and similar terms and phrases. Such forward-looking statements include, but are not limited to, statements concerning:

 

   

our strategy to finance our operations, including our planned construction and expansion;

 

   

future marketing efforts, advertising campaigns, and promotional efforts;

 

   

future growth and market share projections, including projections regarding developments in technology and the effect of growth on our management and other resources;

 

   

our expectations of the potential impact of the ongoing COVID-19 pandemic and related public health measures on our business, the businesses of our customers, vendors and partners, and the economy;

 

   

the effect of facility expansion on our fixed costs;

 

   

our future expansion plans;

 

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our future acquisition strategy, including plans to acquire or make investments in complementary businesses, technologies, services or products, or enter into strategic partnerships with parties who can provide access to those assets;

 

   

the future impact of our acquisitions;

 

   

our strategy and intentions regarding new product branding;

 

   

the future competitive landscape and the effects of different pricing strategies;

 

   

the effect of current tax laws, including the branch profit tax;

 

   

the effect of future tax laws on our business;

 

   

the outcome of any legal proceeding, hearing, or dispute (including tax hearings) and the resulting effects on our business;

 

   

our ability to implement and maintain effective internal control over financial reporting;

 

   

projections that the legal proceedings and claims that have arisen in the ordinary course of our business will not have a material and adverse effect on the results of operations or the financial position of the Company;

 

   

expectations of future dividend payout or other corporate actions such as a buyback, bonus issue, etc.;

 

   

projections that our cash and cash equivalent along with cash generated from operations will be sufficient to meet our working capital requirements and certain of our obligations;

 

   

our compensation strategy;

 

   

projections regarding currency transactions, including the effect of exchange rates on the Indian rupee and the U.S. dollar;

 

   

the nature of our revenue streams, including the portion of our IT Services revenue generated from a limited number of corporate clients;

 

   

the effect of a strategically located network of software development centers, and whether it will provide us with cost advantages;

 

   

our ability to anticipate and develop new services and enhance existing services in order to keep pace with rapid changes in technology;

 

   

projections regarding future economic policy, legislation, foreign investment, currency exchange and other policy matters that may affect our business;

 

   

the nature and flexibility of our business model;

 

   

expectations as to our future revenue, margins, expenses and capital requirements; and

 

   

our exposure to market risks.

We wish to ensure that all forward-looking statements are accompanied by meaningful cautionary statements, so as to ensure to the fullest extent possible the protections of the safe harbor established in the Private Securities Litigation Reform Act of 1995. Accordingly, all forward-looking statements are qualified in their entirety by reference to, and are accompanied by, the discussion of certain important factors that could cause actual results to differ materially from those projected in such forward-looking statements in this report, including

 

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the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” We caution the reader that this list of important factors may not be exhaustive. We operate in rapidly changing businesses, and new risk factors emerge from time to time. We cannot predict every risk factor, nor can we assess the impact, if any, of all such risk factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those projected in any forward-looking statements.

Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. In addition, readers should carefully review the other information in this Annual Report on Form 20-F and in the Company’s periodic reports and other documents filed with the Securities and Exchange Commission (“SEC”) from time to time.

 

-3-


Table of Contents

TABLE OF CONTENTS

 

         Page  

PART I

       5  

Item 1.

 

Identity of Directors, Senior Management and Advisers

     5  

Item 2.

 

Offer Statistics and Expected Timetable

     5  

Item 3.

 

Key Information

     6  

Item 4.

 

Information on the Company

     30  

Item 4A.

 

Unresolved Staff Comments

     46  

Item 5.

 

Operating and Financial Review and Prospects

     46  

Item 6.

 

Directors, Senior Management and Employees

     63  

Item 7.

 

Major Shareholders and Related Party Transactions

     76  

Item 8.

 

Financial Information

     77  

Item 9.

 

The Offer and Listing

     78  

Item 10.

 

Additional Information

     80  

Item 11.

 

Quantitative and Qualitative Disclosures About Market Risk

     101  

Item 12.

 

Description of Securities Other Than Equity Securities

     103  

PART II

       104  

Item 13.

 

Defaults, Dividend Arrearages and Delinquencies

     104  

Item 14.

 

Material Modifications to the Rights of Security Holders and Use of Proceeds

     104  

Item 15.

 

Controls and Procedures

     104  

Item 16A.

 

Audit Committee Financial Expert

     107  

Item 16B.

 

Code of Ethics

     107  

Item 16C.

 

Principal Accountant Fees and Services

     108  

Item 16D.

 

Exemptions from the Listing Standards for Audit Committees

     108  

Item 16E.

 

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

     108  

Item 16F.

 

Changes in Registrant’s Certifying Accountant

     108  

Item 16G.

 

Corporate Governance

     108  

Item 16H.

 

Mine Safety Disclosure

     110  

PART III

       110  

Item 17.

 

Financial Statements

     110  

Item 18.

 

Financial Statements

     110  

Item 19.

 

Exhibits

     175  

 

-4-


Table of Contents

PART I

 

Item 1.

Identity of Directors, Senior Management and Advisers

Not applicable.

 

Item 2.

Offer Statistics and Expected Timetable

Not applicable.

 

-5-


Table of Contents
Item 3.

Key Information

Summary of Selected Consolidated Financial Data

The selected consolidated financial data should be read in conjunction with the consolidated financial statements, the related notes and operating and financial review and prospects which are included elsewhere in this Annual Report. The selected consolidated statement of income data for each of the three years ended March 31, 2018, March 31, 2019 and March 31, 2020 and selected consolidated statements of financial position data as of March 31, 2018, March 31, 2019 and March 31, 2020 have been derived from our Consolidated Financial Statements and related notes audited by Deloitte Haskins & Sells LLP. The selected consolidated statements of income for each of the two years ended March 31, 2016 and 2017 and selected consolidated statements of financial position data as of March 31, 2016 and 2017 have been derived from the consolidated financial statements and related notes audited by KPMG. The audited Consolidated Financial Statement for each of the periods have been prepared and presented in accordance with IFRS, as issued by the IASB. Historical results are not necessarily indicative of future results.

 

                                                                                                                                               
    ( in millions, except per equity share data)  
                                  2020  
    2016(1)     2017     2018     2019     2020     Convenience
Translation
into US$(2)
 

Consolidated Statements of Income Data:

           

Revenues

             512,440                550,402                544,871                585,845                610,232     US$           8,094  

Cost of revenues

    (356,724     (391,544     (385,575     (413,033     (436,085     (5,784
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

   155,716      158,858      159,296      172,812      174,147     US$  2,310  

Selling and marketing expenses

    (34,097     (40,817     (42,349     (44,510     (42,907     (569

General and administrative expenses

    (28,626     (32,021     (34,141     (35,951     (29,823     (396

Foreign exchange gains/(losses), net

    3,867       3,777       1,488       3,215       3,169       42  

Other operating income(3)

    —         4,082       —         4,344       1,144       15  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Results from operating activities

   96,860      93,879      84,294      99,910      105,730     US$  1,402  

Finance expenses

    (5,378     (5,942     (5,830     (7,375     (7,328     (97

Finance and other income

    23,451       22,419       23,999       22,923       24,081       319  

Share of net profit /(loss) of associates accounted for using the equity method

    —         —         11       (43     29       —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit before tax

   114,933      110,356      102,474      115,415      122,512     US$  1,624  

Income tax expense

    (25,366     (25,213     (22,390     (25,242     (24,799     (329
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year from continuing operations

   89,567      85,143      80,084      90,173      97,713     US$  1,295  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Discontinued operations

           

Profit after tax for the year from discontinued operations

    —         —         —         —         —         —    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year

   89,567      85,143      80,084      90,173      97,713     US$  1,295  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit attributable to:

           

Equity holders of the Company

    89,075       84,895       80,081       90,031       97,218       1,288  

Non-controlling interest

    492       248       3       142       495       7  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year

   89,567      85,143      80,084      90,173      97,713     US$  1,295  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit from continuing operations attributable to:

           

Equity holders of the Company

    89,075       84,895       80,081       90,031       97,218       1,288  

Non-controlling interest

    492       248       3       142       495       7  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Profit for the year from continuing operations

   89,567      85,143      80,084      90,173      97,713     US$  1,295  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Basic Earnings per equity share (4):

           

Attributable to equity shareholders of the Company

           

Continuing operations

   13.60      13.11      12.64      14.99      16.67     US$  0.22  

Discontinuing operations

    —         —         —         —         —         —    

 

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Continuing and discontinuing operations

   13.60      13.11      12.64      14.99      16.67     US$  0.22  

Diluted Earnings per equity share (4):

           

Attributable to equity shareholders of the Company

           

Continuing operations

   13.57      13.07      12.62      14.95      16.62     US$  0.22  

Discontinuing operations

    —         —         —         —         —         —    

Continuing and discontinuing operations

   13.57      13.07      12.62      14.95      16.62     US$  0.22  

Weighted average number of equity shares used in computing earnings per equity share:

           

Basic

    6,550,825,067       6,476,108,013       6,333,391,200       6,007,376,837       5,833,384,018       5,833,384,018  

Diluted

    6,564,506,421       6,495,129,517       6,344,482,633       6,022,304,367       5,847,823,239       5,847,823,239  

Cash dividend per equity share paid ()

   12.00      3.00      1.00      1.00      1.00     US$  0.01  

Cash dividend per equity share paid ($)(5)

  US$  0.18     US$  0.05     US$  0.02     US$  0.01     US$  0.01     US$  0.01  

Additional data:

           

Revenue by segment (6) (7)

           

IT Services

   487,316      519,196      517,716      568,253      594,041     US$  7,880  

IT Products

    29,722       25,922       17,998       12,312       11,010       146  

ISRE

    NA       9,244       10,693       8,544       8,400       111  

Reconciling items

    (731     (183     (49     (49     (50     (1
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   516,307      554,179      546,358      589,060      613,401     US$  8,136  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Segment results(8):

           

IT Services

   98,253      98,391      83,519      102,503      107,685     US$  1,428  

IT Products

    (1,007     (1,680     362       (1,047     (282     (4

ISRE

    NA       (2,326     454       (1,829     (1,822     (24

Reconciling items

    (386     (506     319       283       149       2  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

   96,860      93,879      84,654      99,910      105,730     US$  1,402  
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Consolidated Statements of Financial Position Data:

           

Cash and cash equivalents

   99,049      52,710      44,925      158,529      144,499     US$  1,917  

Investments

    209,151       299,133       257,968       228,867       200,320       2,656  

Working capital (9)

    284,264       309,355       292,649       357,556       303,458       4,025  

Total assets

    724,003       793,516       760,640       833,171       817,062       10,838  

Total debt

    125,221       142,412       138,259       99,467       78,042       1,035  

Total equity

    467,384       522,695       485,346       570,753       559,333       7,420  

Number of shares outstanding

    2,470,713,290       2,430,900,565       4,523,784,491       6,033,935,388       5,713,357,390       5,713,357,390  

Notes:

 

1.

We elected to early-adopt IFRS 9, Financial Instruments, effective April 1, 2016, with retrospective application from April 1, 2015. The financial data above has been adjusted for the year ended March 31, 2016 to reflect this.

2.

Solely for the convenience of the readers, the selected consolidated financial data as of and for the year ended March 31, 2020, has been translated into United States dollars at the certified foreign exchange rate of $1 = 75.39, as published by the Federal Reserve Board of Governors on March 31, 2020.

3.

Other operating income represents:

 

  (i)

For the year ended March 31, 2017, net gain on sale of the EcoEnergy division,

 

  (ii)

For the year ended March 31, 2019, (a) net gain on sale of hosted data center services business, and (b) the Workday and Cornerstone OnDemand business, and

 

  (iii)

For the year ended March 31, 2020, (a) change in fair value of the callable units upon partial achievement of business targets pertaining to sale of hosted data center services business, and (b) gain on sale of assets pertaining to Workday and Cornerstone OnDemand business in Portugal, France and Sweden. Please see Note 26 of the Notes to the Consolidated Financial Statements for additional details.

 

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4.

Earnings per share and weighted average number of equity shares used in computing earnings per equity share for the years ended March 31, 2016, 2017 and 2018 have been proportionately adjusted for the bonus issue in the ratio of 1:3 as approved by the shareholders on February 22, 2019.

5.

Translated into United States dollars at the certified foreign exchange rate of 66.25, 64.85, 65.11, 69.16 and 75.39, as published by Federal Reserve Board of Governors on March 31, 2016, 2017, 2018, 2019 and 2020, respectively.

6.

During the year ended March 31, 2019, we carved out India State Run Enterprise (“ISRE”) as a separate segment from our global IT Services business. The ISRE segment consists of IT services offerings to entities and/or departments owned or controlled by the Government of India (the “GoI”) and/or any Indian State Governments (“ISRE Customers”). We made this decision because we changed our strategy for providing services to ISRE Customers. Historically, projects in our ISRE business have been primarily system integration (“SI”) projects that have complex deliverables and, compared to our IT Services segment, longer working capital cycles and different downstream processes, including billing and collections. Most ISRE deals come in the form of a tender process, with little room to negotiate the terms and conditions. We have pivoted our ISRE strategy to focus more on consulting and digital engagements and to be selective in bidding for SI projects with long working capital cycles. Segment revenue and results for the year ended March 31, 2017 and March 31, 2018 have been restated to reflect the above changes. The segment revenue and results for the year ended March 31, 2016 have not been restated and include ISRE as part of the IT Services segment as restated segment revenues for this period could not be prepared without unreasonable effort and expense.

7.

For the purpose of segment reporting, we have included the impact of exchange rate fluctuations in revenue. Further, finance income on deferred consideration earned under multi-year payment terms in certain total outsourcing contracts is included in the revenue of the respective segment and is eliminated under reconciling items. Please see Note 34 of the Notes to the Consolidated Financial Statements for additional details.

8.

Effective April 1, 2016, the segment results are measured after including the amortization charge for acquired intangibles to the respective segments. Such costs were classified under reconciling items until the fiscal year ended March 31, 2016. The Company has restated the segment results for year ended March 31, 2016 to reflect this change.

9.

Working capital equals current assets less current liabilities.

Capitalization and Indebtedness

Not applicable.

Reasons for the Offer and Use of Proceeds

Not applicable.

 

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RISK FACTORS

This Annual Report contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth in the following risk factors and elsewhere in this Annual Report. The following risk factors should be considered carefully in evaluating us and our business.

Risks Related to Our Company and Our Industry

Our revenues and expenses are difficult to predict because they can fluctuate significantly given the nature of the markets in which we operate. This increases the likelihood that our results could fall below our projections, ambition and expectations of investors and market analysts, which could cause the market price of our equity shares and American Depositary Shares (“ADSs”) to decline.

Our results historically have fluctuated, may fluctuate in the future and may fail to match our past performance, our projections or ambition or guidance, our internal expectations or the expectations of investors due to a number of factors, including:

 

   

the size, complexity, timing, pricing terms and profitability of significant projects, as well as changes in the corporate decision-making process of our clients;

 

   

increased pricing pressure from our competitors;

 

   

our ability to increase sales of our services to new customers and expand sales to our existing customers;

 

   

industry consolidation leading to stronger competitors that are able to compete better;

 

   

competitors being more established in certain markets, making our geographic expansion strategy in those markets more challenging;

 

   

the proportion of services we perform at our clients’ sites rather than at our offshore facilities;

 

   

seasonal changes that affect the mix of services we provide to our clients or the relative proportion of services and product revenue;

 

   

seasonal changes that affect purchasing patterns among our customers of servers, communication devices and other products;

 

   

our expectations regarding the potential impacts on our business of Coronavirus Disease 2019 (“COVID-19”) pandemic;

 

   

unanticipated cancellations, contract terminations or deferral of projects or those occurring as a result of our clients reorganizing their operations;

 

   

our ability to accurately forecast our client’s demand patterns to ensure the availability of trained employees to satisfy such demand;

 

   

the effect of increased wage pressure in India and other locations and the time we require to train and productively utilize our new employees;

 

   

our ability to generate historical levels of yield on our investments; and

 

   

our ability to identify and acquire new businesses.

A significant portion of our total operating expenses, particularly personnel and facilities, are fixed in advance of any particular quarter. As a result, unanticipated variations in the number and timing of our projects may cause significant variations in operating results in any particular quarter. Our pricing remains competitive and clients remain focused on cost reduction and capital conservation. While we believe that we have a flexible business model which can mitigate the negative impact of an uncertain or slow growing economy, we may not be able to sustain historical levels of profitability.

There are also other factors that are not within our control that could cause significant variations in our results in any particular quarter. These include:

 

   

the duration of tax holidays or exemptions and the availability of other Indian Government incentives;

 

   

currency exchange fluctuations, specifically movement of the Indian Rupee against the U.S. Dollar, the U.K. Pound Sterling, the Euro, the Canadian Dollar and the Australian Dollar, as significant portion of our revenues are in these currencies;

 

   

political uncertainties, changes in regulations, or other economic factors, including the economic conditions, in India, the United States, the United Kingdom, the European Union, Middle East and other geographies in which we operate;

 

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uncertain or changing economic conditions particular to a business segment or to particular customer markets within that segment; and

 

   

increase in cost of operations in countries that we operate in on account of changes in minimum wage regulations.

Therefore, we believe that period-to-period comparisons of our results of operations are not necessarily meaningful and should not be relied upon as indications of future performance. Thus, it is possible that in the future some of our periodic results of operations may be below the expectations of public market analysts and investors, and the market price of our equity shares and ADSs could decline.

Our business will suffer if we fail to anticipate and develop new services and enhance existing services in order to keep pace with rapid changes in technology and the industries on which we focus.

The IT services market is characterized by rapid technological changes, evolving industry standards, changing client preferences and new product and service introductions. Our future success will depend on our ability to anticipate these advances and enhance our existing offerings or develop new product and service offerings to meet client needs. We may not be successful in anticipating or responding to these advances on a timely basis, or, if we do respond, the services or technologies we develop may not be successful in the marketplace. We may also be unsuccessful in stimulating customer demand for new and upgraded products, or seamlessly managing new product introductions or transitions. Further, products, services or technologies that are developed by our competitors, including emerging companies offering specialized services with effective and targeted allocation of technical, marketing and financial resources, may render our services non-competitive or obsolete. Our failure to address the demands of the rapidly evolving information technology environment, particularly with respect to digital technology, the internet of things, artificial intelligence, cloud computing, storage, mobility and applications, analytics, augmented reality, automation, blockchain and quantum computing could have a material adverse effect on our business, results of operations and financial condition.

If our pricing structures do not accurately anticipate the cost, complexity and duration of our work, then our contracts could be unprofitable.

We negotiate pricing terms with our clients utilizing a range of pricing structures and conditions. Depending on the particular contract, we may use time and materials pricing, fixed-price arrangements, or hybrid contracts with features of both pricing models. We also undertake element or transaction-based pricing, which relies on a certain scale of operations to be profitable for us. Our pricing is highly dependent on the client and our internal forecasts and predictions about our projects and the marketplace, which might be based on limited data and could be inaccurate.

There is a risk that we will underprice our contracts, fail to accurately estimate the duration, complexity and costs of performing the work or fail to accurately assess the risks associated with potential contracts. The risk is greatest when pricing our outsourcing contracts, as many of our outsourcing projects entail the coordination of operations and workforces in multiple locations, utilizing workforces with different skill sets and competencies across geographically-distributed service centers. Furthermore, when work gets outsourced, we occasionally takeover employees/assets from our clients and assume responsibility for one or more of our clients’ business processes. Our pricing, cost and profit margin estimates on outsourced work frequently include anticipated long-term cost savings from transformational initiatives and other endeavors that we expect to achieve and sustain over the life of the outsourcing contract, but may not generate revenue in the short term.

We offer a portion of our services on a fixed-price, fixed-time frame basis, rather than on a time-and-materials basis. Although we use our specified software engineering processes and rely on our past project experience to reduce the risks associated with estimating, planning and performing such projects, we bear the risks of cost overruns, including increased costs of third parties, completion delays and wage inflation in connection with these projects, which may have a material adverse effect on our profitability.

We may also fail to obtain renewals or provide ongoing services, the loss of which prevents us from realizing from long-term cost savings. In particular, any increased or unexpected costs, or wide fluctuations compared to our original estimates, delays or failures to achieve anticipated cost savings, or unexpected risks we encounter in connection with the performance of this work, including those caused by factors outside our control, could make these contracts less profitable or unprofitable, which could have an adverse effect on our profit margin. For example, the conditions caused by the COVID-19 pandemic may affect the rate of customer spending, including through increased requests by customers for price discounts and adverse impacts on our ability to provide on-site services to our customers or delays to the provisioning of our offerings, including due to travel restrictions imposed by many countries, could adversely affect our future revenues, operating results and overall financial performance.

 

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Errors, defects or disruptions in our services could raise our costs, diminish our service capacities and harm our financial results.

If flaws in design, function or maintenance of our services were to occur, we could experience a rate of failure that would result in substantial repair, replacement or service costs and potential damage to our reputation. Although we continue to improve our services through quality control, innovation and product testing, there can be no assurances that our efforts to monitor, develop, modify and implement appropriate testing for errors and upgrading processes will be sufficient to prevent us from having to incur substantial repair, replacement or service costs, or from a disruption in our ability to provide services, either of which could have a material adverse effect on our business, results from operations or financial condition.

Our profitability could suffer if we are unable to continue to successfully manage our costs.

Our ability to improve or maintain our profitability is dependent on successful management of our costs. Our cost management strategies include maintaining appropriate alignment between the demand for our services and our resource capacity, optimizing the costs of service delivery through automation and deployment of tools, optimizing utilization of existing facilities, relocating non-client facing employees to lower-cost locations and effectively leveraging our sales and marketing and general and administrative costs. We must also manage additional costs to replace unsatisfactory solutions or services if our clients are not satisfied or if we fail to properly understand their needs and develop solutions accordingly. There is no guarantee that these, or other cost-management efforts will be successful, that our efficiency will be enhanced, or that we will achieve desired levels of profitability. If we are not able to mitigate rising employee compensation costs by passing such increases to clients, or increase our revenues sufficiently to offset increasing costs, our results of operations could be adversely affected. Additionally, if we are not able to maintain high utilization rates for our employees, our profitability may suffer.

Our success depends in large part upon the strength of our management team and other highly skilled professionals. If we fail to attract, retain and manage transition of these personnel, our business may be unable to grow and our revenue could decline.

The continued efforts of the senior members of our management team are critical to our success. Our future performance and customer relationships may be affected by any disruptions in the continued service of our directors and executive officers.

Our ability to execute project engagements and to obtain new clients depends in large part on our ability to attract, train, motivate and retain highly skilled professionals, especially senior technical personnel, project managers and software engineers. If we cannot hire and retain additional qualified personnel, our ability to bid on and obtain new projects and to continue to expand our business will be impaired and our revenue could decline. Our compensation policies include equity-based incentive compensation plans that are designed to reward high-performing personnel for their contributions and provide incentives for them to remain with us. If the anticipated value of such incentives does not materialize because of volatility or lack of positive performance in our stock price, or if our total compensation package is not viewed as being competitive, our ability to attract and retain personnel could be adversely affected. We believe that there is significant competition for professionals with the skills necessary to perform the services we offer, particularly in the locations in which we have operations, which may also impact our ability to attract and retain personnel.

We may not be able to hire and retain enough skilled and experienced employees to replace those who leave. Changes in government policies may also affect our ability to attract, hire and retain personnel. Additionally, we may not be able to reassign or retain our employees to keep pace with continuing changes in technology, evolving standards and changing client preferences. Our revenues, results of operations and financial condition could be adversely affected if we are unable to manage employee hiring and attrition to achieve a stable and efficient workforce structure.

If we do not effectively manage our growth, including, among other things by improving our administrative, operational and financial processes and systems to manage our growth, the value of our shareholders’ investment may be harmed.

Our expected growth will continue to place significant demands on our management and other resources. This will require us to continue to develop and improve our operational, financial and other internal controls. As a result of our growing operations, we face and expect to continue to face challenges such as:

 

   

recruiting, training and retaining sufficiently skilled technical, marketing and management personnel;

 

   

maintaining an effective internal control system and properly educating and training employees to mitigate the risk of individuals engaging in unlawful or fraudulent activity or otherwise exposing us to unacceptable business risks;

 

   

maintaining our high standards of service and levels of client satisfaction;

 

   

developing and improving our internal administrative infrastructure, particularly our financial, operational, communications and other internal systems including data management in our IT applications and Management Information Systems;

 

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preserving our culture, values and entrepreneurial environment;

 

   

assimilating and integrating disparate IT systems, personnel and employment practices, and operations of acquired companies; and

 

   

managing our procurement, supply chain and vendor management processes.

We are making substantial investments in new facilities and physical infrastructures, and our profitability could be reduced if our business does not grow proportionately.

We have invested substantially in construction or expansion of software development facilities and physical infrastructure in anticipation of growth in our business. The total amount of investment in property, plant and equipment in fiscal year 2020 was 23,497 million ($311.7 million). Additionally, as of March 31, 2020, we had contractual commitments of 14,011 million ($185.8 million) related to capital expenditures on construction or expansion of our software development and other facilities. We may encounter cost overruns or project delays in connection with new facilities and these expansions may increase our fixed costs. If we are unable to grow our business and revenues to sufficiently offset the increased expenditures, our profitability could be reduced.

Cyber attacks and other security incidents, both real and perceived, impacting confidentiality and integrity of our information technology and digital infrastructure could lead to loss of reputation and financial obligations.

Considering the high business dependency on our information technology and digital infrastructure to interconnect offices, employee systems, partners and clients for day to day business operations, as well as our hosting of data and service delivery, any potential cyber event impacting the confidentiality, integrity and availability of this environment could lead to financial loss, disclosure of data, breaches of privacy or security, reputational and customer loss, and legal, regulatory and contractual obligations upon Wipro and may directly impact our customers and partners.

Given the rise of connected devices, transition to cloud and use of other emerging technologies, the impact of threats continue to increase while the threat attack area is evolving and increasing beyond the enterprise. Attempts for unauthorized access, malware, fraud, leakage, misuse/loss/tampering of personal and business data, denial of services exploiting weakness in the systems or programs, errors, omissions, deliberate or accidental act of our employees or former employees, partners, third-party business providers or other stakeholders both internal and external are on the rise. Our internal security controls may not be able to keep pace with threats from emerging technologies.

We often have access to or are required to collect and store confidential customer data. As a service provider in the healthcare industry, we are also subject to data privacy and security regulations by both the federal and state governments in which we conduct our business, including the Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information. We are also subject to the European Union General Data Protection Regulations.

We face a number of threats to our data centers and networks such as unauthorized access, security breaches and other system disruptions. It is critical to our business that our infrastructure remains secure and is perceived by customers to be secure. Despite our security measures, our infrastructure may be vulnerable to attacks by hackers or other disruptive problems, such as a ‘Zero Day’ attack, for which no remedies are available with network security service providers. As an IT Services provider, we may be an attractive target of cyber attacks designed to impede the performance of our products, penetrate our network security or the security of our internal systems, or that of our customers, misappropriate proprietary information and/or cause interruption to our services. We can provide no assurance that our systems are fully protected against third-party intrusions, viruses, hacker attacks, information or data theft or other similar threats. For example, in April 2019, we became aware that our system was subject to a cyber attack by a coordinated and advanced phishing campaign, which was reportedly directed against several major companies, including Wipro. Upon learning of this breach, we collaborated with a forensic firm to investigate the incident and have worked closely with our anti-virus provider and our security team to counter the malware found in our system and implement a series of additional precautionary and containment measures across our system. In our investigation into this incident, we found no evidence of data breach or data loss. However, any third-party intrusions, viruses, hacker attacks, information or data theft or similar threats against us and our systems may have a material adverse effect on our business, financial condition and results of operations.

Breaches of our security measures or the accidental loss, inadvertent disclosure or unapproved dissemination of confidential customer data could expose us, our customers or the affected parties to a risk of loss or misuse of this information. We could be subject to termination of contracts for non-compliance with our client’s information security policies and procedures. If additional safeguards are required to comply with laws relating to privacy, security and data protection, our costs could increase further, which would negatively affect our results of operations.

 

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Many of our client agreements do not limit our potential liability for breaches of confidentiality. If any person, including any of our employees or former employees, penetrates our network security or misappropriates sensitive data, we could be subject to significant liability from our customers or from their customers for breaching contractual confidentiality provisions or privacy laws. Unauthorized disclosure of sensitive or confidential customer data, whether through breach of our computer systems, systems failure, loss or theft of assets containing confidential information or otherwise, could damage our reputation and cause us to lose clients.

In response to COVID-19, most of our employees have been asked to work from home. In order to better support employees working from home, we have enhanced our cybersecurity measures by installing secure agents in our systems. While various security control mechanisms are deployed and periodically re-enforced, these security control mechanisms may not always be successful, considering the complexity of the environments, inter-dependencies, sophisticated attack methodologies, highly dynamic heterogeneous systems, global digital presence, hosted both in the cloud and on premises, and work from home arrangements. Our service operations and delivery is aligned to various industry, geographical and regional regulations, privacy, security, reporting, data localization, standards and legal requirements which are continuously evolving and changing, mandating us to enforce required security and privacy controls and frameworks.

We may face difficulties in providing end-to-end business solutions for our clients that could cause clients to discontinue their work with us, which in turn could impact our business.

As we have increased the breadth of our service offerings, we have engaged in larger and more complex projects with our clients. This requires us to establish closer relationships with our clients and potentially with other technology service providers and vendors and to have a more thorough understanding of our clients’ operations. Our ability to establish such relationships will depend on a number of factors, including the proficiency of our IT professionals and our management personnel. Our failure to understand and successfully implement our clients’ requirements, the domain and country-specific laws and regulations which govern the products and services that we provide, or our failure to deliver services which meet the requirements specified by our clients could result in termination of client contracts, reputational harm and/or imposition of penalties or the payment of damages. This may further damage our business by affecting our ability to compete for new contracts with current and prospective clients. Additionally, we may experience financial losses in contracts which are linked to our clients’ future business outcomes or based on assumptions which are not realized. We may also be subject to loss of clients due to dependence on alliance partners, subcontractors or third-party product vendors. In projects where we own the end-to-end delivery, we may incur penalties on work performed by our alliance partners, subcontractors or third-party product vendors if they do not meet contractual performance thresholds.

Larger projects may involve multiple engagements or stages, and there is a risk that a client may choose not to retain us for subsequent stages or may cancel or delay subsequent planned engagements. Further, we may not be able to sell additional services to existing clients. We may also experience terminations, cancellations or delays as a result of the business or financial condition of our clients or the economy generally, as opposed to factors related to the quality of our services. Such cancellations or delays make it difficult to plan for project resource requirements, and inaccuracies in such resource planning may have a negative impact on our profitability.

We may be subject to litigation and be required to pay damages for deficient services or for violating intellectual property rights.

We may be subject to customer audits on quality of service and required to pay damages or face litigations for losses caused by deficient services. We may be liable to our clients for damages or termination of contract if we are unable to address disruption in services to our clients with adequate business continuity plans. We may also be subject to litigations or damages for violating or misusing our clients’ intellectual property rights or for breaches of third-party intellectual property rights or confidential information (including but not limited to proprietary data and personally identifiable information). Further, our contracts often contain provisions pursuant to which we must indemnify our clients for such third-party breaches of intellectual property pursuant to our contracts. Additionally, any failure in a client’s system could result in a claim for substantial damages against us, regardless of our responsibility for such failure. Although we attempt to limit our contractual liability for consequential damages in rendering our services, we cannot be assured that such limitations on liability will be enforceable in all cases, or that they will otherwise protect us from liability for damages. Such scenarios could require us to pay damages, enter into expensive arrangements or modify our products and services, causing significant damage to our reputation and adversely affecting our results from operations.

Our insurance coverage may not be adequate to protect us against all potential losses to which we may be subject, and this may have a material adverse effect on our business

Our insurance policies cover physical loss or damage to our property and equipment arising from a number of specified risks and certain consequential losses, including business interruption, arising from the occurrence of an insured event under the policies. Under our property and equipment policies, damages and losses caused by certain natural disasters, such as earthquakes, acts of terrorism, floods and windstorms are also covered. We also maintain various other types of insurance including, but not limited to, directors’ and officers’ liability insurance, workmen’s compensation insurance, errors and omissions insurance, cyber insurance and marine insurance. We maintain insurance on property and equipment in

 

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amounts believed to be consistent with industry practices, but we are not fully insured against all such risks. Notwithstanding the insurance coverage that we carry, the occurrence of an event that causes losses in excess of the limits specified in our policies, or losses arising from events not covered by insurance policies, could materially harm our financial condition and future operating results. There can be no assurance that any claims filed, under our insurance policies will be honored fully or timely. Also, our financial condition may be affected to the extent we suffer any loss or damage that is not covered by insurance or which exceeds our insurance coverage. A successful assertion of one or more large claims against us that results in changes to our insurance policies, including premium increases or the imposition of a large deductible or co-insurance requirement, could also adversely affect our revenues and operating results.

If we fail to or are unable to implement and maintain effective internal controls over financial reporting, the accuracy and timeliness of our financial reporting may be adversely affected.

We are subject to reporting obligations under U.S. securities laws. The SEC, as required under Section 404 of the Sarbanes- Oxley Act of 2002, has adopted rules requiring every public company to include a report of management on the effectiveness of such company’s internal control over financial reporting in its annual report. In addition, an independent registered public accounting firm must issue an attestation report on the effectiveness of the company’s internal control over financial reporting.

We recognize that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. If we fail to maintain effective internal control over financial reporting in the future, we and our independent registered public accounting firm may not be able to conclude that we have effective internal control over financial reporting at a reasonable assurance level. This could in turn result in the loss of investor confidence in the reliability of our financial statements. Furthermore, we have incurred and anticipate that we will continue to incur considerable costs and use significant management time and other resources in an effort to comply with Section 404 and other requirements of the Sarbanes-Oxley Act. If we are not able to continue to meet the requirements of Section 404 in a timely manner or with adequate compliance, we might be subject to sanctions or investigation by the SEC, the New York Stock Exchange (the “NYSE”) or other regulatory authorities. Any such action could adversely affect the accuracy and timeliness of our financial reporting.

We may invest in companies for strategic reasons that may not be successful or meet our expectations.

We make non-controlling investments in companies which are important to our business strategy and to complement some of our business initiatives. These may include investments in non-marketable securities of early stage companies that carry a significant degree of risk and may not become liquid for several years from the date of investment. These investments may not generate financial returns or may not yield the desired business outcome. The success of our investment in a company is sometimes dependent on the availability of additional funding on favorable terms or a liquidity event such as an initial public offering. We may record impairment charges in relation to our strategic investments which will have a negative impact on our financial position.

Investments in companies where we do not have majority ownership expose us to decisions made by others. This could impact our ability to align the strategic goals of the companies with our goals and this may impact the returns on our investment. We may also be required to exit such investments at inopportune times or make further investments based on current shareholder agreements. Such further investments may have to be made at a time when the venture is financially struggling and this may erode or dilute its value to our shareholders.

We may engage in future acquisitions that may not be successful or meet our expectations.

We have acquired, and in the future may acquire or make investments in, complementary businesses, technologies, services or products, or enter into strategic partnerships or joint ventures with parties that we believe can provide access to new markets, capabilities or assets. The acquisition of new businesses subjects us to many risks, and we can provide no assurances that any such acquisition will be successful or meet our expectations. If it does not, we may suffer losses, dilute value to shareholders, may not be able to take advantage of appropriate investment opportunities or complete transactions on terms commercially acceptable to us. Changes in competition laws in India and abroad could also impact our acquisition plans by prohibiting potential transactions which could otherwise be beneficial for us.

Despite our due diligence process, we may fail to discover significant issues around an acquired company’s intellectual property, service offerings, customer relationships, employee matters, accounting practices or regulatory compliances. We may also fail to discover liabilities that are not properly disclosed to us or we inadequately assess in our due diligence efforts or liabilities that may arise out of regulatory non-compliance, contractual obligations or breaches. We cannot predict or guarantee that our efforts will be effective or will protect us from liability. If we are unable to get indemnification protection or other contractual protections or relief for any material liabilities associated with our acquisitions or investments, it could harm our operating results.

 

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We may increase our interest expense and leverage if we incur additional debt to pay for an acquisition. Use of cash to pay for acquisitions may limit other potential uses of cash, including stock repurchases and dividend payments.

We may be required to integrate any acquired entities into our framework of internal control over financial reporting and disclosure controls and procedures. Integration of acquired entities could be a time-consuming and expensive process. We could have difficulty in integrating the acquired products, services, solutions or technologies into our operations. We could also have difficulties in assimilating and retaining the key personnel, consolidating and integrating IT infrastructure or operations of the acquired companies.

We may face difficulties in meeting the needs of the acquired company’s customers and partners following completion of the acquisition. We may face litigation or other claims arising out of our acquisitions, including disputes with regard to earn-outs or other closing adjustments. These difficulties could disrupt our ongoing business, distract our management and employees, and increase our expenses.

Goodwill and acquisition related intangibles that we carry on our balance sheet could give rise to significant impairment charges in the future.

The amount of goodwill and intangible assets in our Consolidated Financial Statements has increased significantly in recent years, primarily on account of acquisitions. Goodwill and acquisition related intangibles are subject to impairment review at least annually, which may lead to impairment charges in the future. For example, during the year ended March 31, 2019, for one of our acquisitions, we recorded impairment charges on certain intangible assets as a result of uncertainties around regulatory changes relating to the Affordable Care Act. Any significant impairment charges could have a material adverse effect on our results of operations.

Our business depends on a strong brand, and failing to maintain and enhance our brand would impact our ability to expand our business.

We continue to share the “Wipro” brand with Wipro Enterprises (P) Limited, which was formed following the demerger of the Company’s consumer care and lighting, infrastructure engineering and other non-IT business segments. Our brand may be negatively impacted by a number of factors, including, among others, reputational issues and performance failures, some of which may be outside of our control. Further, if we fail to maintain and enhance the quality of our brand, our business and operating results may be materially and adversely affected. Maintaining and enhancing our brand will depend largely on our ability to remain a technology leader and continue to provide high quality, innovative services and solutions to our customers.

Our revenue depends to a large extent on a limited number of clients, and our revenue could decline if we lose a major client.

We currently derive, and believe that we will continue to derive, a significant portion of our revenue from a limited number of corporate clients. The loss of a major client or a significant reduction in the service performed for a major client could result in a reduction of our revenue. Significant pricing or margin pressure exerted by our largest clients would also adversely affect our operating results. Our largest client accounted for 3.2%, 3.7% and 3.2% of our IT Services revenue for the years ended March 31, 2018, 2019 and 2020, respectively. Our ten largest IT Services clients accounted for approximately 18%, 19.5% and 19.7% of our IT Services revenues for the years ended March 31, 2018, 2019 and 2020, respectively. For the year ended March 31, 2020, we had one customer that accounted for 21.9% of our overall IT Products segment revenue, while our largest ISRE customer and second largest ISRE customer accounted for 15.9% and 11.1%, respectively, of our overall ISRE segment revenue. The volume of work we perform for specific clients may vary from year to year, particularly since we typically are not the exclusive external technology service provider for these clients. Thus, any major client during one year may not provide the same level of revenue in a subsequent year.

There are a number of factors other than our performance that could cause the loss of a client, such as a reduction in our clients’ IT budgets due to macroeconomic factors or otherwise, shifts in corporate priorities and political or economic factors, including bankruptcy and/or liquidation of our large clients. These factors may not be predictable or under our control. We cannot assure you that our large clients will not terminate their arrangements with us or significantly change, reduce or delay the amount of services ordered from us, any of which would reduce our revenue.

Companies in the industries that we serve may also seek to achieve economies of scale and other synergies by combining with or acquiring other companies. If two or more of our current clients merge or consolidate and combine their operations, it may decrease the overall amount of work that we perform for such clients. If one of our current clients merges or consolidates with a company that relies on another provider for its consulting, systems integration, technology or outsourcing services, we may lose work from that client or lose the opportunity to gain additional work. The increased market power of larger companies could also increase pricing and competitive pressures on us.

 

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Our revenue and operating results may be affected by the rate of growth in the use of technology in business and the type and level of technology spending by our clients.

Our business depends, in part, upon continued reliance on the use of technology in business by our clients and prospective clients as well as their customers and suppliers. We have invested, and will continue to invest, in research and development and in initiatives to expand our capabilities or offerings around new technologies. The effort and initiatives may not be successful or could yield sub-optimal results, which would negatively impact our revenues and profitability. In particular, the success of our new service offerings requires continued demand for such services and our ability to meet this demand in a cost-effective manner. In challenging economic environments, prospective clients may reduce or defer their spending on new technologies in order to focus on other priorities or may decide not to engage our services. Also, many companies have already invested substantial resources in their current means of conducting commerce and exchanging information, and they may be reluctant or slow to adopt new approaches that could disrupt existing personnel, processes and infrastructures. If the growth of technology usage in business, or our clients’ spending on such technology, declines, or if we cannot convince our clients or potential clients to embrace new technological solutions, our revenue and operating results could be adversely affected.

Some of our long-term client contracts contain benchmarking and most favored customer provisions which, if triggered, could result in lower contractual revenues and profitability in the future.

Some of our client contracts contain benchmarking and most favored customer provisions. The benchmarking provisions allow a customer in certain circumstances to request a study prepared by an agreed upon third-party comparing our pricing, performance and efficiency gains for delivered contract services against the comparable services of an agreed upon list of other service providers. Based on the results of the benchmark study and depending on the reasons for any unfavorable variance, we may be required to reduce our pricing for future services to be performed for the remainder of the contract term, which could have an adverse impact on our revenues and results. Most favored customer provisions require us to give existing customers updated terms in the event we enter into more favorable agreements with certain other customers, which limits our ability to freely enter into agreements and could have an adverse impact on our revenues and results.

Our work with government clients exposes us to additional risks inherent in the government contracting environment.

Our clients include national, provincial, state and local governmental entities. Our government work carries various risks inherent in the government contracting process, which may affect our operating profitability. These risks include, but are not limited to, the following:

 

   

Government entities often reserve the right to audit our contract costs, including allocated indirect costs, and conduct inquiries and investigations of our business practices with respect to our government contracts. If the client finds that the costs are not chargeable, then we will not be allowed to bill for them or the cost must be refunded to the client if it has already been paid to us. Findings from an audit may also result in prospective adjustments of previously agreed upon rates for our work and may affect our future margins.

 

   

If a government client discovers improper or illegal activities in the course of audits or investigations, we may become subject to various civil and criminal penalties and administrative sanctions, which may include termination of contracts, forfeiture of profits, suspension of payments, fines and suspensions or unilateral debarment from doing business with other agencies of that government. The inherent limitations of internal controls may not prevent or detect all improper or illegal activities, regardless of their adequacy, and therefore we can only mitigate, and not eliminate, this risk.

 

   

Government contracts are often subject to more extensive scrutiny and publicity than contracts with commercial clients. Negative publicity related to our government contracts, regardless of its accuracy, may further damage our business by affecting our ability to compete for new contracts among commercial and governmental entities.

 

   

Political and economic factors such as pending elections, changes in leadership among key governmental decision makers, revisions to governmental tax policies, reduced tax revenues and public health crises, such as COVID-19, can affect the number and terms of new government contracts signed.

 

   

Terms and conditions of government contracts tend to be more onerous and are often more difficult to negotiate than those for commercial contracts.

 

   

Government contracts may not include a cap on direct or consequential damages, which could cause additional risk and expense in these contracts.

 

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If our clients are unable to pay our dues and receivables, our results of operations and cash flows could be adversely affected.

Our business depends on our ability to successfully obtain payments from our clients of the amounts they owe us for work performed. We evaluate the financial condition of our clients and usually bill and collect on relatively short cycles. We maintain provisions against receivables and unbilled services. Actual losses on client balances could differ from those that we currently anticipate and as a result we might need to adjust our provisions. For example, in the year ended March 31, 2018, two of our customers filed for bankruptcy/liquidation, which adversely affected our results for that year. There is no guarantee that we will accurately assess the creditworthiness of our clients. Macroeconomic conditions, such as a potential credit crisis in the global financial system, could also result in financial difficulties for our clients, including limited access to the credit markets, insolvency or bankruptcy. Such conditions could cause clients to delay payment, request modifications of their payment terms, or default on their payment obligations to us, all of which could increase our receivables. Additionally, if we are unable to meet our contractual obligations, we might experience delays in the collection of or be unable to collect our client balances, which may adversely affect our results from operations and cash flows.

Many of our client contracts can be terminated without cause, with little or no notice and without termination charges, which could negatively impact our revenue and profitability.

Our clients typically retain us on a non-exclusive, project-by-project basis. Some of our client contracts, including those that are on a fixed-price, fixed-time frame basis, can be terminated with or without cause, with as little as 15 days’ notice and without termination-related penalties. Most of our contracts with clients are typically limited to discrete projects without any commitment to a specific volume of business or future work. Our business is dependent on the decisions and actions of our clients, and there are a number of factors that might result in the termination of a project or the loss of a client that are outside of our control, including:

 

   

the business or financial condition of our clients or the economy generally;

 

   

a change in strategic priorities, resulting in a reduced level of IT spending;

 

   

a demand for price reductions;

 

   

a change in outsourcing strategy such as moving to client in-house IT departments or to our competitors; and

 

   

consolidation of IT spending by our clients, whether arising out of mergers and acquisitions, or otherwise.

Larger projects may involve multiple engagements or stages, and there is a risk that a client may choose not to retain us for subsequent stages or may cancel or delay subsequent planned engagements. Further, we may not be able to sell additional services to existing clients. Termination of client relationships, particularly relationships with our significant customers, would have a material adverse effect on our business, results from operations and financial condition.

Adverse changes to our relationships with key alliance partners could adversely affect our revenues and results of operations.

We have alliances with companies whose capabilities complement our own. A significant portion of our service offerings are based on technology or software provided by our alliance partners. The priorities and objectives of our alliance partners may differ from ours. As most of our alliance relationships are non-exclusive, our alliance partners are not prohibited from competing with us or aligning more closely with our competitors. In addition, our alliance partners could experience reduced demand for their technology or software, including responses to changes in technology, which could impact related demand for our services. If we do not obtain the expected benefits from our alliance relationships, or if we are unable to enter into new alliances for any reason, we may be less competitive, our ability to offer attractive service offerings to our clients may be negatively affected, and our revenues and results of operations could be adversely affected.

Our dependencies on “open source” software programs and platforms could impose limitations on our ability to commercialize our products and services, require us to re-engineer our products and services, or subject our proprietary software to general release.

Certain products and services we offer to our clients incorporate open source software licensed without warranties, indemnification, or other contractual protections regarding infringement claims, security, upgrades or the quality of the code. Although we monitor our use of open source software to avoid subjecting our products to conditions we do not intend, the terms of many open source licenses have not been interpreted by United States or foreign courts, and there is a risk that these licenses could be construed in a way that could impose unanticipated conditions or restrictions on our ability to commercialize our products and services. There can be no assurance that our processes for controlling our use of open source software in our products and services will be effective. If we are held to have breached the terms of an open source software license, we could be required to seek licenses from third parties to continue offering our products on terms that are not economically feasible, to potentially re-engineer or discontinue the sale of our products or to make generally available, in source code form, our proprietary software if we combine it with open source software in a certain manner, any of which could adversely affect our business, operating results, and financial condition.

 

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The laws of India do not protect intellectual property rights to the same extent as those of the United States, and we may be unsuccessful in protecting our intellectual property rights. Unauthorized use of our intellectual property may result in development of technology, products or services which compete with our products. We may also be subject to third-party claims of intellectual property infringement.

Our intellectual property rights are important to our business. We rely on a combination of patent, copyright and trademark laws, trade secrets, confidentiality procedures and contractual provisions to protect our intellectual property. However, we cannot be certain that the steps we have taken will prevent unauthorized use of our intellectual property. Furthermore, the laws of India do not protect proprietary rights to the same extent as laws in the United States. Therefore, our efforts to protect our intellectual property may not be adequate. Our competitors may independently develop similar technology or duplicate our products or services. Unauthorized parties may infringe upon or misappropriate our products, services or proprietary information.

The misappropriation or duplication of our intellectual property could disrupt our ongoing business, distract our management and employees, reduce our revenue and increase our expenses. The competitive advantage that we derive from our intellectual property may also be diminished or eliminated. We may need to litigate to enforce our intellectual property rights or to determine the validity and scope of the proprietary rights of others. Any such litigation could be time-consuming and expensive. As the number of patents, copyrights and other intellectual property rights in our industry increases, and as the coverage of these rights increases, we believe that companies in our industry will face more frequent infringement claims. Defending against these claims, even if not meritorious, could be expensive and divert our attention and resources from operating our company. Also, there can be no assurance that, as our business expands into new areas, we will be able to independently develop the technology necessary to conduct our business or that we can do so without infringing on the intellectual property rights of others.

Although we believe that our intellectual property rights do not infringe on the intellectual property rights of any other party, infringement claims may be asserted against us in the future. If we become liable to third parties for infringing their intellectual property rights, we could be required to pay a substantial damage award and be forced to develop non-infringing technology, obtain a license or cease selling the applications or products that contain the infringing technology. We may be unable to develop non-infringing technology or to obtain a license on commercially reasonable terms, or at all. Further, we may be required to provide indemnification to clients for third-party breaches of intellectual property pursuant to our contracts with such parties.

Changes in financial reporting standards, management’s use of accounting estimates may affect our operating results and financial position.

To comply with IFRS, management is required to make various estimates, judgments and assumptions. The facts and circumstances on which management bases these estimates, judgments, assumptions, and management’s judgment of the facts and circumstances, may change from time to time and this may result in significant changes in the estimates, with an impact on our assets or income. Current and future accounting pronouncements and other financial reporting standards may adversely affect the financial information we present. We regularly monitor our compliance with all of the financial reporting standards that are applicable to us and any new pronouncements that are relevant to us. Findings of our monitoring activity or new financial reporting standards may require us to change our internal accounting policies and to alter our operational policy so that it reflects new or amended financial reporting standards. We cannot exclude the possibility that this may have a material impact on our assets, income, or cash flows. For a summary of significant accounting policies, refer to Note 3 of the Notes to the Consolidated Financial Statements section.

Our revenues are highly dependent on clients primarily located in the Americas (including the United States) and Europe, as well as on clients concentrated in certain industries; therefore, an economic slowdown or factors that affect the economic health of the United States, Europe or these industries would adversely affect our business.

We derive approximately 57% of our revenue from the Americas (including the United States) and 24% of our revenue from Europe. Our business and financial performance is and will continue to be affected by economic conditions globally. Increased protectionism and the risk of global trade war, resulting in weaker global trade and economic activity could adversely affect our business. If the economy in the Americas or Europe continues to be volatile or uncertain or conditions in the global financial market deteriorate, pricing for our services may become less attractive and our clients located in these geographies may reduce or postpone their technology spending significantly. Reduction in spending on IT services may lower the demand for our services and negatively affect our revenues and profitability.

Further, in June 2016, a referendum was held on the United Kingdom’s membership in the European Union, the outcome of which was a vote in favor of leaving the European Union (commonly referred to as “Brexit”). In March 2017, the United Kingdom subsequently notified the European Union of its intention to withdraw. The withdrawal of the United Kingdom from the European Union took effect as of January 31, 2020, and the United Kingdom and European Union entered into an eleven-month transition period ending on December 31, 2020. During this transition period, the United Kingdom and European Union will negotiate trade agreements that will determine the terms of future trade and tariffs between them.

 

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The effects of Brexit will depend on the trade agreements that the United Kingdom makes with the European Union and other countries to retain access for its goods and services to respective markets. We are unable to predict what the terms of those agreements will be and its effect on our business in the United Kingdom and European Union. Brexit therefore creates an uncertain economic environment in the United Kingdom and potentially across other European Union member states for the foreseeable future, including during the transition period while the final terms of the United Kingdom’s exit from the European Union are being negotiated. Our operations in the United Kingdom and the European Union may be impacted by such uncertainties. Further, Brexit could adversely affect European and worldwide economic or market conditions and could contribute to instability in global financial markets, and the value of the Pound Sterling currency or other currencies, including the Euro. We are exposed to the economic, market and fiscal conditions in the United Kingdom and the European Union and to changes in any of these conditions. Depending on the terms reached under the trade agreements, it is possible that there may be adverse practical and/or operational implications on our business.

Our clients are concentrated in certain key industries. Any significant decrease in the growth of any one of these industries, or widespread changes in any such industry, may reduce or alter the demand for our services and adversely affect our revenue and profitability. For instance, fluctuations in global crude oil prices have significantly impacted the companies operating in the energy industry, impacting revenue and profitability of our Energy, Natural Resources and Utilities industry vertical. Furthermore, some of the industries in which our clients are concentrated, such as the financial services industry, health care industry or the energy and utilities industry, are, or may be, increasingly subject to governmental regulation and intervention. For instance, clients in the financial services sector have been subject to increased regulations following the enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act in the United States. Similarly, clients in the health care industry are subject to additional federal, state and foreign laws and regulations, such as the Affordable Care Act and the Health Care and Education Reconciliation Act of 2010 (the “ACA”). Furthermore, the regulatory and legislative environment surrounding the health care industry is facing uncertainty due to the continuing lack of clarity surrounding the future of the ACA. Increased regulation, changes in existing regulation or increased governmental intervention in the industries in which our clients operate may adversely affect the growth of their respective businesses and therefore negatively impact our revenues.

Wage increases in India may diminish our competitive advantage against companies located in the United States and Europe and may reduce our profit margins.

Our wage costs in India have historically been significantly lower than wage costs in the U.S. and Europe for comparably skilled professionals, and this has been one of our competitive advantages. However, wage increases in India may prevent us from sustaining this competitive advantage and may negatively affect our profit margins. We may need to increase the levels of our employee compensation more rapidly than in the past to retain talent. Unless we are able to continue to increase the efficiency and productivity of our employees over the long term, wage increases may reduce our profit margins. Furthermore, any inability to increase the proportion of employees with less experience, or source talent from other low-cost locations, like Eastern Europe, China or Southeast Asia could also negatively affect our profits.

Our international operations subject us to risks inherent in doing business on an international level, including geopolitical volatilities, which could harm our operating results.

The majority of our software development facilities are in India. Currently, we also have facilities in several countries around the world. As we continue to increase our presence outside India through our strategic development centers worldwide, we are subject to additional risks, including risks related to complying with a wide variety of national and local laws, localization requirements, restrictions on the import and export of certain technologies, data privacy and protection regulations, currency fluctuations, economic and political volatility, pending elections, changes in trade and foreign exchange policies, restrictions on repatriation of funds to India and multiple and possibly overlapping tax structures.

Our current international operations and future initiatives will involve a variety of risks including (i) government trade restrictions, including those which may impose restrictions, including prohibitions, on the exportation, re-exportation, sale, shipment or other transfer of programming, technology, components and/or services to foreign persons and (ii) changes in diplomatic and trade relationships, including new tariffs, trade protections measures, import or export licensing requirements, trade embargoes and other trade barriers. Emerging nationalist trends in countries may also significantly and adversely alter the trade environment. These conditions may add uncertainty to the timing and budget for technology investment decisions by our customers, and may impact our ability to do business in some markets or with some public-sector customers.

We may face competition in other countries from companies that may have more experience with operations in such countries or with international operations in general. We may also face difficulties integrating new facilities in different countries into our existing operations, as well as integrating employees that we hire in different countries into our existing corporate culture. Our international expansion plans may not be successful, and we may not be able to compete effectively in other countries.

 

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Pandemics and public health crises, such as COVID-19, affecting the geographies where our or our customers operations are located can have an adverse impact on our business.

Terrorist attacks and other acts of violence or war have the potential to directly impact our clients. To the extent that such attacks affect or involve the U.S. or Europe, our business may be significantly impacted, as the majority of our revenue is derived from clients located in those regions.

Further, South Asia has from time to time experienced instances of civil unrest and hostilities among neighboring countries. Such activities could disrupt communications, make travel more difficult, and create a greater perception that investments in Indian companies involve a higher degree of risk. This, in turn, could have a material adverse effect on the market for the securities of Indian companies, including our equity shares and our ADSs, and on the market for our services.

The recent COVID-19 global pandemic could harm our business and results of operations.

In January 2020, the World Health Organization (the “WHO”) declared COVID-19 a Public Health Emergency of International Concern. On February 28, 2020, the WHO raised its assessment of the COVID-19 threat from high to very high at a global level due to the continued increase in the number of cases and affected countries, and on March 11, 2020, the WHO characterized COVID-19 as a pandemic. This contagious disease outbreak, which has spread around the world, and any related adverse public health developments, could adversely affect workforces, customers, economies and financial markets globally, potentially leading to an economic downturn. This could decrease technology spending, adversely affect demand for our offerings and impact our business and results of operations.

The conditions caused by the COVID-19 pandemic can affect the rate of customer spending, including through cancellations or ramp-downs of existing projects, increased requests for furloughs, increased requests by customers for price discounts, customers’ decreased ability or willingness to purchase our offerings, delays to prospective customers’ purchasing decisions, adverse impacts on our ability to provide on-site services to our customers or delays to the provisioning of our offerings, including due to travel restrictions imposed by many countries, all of which could adversely affect our future revenues, operating results and overall financial performance. Our operations have also begun to be negatively affected by a range of external factors related to the COVID-19 pandemic that are not within our control. For example, many cities, states, and even countries have imposed or may impose a wide range of restrictions on our employees’ and customers’ physical movements to limit the spread of COVID-19, including business shutdowns. Such restrictions may cause significant disruptions to our operations. As many of our employees are working from home, we may be exposed to additional cyber or ransomware attacks despite having strong cyber security controls in place. If the COVID-19 pandemic has a substantial impact on our employees’, partners’ or customers’ attendance or productivity, our results of operations and overall financial performance may be harmed, and the recoverable value of our assets may be significantly reduced, which may result in impairment loss.

Macroeconomic conditions caused by COVID-19 could also result in financial difficulties for our clients, including limited access to the credit markets, insolvency or bankruptcy. Such conditions could cause clients to delay payment, request modifications of their payment terms, or default on their payment obligations to us, all of which could increase our receivables (including contract assets and unbilled receivables) and negatively impact our liquidity and cash generated from operations. The International Monetary Fund (“IMF”) predicts that the global economy will shrink by 3% in the year 2020. The economic fallout and subsequent recovery will depend on multiple factors, such as the success of containment efforts and rate of recovery from the COVID-19 pandemic, supply chain disruptions, impact of lockdowns, repercussions of any dramatic tightening in global financial market conditions, shifts in consumer behaviour and spending patterns and volatile commodity prices, including oil prices.

The duration and extent of the impact from the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the severity and transmission rate of the virus, the extent and effectiveness of containment actions and the impact of these and other factors on our employees, customers, partners and vendors. If we are not able to respond to and manage the impact of such events effectively, our business will be adversely impacted.

The markets in which we operate are subject to the risks of earthquakes, floods and other natural disasters, the occurrence of which could cause our business to suffer.

Some of the regions that we operate in are prone to earthquakes, hurricanes, tsunamis, flooding and other natural disasters. In the event that any of our business centers are affected by such disasters, as occurred in Chennai in late 2015, we may sustain damage to our operations and properties, suffer significant financial losses and be unable to complete our client engagements in a timely manner, if at all. Further, in the event of a natural disaster, we may also incur costs in redeploying personnel and property. In addition, if any such natural disaster occurs in any of the locations in which our significant clients are located, we face the risk that our clients may incur losses or sustained business interruption which may materially impair their ability to continue their purchase of our products or services. The long-term effects of climate change on the global economy or the IT

 

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industry, in particular, are unclear. A major earthquake, flood or other natural disaster including as a result of climate changes in the locations in which we operate could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Restrictive changes to immigration laws may hamper our growth and cause our revenue to decline.

The success of our business is dependent on our ability to attract and retain talented and experienced professionals and be able to mobilize them around the world to meet our clients’ needs. Immigration laws in the countries we operate in are subject to legislative changes, as well as to variations in the standards of application and enforcement due to political forces and economic conditions. Changes in immigration laws to restrict offshore outsourcing, limit the availability of certain work visas or increase visa fees in the key markets in which we operate may impact our ability to staff projects in a timely manner and negatively affect our profitability.

A few countries have introduced new provisions and standards in immigration law which can impact our ability to provide services in those countries due to restrictive policies and additional costs involved. It is difficult to predict the political and economic events that could affect immigration laws, or the restrictive impact they could have on obtaining or renewing work visas for our technology professionals. Travel restrictions in connection with COVID-19 may also negatively impact our employees’ ability to travel as required to provide services to our clients.

USA

Since a large part of our business centers around the United States, changes to U.S. immigration laws could make it more difficult to obtain the required nonimmigrant work authorizations for our employees that allow us to compete for and provide timely and cost-effective services to our clients in the United States. There have been and will continue to be calls for extensive changes to U.S. immigration laws regarding the admission of highly skilled temporary and permanent workers. There are some legislative proposals which, if passed and signed into law, could add further costs and/or restrictions to some of the high-skilled temporary worker categories. Changes to immigration policies have resulted in higher visa denial rates for U.S. businesses. In turn, our cost of doing business in the United States may increase further, which may discourage some customers from seeking our services. This could have a material and adverse effect on our business, revenues and operating results.

We currently have sufficient personnel with valid nonimmigrant worker visas and are also increasing hiring in the United States to continue services to clients. However, the uncertainty around whether we will continue to be able to obtain adequate number of nonimmigrant worker visas for our onsite employees on the same timeframe as we currently maintain, could affect our ability to be responsive to business needs and cause our revenue to decline.

Our global operations expose us to numerous and sometimes conflicting legal and regulatory requirements. Violation of these regulations could harm our business.

Since we provide services to clients throughout the world, we are subject to numerous, and sometimes conflicting, legal requirements on matters as diverse as import/export controls, content requirements, trade restrictions, tariffs, taxation, sanctions, government affairs, anti-corruption, whistle blowing, internal and disclosure control obligations, data protection and privacy and labor relations and certain regulatory requirements that are specific to our client’s industry. Non-compliance with these regulations in the conduct of our business could result in fines, penalties, criminal sanctions against us or our officers, disgorgement of profits, prohibitions on doing business and adverse impact to our reputation. Gaps in compliance with these regulations in connection with the performance of our obligations to our clients could also result in exposure to monetary damages, fines and/or criminal prosecution, unfavorable publicity, restrictions on our ability to process information and allegations by our clients that we have not performed our contractual obligations. Many countries also seek to regulate the actions that companies take outside of their respective jurisdictions, subjecting us to multiple and sometimes competing legal frameworks in addition to our home country rules. Due to the varying degree of development of the legal systems of the countries in which we operate, local laws might be insufficient to defend us and preserve our rights. We could also be subjected to risks to our reputation and regulatory action on account of any unethical acts by any of our employees, partners or other related individuals.

We have more than 41,000 employees located outside India. We are subject to risks relating to compliance with a variety of national and local laws including multiple tax regimes, labor laws, and employee health, safety, wages and benefits laws. We may, from time to time, be subject to litigation or administrative actions resulting from claims against us by current or former employees individually or as part of class actions, including claims of wrongful terminations, discrimination, misclassification or other violations of labor law or other alleged conduct. We may also, from time to time, be subject to litigation resulting from claims against us by third parties, including claims of breach of non-compete and confidentiality provisions of our employees’ former employment agreements with such third parties or claims of breach by us of their intellectual property rights. Our failure to comply with applicable regulatory requirements could have a material adverse effect on our business, results of operations and financial condition.

 

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Also, regulation and monitoring of the Indian securities markets and the activities of investors, brokers and other participants may differ as compared to that of the United States. The Securities and Exchange Board of India (“SEBI”) has prescribed regulations and guidelines in relation to disclosure requirements, insider dealing and other matters relevant to the Indian securities market. There may, however, be less publicly available information about Indian companies than is regularly made available by public companies in the United States.

Compliance with new and changing corporate governance and public disclosure requirements adds uncertainty to our compliance policies and increases our costs of compliance.

Changing laws, regulations and standards relating to accounting, corporate governance and public disclosure, including the Sarbanes Oxley Act of 2002, new SEC regulations, NYSE rules, Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”), Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015 (“Insider Trading Regulations”), and the Indian Companies Act, 2013 (“Companies Act, 2013”) are creating uncertainty for companies like ours. These new or changed laws, regulations and standards may lack specificity and are subject to varying interpretations. Their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such governance standards. For example, SEBI notified the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018 which prescribe various new concepts and compliance requirements for Indian listed companies. Impact of such regulations may be far-reaching and often untested since they are of recent origin. Introduction of such regulations have added complexity to our corporate compliance regime.

In particular, continuing compliance with Section 404 of the Sarbanes-Oxley Act of 2002 and the related regulations regarding our required assessment of our internal controls over financial reporting requires the commitment of significant financial and managerial resources. With respect to our Form 20-F for the year ended March 31, 2020, our management has performed an assessment of the effectiveness of the internal control over financial reporting. We have determined that the internal controls are effective.

We are committed to maintaining high standards of corporate governance and public disclosure, and our efforts to comply with evolving laws, regulations and standards in this regard have resulted in, and are likely to continue to result in, increased general and administrative expenses and significant management time and attention. In addition, the new laws, regulations and standards regarding corporate governance may make it more difficult for us to obtain or maintain directors’ and officers’ liability insurance. Further, our board members, chief executive officer and chief financial officer could face an increased risk of personal liability in connection with the performance of their duties. As a result, we may face difficulties attracting and retaining qualified board members and executive officers, which could harm our business. In certain instances, the compliance requirements under the SEBI Listing Regulations, Companies Act, 2013, and the rules under the NYSE are more onerous than those under the Sarbanes-Oxley Act of 2002. For example, our Board of Directors is required to state that they have established internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. Additionally, under the SEBI Listing Regulations, the Chief Executive Officer, the Managing Director or a full time director appointed under the Companies Act, 2013 and the Chief Financial Officer are required to certify to the Board that (i) they accept responsibility for establishing and maintaining internal controls for financial reporting, (ii) that they have evaluated the effectiveness of the internal control systems of the company pertaining to financial reporting, and (iii) they have disclosed to the auditors and the Audit Committee any significant changes in internal control over financial reporting during the year, instances of significant fraud of which they have become aware and the involvement therein, if any, of the management or an employee having a significant role in the company’s internal control system over financial reporting, deficiencies in the design or operation of such internal controls, if any, of which they are aware and the steps they have taken or propose to take to rectify these deficiencies.

Furthermore, with respect to material related party transactions, the Company is required to obtain approval from its non-controlling shareholders if the controlling shareholders are related parties. Obtaining the approval of non-controlling shareholders is not guaranteed and may be time consuming, which could affect the Company’s ability to carry out the decisions of the Board of Directors in a timely manner. Additionally, under the Securities and Exchange Board of India (Prohibition of Insider Trading) (Amendment) Regulations, 2018, the Company is required to establish mechanisms for prevention of insider trading. In this regard, with effect from April 1, 2019, the chief executive officer, managing director or such other analogous person of every Indian listed company must put in place an adequate and effective system of internal controls to ensure compliance with the Insider Trading Regulations. The Company’s audit committee is required to review the compliance with the said provisions at least once in each financial year and verify that the systems for internal control are adequate and are operating effectively. If we fail to comply with new or changed laws or regulations and standards or unintentionally disclose unpublished price sensitive information, our business and reputation may be harmed.

 

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We may incur substantial costs for environmental regulatory compliance.

We are subject to various federal, state, local and foreign laws relating to protection of the environment. We may incur substantial fines, civil or criminal sanctions, including fines and sanctions against our directors and officers, or third-party claims for property damage or personal injury if we are held liable under environmental laws and regulations. Our current compliance with environmental laws and regulations is not expected to have a material adverse effect on our financial position, results of operations or competitive position.

Legislation in certain countries in which we operate, including the United States, may restrict companies in those countries from outsourcing work.

Some countries and organizations have expressed concerns about a perceived connection between offshore outsourcing and the loss of jobs domestically. With high domestic unemployment levels in many countries and increasing political and media attention on the outsourcing of services internationally by domestic corporations, there have been concerted efforts in many countries to enact new legislations to restrict offshore outsourcing or impose restrictions on companies that outsource. Recently, in addition to calls for changes to U.S. immigration laws regarding the admission of highly-skilled temporary and permanent workers, restrictive outsourcing legislation has been considered by federal and state authorities in the United States. In the event any of these measures become law, our ability to do business in these jurisdictions could be adversely impacted, which in turn could adversely affect our revenues and operating profitability.

In addition, from time to time, negative experiences associated with offshore outsourcing, such as theft and misappropriation of sensitive client data, have been publicized, including reports involving service providers in India. Our current or prospective clients may elect to perform certain services themselves or may be discouraged from transferring services from onshore to offshore service providers to avoid harmful publicity or any negative perceptions that may be associated with using an offshore service provider. Any slowdown or reversal of existing industry trends towards offshore outsourcing would seriously harm our ability to compete effectively with competitors that provide services from within the countries in which our clients operate.

Further, under the United Kingdom’s Transfer of Undertakings (Protection of Employees) Regulations, 2006, as well as similar regulations in European Union member countries, employees who are dismissed by an outsourcing vendor could seek compensation from their current or new employer. This could adversely impact our customers’ ability to outsource and also result in additional costs due to redundant payment liabilities. Such events could have an adverse impact on our results of operations and our financial position.

We would realize lower tax benefits if the special tax holiday scheme for units set up in Special Economic Zones is substantially modified.

Currently, we benefit from tax incentives under Indian tax laws. We qualify for a deduction from taxable income on profits attributable to our status as a developer of Special Economic Zones (“SEZs”) or from operation of units located in SEZs. The tax deduction for SEZ developers is available for any ten consecutive years out of fifteen years, commencing from the year in which the SEZ is notified. The tax deduction for a unit in an SEZ is equal to 100% of profits from the export of services for the first five years after the commencement of operations in the SEZ, and thereafter is equal to 50% of profits from the export of services for a subsequent period of ten years, subject to meeting specified re-investment conditions and earmarking of specified reserves in the last five years. This tax deduction will terminate if our operations are no longer located in an SEZ, fail to comply with rules required for an SEZ or fail to meet certain conditions prescribed under the Income Tax Act, 1961 of India. These tax benefits of units are conditioned upon our ability to generate positive net foreign exchange within five years of the commencement of our operations in the SEZ. If we fail to generate positive net foreign exchange within five years, or thereafter fail to maintain it, we will be subject to penalties under the Foreign Trade (Development and Regulation) Act, 1992, or the Indian Foreign Trade Act. The maximum penalty that may be imposed is equal to five times the gross value of the goods and services that we purchase with duty exemptions. We were subject to a Minimum Alternate Tax (“MAT”) at a fixed rate of approximately 21.54% until March 31, 2019 on our net profits as adjusted by certain prescribed adjustments. Where any tax is paid under MAT, such tax will be eligible for adjustment against regular income tax liability computed under the Income Tax Act, 1961 of India, for the following fifteen years as MAT credit. Per the provisions of Income Tax Act,1961 any new SEZ which commences operation on or after April 1, 2020, will not be entitled to any special tax exemption under section 10AA of the Income Tax Act, 1961. In the midst of COVID 19, this timeline has been extended to June 30, 2020. Thus, any new SEZ which commences operation after June 30, 2020 will not be entitled to any special tax exemption, which may have the effect of increasing tax outflow in future. Further, if the MAT rate of taxation is increased, our financial results may be adversely affected.

In 2019, the Government of India (the “GoI”) amended the Income Tax Act, 1961 by enacting The Taxation Laws (Amendment) Ordinance, 2019, and has provided an option for companies to pay tax at a lower rate of 22% (plus surcharge and cess) by forgoing all the deductions available under Chapter VI-A and other profit-linked deductions under the Income Tax Act, 1961. This option, if exercised, is irrevocable and the corresponding MAT credit will be lapsed. We have evaluated the option and have decided to continue under the existing regime and not to avail ourselves of the lower tax rate. In the future, if we opt for the lower tax rate, it may lead to an increase in tax outflow and the MAT credit available will be lapsed. Further, there has been a reduction in tax rate under MAT provisions, from 18.5% (plus surcharge and cess) to 15% (plus surcharge and cess).

 

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If the Government of India modifies or introduces new forms of taxes on distribution of profits or changes the basis of application of these taxes, the same could materially affect the returns to our shareholders.

The GoI, through the Finance Act, 2020, has abolished the dividend distribution tax. This will have the effect of reducing our tax burden by shifting the tax burden to shareholders.

Further, provisions of section 115QA of the Income Tax Act, 1961 for buy-back of shares, which were initially applicable only to unlisted companies, have now been extended to buy-back of shares by listed companies through the enactment of Finance (No. 2) Act, 2019. In the future, for every buy-back of shares, we will be liable to pay additional income tax on the distributed income, which will result in additional cash outflow. Currently the rate of tax on buy-back of shares is 20% (plus surcharge and cess).

You may be subject to Indian taxes arising out of capital gains on the sale of the shares.

Under the Finance Act, 2018, gains of more than 1 lakh from sale of shares after April 1, 2018 held over one year will be taxed. Furthermore, any gain realized on the sale of the Shares held for a period of 12 months or less is subject to capital gains tax in India. See Item 10 of this annual report on Form 20-F for further information on the application of capital gains tax in India to our shareholders and ADS holders. Investors are advised to consult their own tax advisers and to carefully consider the potential tax consequences of an investment in shares and ADSs.

We operate in jurisdictions that impose transfer pricing and other tax related regulations on us, and any changes in the regulations or failure to comply could materially and adversely affect our profitability.

We are required to comply with various transfer pricing regulations in India and other countries. Failure to comply with such regulations may impact our effective tax rates and consequently affect our net margins. Additionally, we operate in several countries and our failure to comply with the local tax regime may result in additional taxes, penalties and enforcement actions from local authorities. In the event that we do not properly comply with transfer pricing and tax-related regulations, our profitability may be adversely affected. The Finance Act, 2012 extended the applicability of transfer pricing regulations to domestic transactions entered into with related parties and certain specified transactions. However, the Finance Act, 2017 has omitted the clause which dealt with any expenditure in respect of which payment has been made or is to be made to a person referred to in clause (b) of sub-section (2) of section 40A of the Income Tax Act, 1961.

Section 59A of the Tax Cuts and Jobs Act of 2017 imposes a tax equal to the “base erosion minimum amount” on certain “applicable taxpayers.” This may have an impact on payments made to non-US corporations if they don’t meet the exemption criteria.

Further, Brexit may also adversely affect our tax rates. We are unable to predict the final terms of the trade agreements currently being negotiated between the United Kingdom and European Union will be or their effects on our business in the United Kingdom and European Union. Depending on the terms reached under the trade agreements, it is possible that there may be adverse practical and/or operational implications on our effective tax rates.

Taxation laws are susceptible to frequent changes. The overall tax environment has made it increasingly challenging for multinational corporations to operate with certainty about taxation in many jurisdictions. For example, some countries are unilaterally amending their tax laws to adopt the new guidelines by The Organization for Economic Cooperation and Development. In India, changes in taxation law are announced on an annual basis in February, when the Union Budget is presented. These changes in law, including recent changes in foreign jurisdictions, may affect the accuracy of our estimated tax obligations, or the obligations of holders of our equity shares and ADSs. Significant judgment is required in determining our worldwide provision for income taxes and other tax liabilities. We are regularly under audit by tax authorities and those authorities may not agree with positions taken by us on our tax returns. Although we believe that our estimates are reasonable, there is no assurance that the final determination of tax audits or tax disputes will not be different from what is reflected in our historical income tax provisions and accruals.

Political considerations in the Government of India could delay the liberalization of the Indian economy and adversely affect economic conditions in India in general, which could in return impact our financial results and prospects.

Despite economic liberalization policies, the Indian central and state governments remain a significant part of the Indian economy as producers, consumers and regulators. Although we believe that the process of economic liberalization will continue, the rate of economic liberalization could change, and specific laws and policies affecting technology companies, foreign investment, currency exchange and other matters affecting investment in our securities could change as well. A significant change in India’s economic liberalization and deregulation policies could adversely affect business and economic conditions in India generally and our business in particular.

 

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For instance, in April 2007, the GoI announced a number of changes in its policy relating to SEZs, including specifying a cap on land available for SEZs. The GoI is currently considering making further changes in its SEZ policy. Finance Act, 2017 has prescribed a cut-off date of March 31, 2020 for setting up new SEZs, which has been extended to June 30, 2020 due to the impact of COVID-19. We currently have several facilities operating within SEZs and any adverse change in policy relating to SEZs could affect our profitability.

Indian law limits our ability to raise capital outside India and may limit the ability of others to acquire us, which could prevent us from operating our business or entering into a transaction that is in the best interests of our shareholders.

Indian law constrains our ability to raise capital outside of India through the issuance of equity or convertible debt securities. Generally, any foreign investment in, or an acquisition of, an Indian company under the applicable foreign exchange regulations does not require approval from the Reserve Bank of India (“RBI”) and relevant government authorities in India, subject to compliance of prescribed conditions. The GoI currently does not mandate prior approvals for IT companies such as ours. However, by notification dated April 22, 2020, the GoI has amended its foreign direct investment (“FDI”) policy to state that investment by a non-resident entity of a country which shares a land border with India, or where the beneficial ownership of an investment into India is situated in or is a citizen of any such countries, shall be under the ‘Government Route’, which requires GoI approval prior to investment. Further, in case of transfer of ownership of any existing or future FDI in an entity in India, directly or indirectly, resulting in the beneficial ownership falling within the above-mentioned restriction/purview such subsequent change in beneficial ownership, will also require GoI approval. If we are required to seek the approval of the GoI and the GoI does not approve the proposed investment or implements a limit on the foreign equity ownership of IT companies, our ability to seek and obtain additional equity investment by foreign investors will be limited. In addition, these restrictions, if applied to us, may prevent us from entering into a transaction, such as an acquisition by a non-Indian company, which would otherwise be beneficial for our Company and the holders of our equity shares and ADSs.

Our ability to invest outside India, including acquiring companies organized outside India, depends on the approval of the Government of India and/or the RBI. Our failure to obtain approval from the Government of India for the acquisition of companies organized outside India may restrict our international growth, which could negatively affect our revenue.

The Ministry of Finance of the GoI and/or the RBI must approve our acquisition of any company organized outside of India or grant general or special permission for such acquisition. The RBI permits acquisitions of companies organized outside India by an Indian party without approval, inter alia, in the following circumstances:

 

   

if the transaction consideration is paid in cash, up to 400% of the net worth of the acquiring company as per its latest audited financial statement; or

 

   

if the acquisition is funded with cash from the acquiring company’s existing foreign currency accounts or with cash proceeds from the issue of ADRs, Global Depositary Receipts, External Commercial Borrowings or Foreign Currency Convertible Bonds.

However, any financial commitment exceeding US$1 billion or its equivalent in a financial year would require prior approval of the RBI even if the total financial commitment of the Indian party is within 400% of the net worth as per its latest audited financial statements. Further, our investments in foreign operations may be subject to restrictions imposed by the RBI. We cannot assure you that any necessary approval from the RBI or the Ministry of Finance or any other Government agency can be obtained. Our failure to obtain such approvals from the GoI for acquisitions of/investments in companies organized outside India may restrict our international growth, which could negatively affect our revenue.

It may be difficult for you to enforce any judgment obtained in the United States against us, our directors or executive officers or our affiliates.

We are incorporated under the laws of India and many of our directors and executive officers reside outside the United States. A substantial portion of our assets and the assets of many of these persons are also located outside the United States. As a result, you may be unable to effect service of process upon us outside of India or upon such persons outside their jurisdiction of residence. In addition, you may be unable to enforce against us in courts outside of India, or against these persons outside the jurisdiction of their residence, judgments obtained in courts of the United States, including judgments predicated solely upon the federal securities laws of the United States.

We have been advised by our Indian counsel that the United States and India do not currently have a treaty providing for reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. Therefore, a final judgment for the payment of money rendered by any federal or state court in the United States on civil liability, whether or not predicated solely upon the federal securities laws of

 

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the United States, would not be enforceable in India. However, the party in whose favor such final judgment is rendered may bring a new suit in a competent court in India based on a final judgment that has been obtained in the United States. The suit must be brought in India within three years from the date of the judgment in the same manner as any other suit filed to enforce a civil liability in India. It is unlikely that a court in India would award damages on the same basis as a foreign court if an action is brought in India. Furthermore, it is unlikely that an Indian court would enforce a foreign judgment if it viewed the amount of damages awarded as excessive or inconsistent with Indian practice. A party seeking to enforce a foreign judgment in India is required to obtain approval from the RBI under the Foreign Exchange Management Act, 1999, to execute such a judgment or to repatriate any amount recovered.

Our stock price continues to be volatile.

Our stock price is affected by factors outside our control. A share buyback program could also affect the price of our stock and increase volatility. Such volatility could negatively impact the perceived value and stability of our equity shares and ADSs. Further, the Indian stock exchanges have, in the past, experienced substantial fluctuations in the prices of their listed securities. The Indian stock exchanges, on which our equity shares are listed, including the BSE Limited (“BSE”) and the National Stock Exchange of India Limited (“NSE”), have experienced problems that, if they continue or reoccur, could affect the market price and liquidity of the securities of Indian companies, including our equity shares and ADSs. These problems in the past included temporary exchange closures, broker defaults, settlement delays and strikes by brokers. In addition, the governing bodies of the Indian stock exchanges have from time to time imposed restrictions on trading in certain securities, limitations on price movements and margin requirements. Furthermore, from time to time disputes have occurred between listed companies and stock exchanges and other regulatory bodies, which in some cases may have had a negative effect on market sentiment.

Any adverse change in India’s debt rating or our credit rating by a domestic or international rating agency could negatively impact our business and profitability.

Any adverse revisions to India’s credit ratings for domestic and international debt or our credit rating by domestic or international rating agencies could adversely impact our ability to raise additional financing, as well as the interest rates and other commercial terms at which such additional financing is available. This could have a material adverse effect on our access to debt market, results of operations and financial condition.

There are risks associated with our outstanding and future indebtedness.

There can be no assurance that our business, results of operations and financial condition will not be adversely affected by our incurrence of indebtedness. Our ability to pay interest and repay the principal for our indebtedness is dependent upon our ability to manage our operations and generate sufficient cash flows to service such debt. In addition, the agreements that govern the terms of our indebtedness may contain a number of restrictive covenants imposing significant operating and financial restrictions. In the event that we fail in the future to make any required payment under the agreements governing our indebtedness or if we fail to comply with the financial and operating covenants contained in those agreements, we would be in default with respect to that indebtedness and the lenders could declare such indebtedness to be immediately due and payable, which could have an impact on our results of operations. There can be no assurance that we will be able to manage any of these risks successfully.

Exchange rate fluctuations in various currencies in which we do business could negatively impact our revenue and operating results / net income. Our financial condition and results of operations may be harmed if we do not successfully reduce such risks through the use of derivative financial instruments.

 

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Our IT Services business contributes approximately 96.8% of our revenue. A significant portion of our revenue from this segment is derived from transactions in foreign currencies, including the U.S. Dollar, the United Kingdom Pound Sterling, the Euro, the Canadian Dollar and the Australian Dollar while a large portion of our costs are in Indian Rupees. The exchange rate between the Indian Rupee and foreign currencies has fluctuated significantly in recent years and may continue to fluctuate in the future. As our financial statements are presented in Indian Rupees, such fluctuations could have a material impact on our reported results. Due to these exchange rate fluctuations, there has been an increased demand from our clients that all risks associated with such fluctuations be borne by us. Appreciation of the Indian Rupee against foreign currencies can therefore adversely affect our revenue and competitive position, and can adversely impact our operating results. We generate approximately 37% of our IT Services revenues in non-U.S. Dollar currencies, and the exchange rate fluctuations between these currencies and the U.S. Dollar can affect our revenues and growth, as expressed in U.S. Dollar terms.

A significant portion of our debt is in various foreign currencies. We also undertake hedging strategies to mitigate exposure of exchange rate risk relating to foreign currency borrowings, including entering into interest rate swaps. As mentioned above, the exchange rate between the Indian Rupee and foreign currencies has fluctuated significantly in recent years and will likely continue to fluctuate in the future. If the value of the Indian Rupee declines, the size of our debt obligations and interest expenses in Indian Rupees may increase. This will adversely impact our net income. We also experience other market risks, including changes in the interest rates of the securities that we own. We may use derivative financial instruments to reduce or mitigate these risks where possible. However, if our strategies to reduce market risks are not successful, our financial condition and operating results may be harmed.

There are risks associated with the use of such hedging instruments. While hedging instruments may mitigate our exposure to fluctuations in currency exchange rates to a certain extent, we potentially forego benefits that might result from market fluctuations in currency exposures. These hedging transactions can also result in substantial losses. Such losses could occur under various circumstances, including, without limitation, any circumstances in which a counterparty does not perform its obligations under the applicable hedging arrangement (despite having International Swaps and Derivatives Association agreements in place with each of our hedging counterparties), there are currency fluctuations or the arrangement is imperfect or ineffective. Further, the policies of the RBI may change from time to time which may limit our ability to hedge our foreign currency exposures adequately.

Our defined benefit plan assets are subject to market volatility.

Our employee compensation policies include certain defined benefit plans where it is our obligation to provide agreed benefits to the employees. These obligations are funded through certain plan assets which carry actuarial and investment risks. These risks include adverse salary growth or demographic experience, which can result in an increase in cost of providing these benefits to employees in future. The valuation of plan assets considers an expected return which is based on expectation of the average long-term rate of return on investments of the fund during the estimated term of the obligations. Should we not achieve the expected rate of return on the plan assets or if the plan experiences a decline in the fair value of its assets, we may be required to contribute assets to the plan which could adversely affect our results of operations.

We are exposed to fluctuations in the market values of our investment portfolio.

We maintain an investment portfolio of various holdings, types, and maturities. These investments are subject to general credit, liquidity, market, and interest rate risks. Deterioration of the credit rating of counterparties and in the credit as well as the debt capital markets in general due to economic turmoil could result in volatility of our investment earnings and impairments to our investment portfolio, which could negatively impact our financial condition and net income. Further, fluctuations in the interest rate environment based on changes in the RBI’s monetary policy could affect the interest income and thereby our profitability.

Disruptions in telecommunications and operations infrastructure could harm our service model, which could result in a reduction of our revenue.

A significant element of our business strategy is to continue to leverage and expand our offshore development centers in Bengaluru, Chennai, Hyderabad, Kolkata, Pune, Delhi, Mumbai and other cities in India, as well as near-shore development centers outside of India. We believe that the use of a strategically located network of software development centers provides us with cost advantages, the ability to attract highly skilled personnel from various regions of India and the world, the ability to service clients on a regional and global basis and the ability to provide services to our clients 24 hours a day, seven days a week. Part of our service model is to maintain active voice and data communications between our main office in Bengaluru, our clients’ offices, and our software development and support facilities. Although we maintain redundancy facilities and satellite communications links, any significant loss in our ability to transmit voice and data through satellite and telephone communications could result in a disruption in business, thereby hindering our performance or our ability to complete client projects on time. This, in turn, could lead to a reduction of our revenue.

 

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Risks Related to Investments in Indian Companies and International Operations Generally.

We are incorporated in India, and a substantial portion of our assets and our employees are located in India. Consequently, our financial performance and the market price of our ADSs will be affected by political, social and economic developments affecting India, GoI policies such as taxation and foreign investment policies, GoI currency exchange control and changes in exchange rates and interest rates.

Risks Related to the ADSs

Sale of our equity shares may adversely affect the prices of our equity shares and ADSs.

Sale of substantial amounts of our equity shares in the public market, including sales by insiders, or the perception that such sales may occur, could adversely affect the prevailing market price of our equity shares or our ADSs or our ability to raise capital through an offering of our securities. In the future, we may also sponsor the sale of shares currently held by some of our shareholders, or issue new shares. We can make no prediction as to the timing of any such sales or the effect, if any, that future sales of our equity shares, or the availability of our equity shares for future sale, will have on the market price of our equity shares or ADSs prevailing from time to time.

The GoI has notified implementation of the Depository Receipts Scheme, 2014, which permits liberalized rules for sponsored and unsponsored secondary market issue of depository receipts up to the sectorial cap of foreign investment as per the prescribed regulations. Regulators like the RBI, Ministry of Corporate Affairs (“MCA”), Ministry of Finance and Securities and Exchange Board of India have also issued guidelines and regulations to operationalize the framework for issuance of depository receipts by listed entities. Further amendments and requirements may also be notified from time to time. Once the regulations are fully operationalized, our shares can be freely convertible into depository receipts, which would impact the share price and available float in Indian as well as the price and availability of ADSs on NYSE.

Indian law imposes foreign investment restrictions that limit a holder’s ability to convert equity shares into ADSs, which may cause our ADSs to trade at a premium or discount to the market price of our equity shares.

Under certain circumstances, the RBI must approve the sale of equity shares underlying ADSs by a non-resident of India to a resident of India. The RBI has given general permission to effect sales of existing shares or certain other capital instruments of an Indian company by a resident to a non-resident, subject to certain conditions, including the price at which the shares may be sold. Additionally, except under certain limited circumstances, if an investor seeks to convert the Indian Rupee proceeds from a sale of equity shares in India into foreign currency and then repatriate that foreign currency from India, he or she will have to obtain additional approval from the RBI for each transaction. Required approval from the RBI or any other government agency may not be obtained on terms which are favorable to a non-resident investor or may not be obtained at all.

Pursuant to the provisions of the Companies Act, 2013, where the name of a person is entered in the register of members as a registered owner of shares but such person does not hold the beneficial interest in such shares, both the registered owner and the beneficial owner of such equity shares are required to disclose to the company the nature of their interest, particulars of the person in whose name the shares stand registered in the books of company and other certain details. Investors who exchange ADSs for the underlying equity shares of the company may be subject to the provisions of the Companies Act, 2013 and to the disclosure obligations that may be necessary as pursuant to the Depository Agreement. Any person who fails to comply with beneficial ownership disclosure requirements under Companies Act, 2013 may be liable for a fine of up to 50,000 and where failure is a continuing one, with a further fine up to 1,000 for each day such failure continues. Such restrictions on foreign ownership of the underlying equity shares may cause our ADSs to trade at a premium or discount to the equity shares. Such restrictions may change in the future, including under the Depository Receipt Scheme, 2014, and may affect the trading value of our ADSs relative to our equity shares.

The price of our ADSs and the U.S. Dollar value of any dividends we declare may be negatively affected by fluctuations in the U.S. Dollar to Indian Rupee exchange rate.

Our ADSs trade on the NYSE in U.S. Dollars. Since the equity shares underlying the ADSs are listed in India on the BSE and the NSE and trade in Indian Rupees, the value of the ADSs may be affected by exchange rate fluctuations between the U.S. Dollar and the Indian Rupee. In addition, dividends declared, if any, are denominated in Indian Rupees, and therefore the value of the dividends received by the holders of ADSs in U.S. Dollars will be affected by exchange rate fluctuations. If the Indian Rupee depreciates against the U.S. Dollar, the price at which our ADSs trade and the value of the U.S. Dollar equivalent of any dividend will decrease accordingly.

 

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Our ADSs have historically traded at a significant premium to the trading prices of our underlying equity shares on Indian stock exchanges, but may not continue to do so in the future.

Historically, our ADSs have traded at a premium to the trading prices of our underlying equity shares on Indian stock exchanges due to the relatively small portion of our market capitalization represented by ADSs, restrictions imposed by Indian law on the conversion of equity shares into ADSs, and the potential preference of some investors to trade securities listed on U.S. exchanges. The completion of any additional secondary ADS offering will increase the number of our outstanding ADSs. Further, the restrictions on the issuance of ADSs imposed by Indian law may be relaxed in the future, including by the Depository Receipts Scheme, 2014. Over a period of time, investor preferences may also change. Therefore, the historical premium of our ADSs as compared to the trading prices of our underlying equity shares on Indian stock exchanges may be reduced or eliminated.

Negative media coverage and public scrutiny may adversely affect the prices of our equity shares and ADSs.

Media coverage, including social media coverage such as blogs, of our business practices, employees, policies and actions has increased dramatically over the past several years. Any negative media coverage, regardless of the accuracy of such reporting, may have an initial adverse impact on our reputation and investor confidence, resulting in a decline in the share price of our equity shares and our ADSs.

Holders of ADSs are subject to the Securities and Exchange Board of India’s Takeover Code with respect to their acquisitions of ADSs or the underlying equity shares, and this may impose requirements on such holders with respect to disclosure and offers to purchase additional ADSs or equity shares.

The Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the “Takeover Code”) is applicable to publicly listed Indian companies such as Wipro and to any person acquiring our equity shares or voting rights in our company, including ADSs.

Under the Takeover Code, persons who acquire 5% or more of the shares of a company are required, within two working days of such acquisition, to disclose the aggregate shareholding and voting rights in the company to the company and to the stock exchanges on which the shares of the company are listed.

Additionally, holders of 5% or more of the shares or voting rights of a company who acquire or dispose of shares representing 2% or more of the shares or voting rights of the company must disclose, within two working days of such transaction their revised shareholding to the company and to the stock exchanges on which the shares of the company are listed. This disclosure is required even if the transaction is a sale which results in the holder’s ownership falling below 5%. The Takeover Code may also impose conditions that discourage a potential acquirer, which could prevent an acquisition of our company in a transaction that could be beneficial for our equity holders.

An investor in our ADSs may not be able to exercise preemptive rights for additional shares and may thereby suffer dilution of his or her equity interest in us.

Under the Companies Act, 2013, a company incorporated in India must offer its holders of equity shares preemptive rights to subscribe and pay for a proportionate number of shares to maintain their existing ownership percentages prior to the issuance of any new equity shares, unless such preemptive rights have been waived by three-fourths of the shares voting on the resolution to waive such rights. Holders of ADSs may be unable to exercise preemptive rights for the equity shares underlying ADSs unless a registration statement under the Securities Act is effective with respect to such rights or an exemption from the registration requirements of the Securities Act is available. We are not obligated to prepare and file such a registration statement, and our decision to do so will depend on the costs and potential liabilities associated with any such registration statement, as well as the perceived benefits of enabling the holders of ADSs to exercise their preemptive rights, and any other factors we consider appropriate at the time. No assurance can be given that we would file a registration statement under these circumstances. If we issue any such securities in the future, such securities may be issued to the Depositary, which may sell such securities for the benefit of the holders of the ADSs. There can be no assurance as to the value, if any, the Depositary would receive upon the sale of such securities. To the extent that holders of ADSs are unable to exercise preemptive rights granted in respect of the equity shares represented by their ADSs, their proportional interests in the Company would be diluted.

ADS holders may be restricted in their ability to exercise voting and other rights.

At our request, the Depositary will mail to you any notice of shareholders’ meeting received from us along with information explaining how to instruct the Depositary to exercise the voting rights of the securities represented by ADSs. If the Depositary receives voting instructions from you prior to such shareholders’ meeting, relating to matters that have been forwarded to you, it will endeavor to vote the securities represented by your

 

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ADSs in accordance with such voting instructions. However, the ability of the Depositary to carry out voting instructions may be limited by practical and legal limitations and the terms of the securities on deposit. We cannot assure that you will receive voting materials in time to enable you to return voting instructions to the Depositary in a timely manner. Securities for which no voting instructions have been received will not be voted. There may be other communications, notices or offerings that we only make to holders of our equity shares, which will not be forwarded to holders of ADSs. Accordingly, you may not be able to participate in all offerings, transactions or votes that are made available to holders of our equity shares including share buyback programs in which the Company buys back equity shares. Because ADS holders may not directly participate in the share buyback program, a notice of such program must be mailed to all ADS holders in advance of the program in order to give the ADS holders who want to participate the opportunity to convert their ADSs into equity shares.

We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequence to U.S. holders.

Based on the current price of our ADSs and the composition of our income and assets, we do not believe that we are a Passive Foreign Investment Company (“PFIC”) for U.S. federal income tax purposes for our current taxable year ended March 31, 2020. However, a separate determination must be made after the close of each taxable year as to whether we are a PFIC. We cannot assure you that we will not be a PFIC for any future taxable year. If we were treated as a PFIC for any taxable year during which a U.S. holder held an equity share or an ADS, certain adverse U.S. federal income tax consequences could apply to the U.S. holder. See “Taxation—Material United States Federal Tax Consequences—Passive Foreign Investment Company.”

 

Item 4.

Information on the Company

Company Overview

Wipro Limited is a leading global information technology (“IT”), consulting and business process services company. We harness the power of cognitive computing, hyper-automation, robotics, cloud, analytics and emerging technologies to help our clients adapt to the digital world and make them successful.

A company recognized globally for its comprehensive portfolio of services, strong commitment to sustainability and good corporate citizenship, we have over 175,000 dedicated employees serving clients across six continents. Together, we discover ideas and connect the dots to build a better and a bold new future.

History and Development of the Company

Wipro was incorporated on December 29, 1945, as Western India Vegetable Products Limited under the Indian Companies Act, VII of 1913, which is now superseded by the Companies Act, 2013. Today, Wipro is a public limited company deemed to be registered under the Companies Act 2013, and is registered with the Registrar of Companies, Bengaluru, Karnataka, India as Company No. 20800. In 1946, we held our initial public offering in India of our equity shares. In October 2000, Wipro raised capital in the initial U.S. public offering of ADSs that were listed on the New York Stock Exchange (“NYSE”). We are listed on the NSE and BSE in India and Wipro’s ADSs are listed on the NYSE. Wipro is a constituent of the Nifty and the NYSE TMT Indices. Our registered office is in Bengaluru, India. The senior management operates from local offices in key regions of operations such as North America, Continental Europe, the United Kingdom, Australia, Africa, Latin America and Asia as well as from Bengaluru, India.

We began business as a vegetable oil manufacturer in 1945 in Amalner, Maharashtra, India and later expanded into manufacturing soaps and other consumer care products. During the late 1970s and early 1980s, under the leadership of Azim H Premji, the company further expanded into the IT industry in India. We began selling personal computers in India in 1985. In the 1990s, the company leveraged its hardware expertise and began offering software services to clients across the world. During the 2000s, our IT business scaled significantly by acquiring new clients, scaling relationship with existing customers and acquiring capabilities in emerging technologies, assets in focus markets and local talent in new geographies. In 2013, we demerged our non-IT business segments to focus solely on our IT business.

Over the last few years, we have transformed our portfolio of services such as digital, cloud, engineering and cyber security by investing in new technologies organically as well as through acquisitions. Our range of services includes digital strategy, customer-centric design, consulting, infrastructure services, business process services, research and development, cloud, mobility and advanced analytics and product engineering. We offer our customers a variety of commercial models including time and material, fixed price, capacity based, pay-per-use, as-a-service and outcome based models. We offer all of these services and models globally by leveraging our proprietary products, platforms, partnerships and solutions, including state of the art automation technologies such as our proprietary cognitive intelligence tool, Wipro HOLMES Artificial Intelligence Platform (“Wipro HOLMESTM”).

 

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In May 2017, we unveiled our contemporary new brand identity and logo. The new logo represents the deep connectedness between people, ideas, communities and the environment. We believe the synergy among these various elements is what drives transformation at Wipro. Our brand promises to bring a pioneering, entrepreneurial, innovative spirit to solve complex business problems for our customers.

The Spirit of Wipro resonates with our new identity. It is the indivisible synthesis of four values:

 

   

Be passionate about clients’ success;

 

   

Treat each person with respect;

 

   

Be global and responsible; and

 

   

Have unyielding integrity in everything we do.

Our business is comprised of the IT Services, IT Products and ISRE segments.

The ISRE segment consists of IT services offerings to ISRE Customers. During the year ended March 31, 2019, we carved out ISRE as a separate segment from our global IT Services business. We made this decision because we changed our strategy for providing services to ISRE Customers. Historically, projects in our ISRE business have been primarily SI projects that have complex deliverables and, compared to our IT Services segment, longer working capital cycles and different downstream processes, including billing and collections. Most ISRE deals come in the form of a tender process, with little room to negotiate the terms and conditions. We have pivoted our ISRE strategy to focus more on consulting and digital engagements and to be selective in bidding for SI projects with long working capital cycles.

For the fiscal year ended March 31, 2020, the IT Services segment generated 96.8% of our revenue and 101.9% of our operating income. For the same period, the IT Products segment generated 1.8% of revenue and (0.3%) of operating income and ISRE services segment generated 1.4% of our revenue and (1.7%) of our operating income. Reconciling Items constitute 0.1% of our operating income. (Refer to Note 34 of the Notes to Consolidated Financial Statements).

We organize our customer-facing functions of sales, marketing and business development into teams that focus primarily on industry verticals and service offerings, enabling us to deliver services to customers based on deep domain insight. Our customer-facing functions in markets such as the United States, Latin America, Continental Europe, the United Kingdom, India, the Middle East and Africa are predominantly locally staffed.

Ethisphere Institute, the global leader in defining and advancing the standards of ethical business practices, recognized Wipro as the World’s Most Ethical Company for the ninth successive year in 2020. Further, Wipro has been recognized as a member of the global Dow Jones Sustainability Index for the tenth year in succession.

There has not been any indication of any public takeover offers by third parties in respect of the Company’s shares or by the Company in respect of other companies’ shares during the last and current fiscal years.

Wipro Limited’s registered office is located at Doddakannelli, Sarjapur Road, Bengaluru, Karnataka 560 035, and the telephone number of the registered office is +91-80-28440011. Our website is http://www.wipro.com. The name and address of Wipro’s registered agent in the United States is CT Corporation System, located at 28 Liberty Street, New York, New York 10005. The SEC maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system.

Capital Expenditures and Divestitures

Acquisitions (“M&A”)

In the last three fiscal years, we have completed several mergers and acquisitions, including the acquisitions of:

 

   

International TechneGroup Incorporated (“ITI”), a global digital engineering and manufacturing solutions company and a world leader in Computer Aided Design (“CAD”) and Product Lifecycle Management (“PLM”) interoperability software services;

 

   

Rational Interaction, Inc., a full-service digital customer experience (“CX”) solutions firm that brings the strategic capabilities of a consultancy together with the creative and digital prowess of an agency;

 

   

Cooper Software Inc., an award-winning design and business strategy consultancy, which expands our digital reach in North America and adding capabilities in professional design education; and

 

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InfoSERVER S.A., an IT services provider providing custom application development and software deployment services in the Brazilian market.

Divestitures

In the last three fiscal years, we have completed the divestiture of:

 

   

Workday business and Cornerstone OnDemand business to Alight Solutions LLC (“Alight”). This divestment will further strengthen our partnership with Alight. In addition, we have maintained our partnership with Workday and will continue to offer Workday application maintenance services, testing and integration services to Wipro’s client base; and

 

   

Hosted data center services business, to Ensono Holdings, LLC (“Ensono”), a leading hybrid IT services provider. This divestment will help us accelerate investments in the digital space. At the same time, Wipro remains committed to serving its hosted data center customers and the market through its business partnership with Ensono.

Additionally, during the year ended March 31, 2020, we sold our remaining 11% equity holding in Wipro Airport IT Services Limited (“WAISL”), which was a joint venture between Wipro Limited and Delhi International Airport Limited, to Antariksh Softtech Private Limited. Consequently, the joint venture agreement was terminated.

Please see Note 7 of the Notes to the Consolidated Financial Statements for additional information regarding our acquisitions and Note 26 of the Notes to the Consolidated Financial Statements for additional information about our divestitures.

Capital Expenditure

We incurred total cash outflow of, 21,870 million, 22,781 million and 23,497 million during the fiscal years ended March 31, 2018, 2019 and 2020, respectively. We incurred these capital expenditures primarily on new software development facilities in India and investments in IT assets. As of March 31, 2020, we had contractual commitments of 14,011 million related to capital expenditures on construction or expansion of software development Cloud Enterprise Platforms to be funded largely through cash generated from operations, existing investible surplus in the form of cash and cash equivalents, short-term investments and other external financing sources.

Buy-back of equity shares

During the year ended March 31, 2020, we completed the buyback of 323,076,923 equity shares at a price of 325 ($4.31) per equity share, as approved by the Board of Directors on April 16, 2019 and by our shareholders by resolution, dated June 1, 2019, through postal ballot and electronic voting. The buyback resulted in a total cash outflow of 105,000 million ($1,393 million). As a result of the buyback, our share capital has been reduced by 646 million ($8.57 million).

Industry Overview

IT Services

Global IT service providers offer a range of end–to-end software development, digital services, IT business solutions, research and development services, technology infrastructure services, business process services, consulting and related support functions. According to the Strategic Review 2020 published by NASSCOM (the “NASSCOM Report”), IT export revenues from India grew by 8.1% to an estimated $147 billion in fiscal year 2020. India’s global IT industry grew by 7.7% to reach $191 billion during the year ended March 31, 2020. According to the NASSCOM Report, “Digital” continues to drive growth (more than 50% of growth in fiscal year 2020) and now contributes $51 billion to the overall IT industry in India. Technologies such as industrial automation, robotics, cloud, Internet of Things (“IoT”), augmented reality (“AR”)/virtual reality (“VR”) and blockchain continue to fuel growth.

Growth in core traditional services revenues are expected to be moderate, whereas digital technology is continuing to gain prominence due to increased technology adoption by governments and businesses upgrading platforms, products and solutions to enhance the consumer experience. The markets we serve continue to undergo rapid changes due to the pace of development in technology, innovation in business models and changes in clients’ sourcing strategies. Digital business has changed the nature of demand for IT services. Big data and analytics, cloud computing, cybersecurity and advanced technologies such as artificial intelligence (“AI”), machine learning (“ML”), IoT, robotics, and 3D printing are profoundly impacting enterprise, government and end consumer segments by enabling new business opportunities across sectors.

 

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The markets we serve are undergoing a massive disruption due to the outbreak of COVID-19. The situation caused by the COVID-19 pandemic continues to evolve and the effects on the markets we serve remain uncertain. The outlook for the markets we serve going forward will depend, in addition to other factors, on how COVID-19 continues to affect the global economy. Please see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Trend Information” in Item 5 for more information on the effects of COVID-19 on our business.

IT Products

The key components of the hardware industry are servers, desktops, notebooks and tablet computers, storage devices, peripherals, printers and networking equipment. According to the NASSCOM Report, - the domestic market in India for hardware was estimated to be $16 billion in fiscal year 2020. The emergence of cloud computing technologies is negatively affecting the demand for IT products such as servers.

ISRE

In the government sector, spending on IT and IT services is expected to grow much faster in the coming years given the focus on “Digital India” initiative by the GoI. Digital India is a flagship program of the GoI with a vision to transform India into a digitally empowered society and knowledge economy. Some of the key initiatives by GoI include Smart City Projects, Aadhar, GSTN, internet infrastructure (Wifi-hotspots), and financial inclusion initiatives such as mobile-banking, e-wallets, digital payments and lending and eKYC, among others. The GoI is also driving large scale transformation by adopting cloud technologies and a mobile-first approach.

In response to COVID-19, the GoI is now prioritizing investments to fight disease prevention, for outbreak management and to create an infrastructure for early detection, tracking and effective response management. Emerging technologies such as geographic information systems, big data analytics, artificial intelligence, machine learning, blockchain, facial recognition, image analytics, drone-based surveillance and IoT enablement will be used to achieve zero touch operations and enhanced service delivery. Most of the GoI processes and working environments, which otherwise would have taken longer to adopt, will now undergo rapid digital transformation. We, therefore, see opportunities around digitization, business process management, ERP, cloud adoption, among other things. However, there could be delays in the GoI decision making processes for long-term transformation initiatives.

Business Overview

We are a global technology services firm, with employees across over 55 countries and serving enterprise clients across various industries. We provide our clients with competitive advantages by applying various emerging technologies and ensuring cyber resilience and cyber assurance. We work with our clients not only to enable their digital future, but also to drive hyper efficiencies across their technology infrastructure, applications and core operations, enabling them to achieve cost leadership in their businesses.

We are recognized by our clients for our ability to bring in “an integrated perspective”, or our ability to bring together broad and deep technology and domain expertise, our ability to draw learnings and apply insights from one company or sector to another and our ability to provide end-to-end services. Our clients value our consistent excellence in execution and our ability to proactively incorporate relevant innovation.

Our IT Services segment provides a range of IT and IT-enabled services which include digital strategy advisory, customer-centric design, technology consulting, IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, global infrastructure services, analytics services, business process services, research and development and hardware and software design to leading enterprises worldwide.

Our IT Products segment provides a range of third-party IT products, which allows us to offer comprehensive IT system integration services. These products include computing, platforms and storage, networking solutions, enterprise information security and software products, including databases and operating systems. We provide IT products as a complement to our IT services offerings rather than sell standalone IT products, and our focus continues to be on consulting and digital engagements, with a more selective approach in bidding for SI engagements.

Our ISRE segment consists of IT Services offerings to organizations owned or controlled by the GoI and/or any Indian State Governments. Our ISRE strategy focuses on consulting and digital engagements, and we are selective in bidding for SI projects with long working capital cycles.

 

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Our Business Strategy

Our strategy is about driving a “Digital first” approach through four foundational pillars: Business Transformation, Modernization, Connected Intelligence and Trust. As part of this approach, we are prioritizing and investing significantly to drive growth in key strategic fields such as digital, cloud, cybersecurity and industrial and engineering services through our “Big Bet” program, under which we prioritize investments in certain high potential growth areas. For example, our “Big Bet” in each of digital and cloud is at the heart of our Business Transformation and Modernization pillars, while our “Big Bet” in industrial and engineering services is central to our Connected Intelligence pillar and our “Big Bet” in cybersecurity is central to our Trust pillar. Talent and Delivery Models, IPs and Platforms, and Open Innovation are the underlying strategies that support the four pillars.

Recent Developments

We anticipate that our “Digital first” strategy will be particularly relevant as we believe the following consumer and industry trends, driven by the response to the COVID-19 pandemic, will reshape the way businesses and organizations operate. They are:

 

   

Accelerate to Digital – The COVID-19 pandemic has precipitated the shift to online/Digital business models globally, across industries and markets, such as Digital only banks and platform-based business models across industries including banking and asset management. Ecosystem collaboration will become a key element of business strategy, and will be driven by the need to optimize for time, cost and de-risking imperatives.

 

   

Ways of Working – We anticipate a long-term impact on established ways of operations, including a redefinition of the core compared to non-core workforce and use of community/gig models, in the following ways:

 

  a.

Work done ‘anywhere by anyone’. Virtual, remote, community-based and distributed work models such as work from home/remote working will become mainstream, enabled by remote working and collaborative technologies.

 

  b.

We believe that in response to the COVID-19 pandemic, mainstream adoption of the community work force and crowdsourced and community models (private, public and hybrid) will accelerate.

 

   

Adaptable, Agile and Resilient Enterprise –Enterprises will need to evaluate their technology stack to allow them to operate with flexibility and agility, and work with partners who can respond and adjust quickly to changing circumstances.

 

   

Automation and AutonomousSocial distancing will become a key design principle element from an operating model standpoint across businesses and will be a key factor that will accelerate adoption of automation, autonomous and low or no human touch or contactless ways of working.

 

   

Safe EnterpriseFocusing on employee health and safety, enterprise health and risk management. Given large scale disruptions in supply chains globally, we anticipate that organizations will invest in decentralizing and nearshoring supply chains in the future and reduce dependency on a few countries.

Enterprises will increasingly require partners, such as Wipro, who are able to bring capabilities that span across consultancy, design, engineering, systems integration and operations to enable them to achieve the accelerated digital transformation. The transformation can only be effective if delivered in the context of the relevant industry or domain, hence it is critical to us that we provide strong domain expertise along with “Digital.”

Our vision is to earn our clients’ trust and maximize value of their businesses by helping them in their journey to ‘re-invent’ their business and operating models with our “Digital first” approach and best in class execution.

Business Transformation

Business Transformation is the first of our four pillars. It is about redefining customer experiences and changing business and operating models through a Design and Consulting-led approach. We deliver value to our customers under this pillar through our capabilities in Consulting, Industry Domain and Strategic Design, scaled through acquisitions of companies such as Designit and Cooper. Examples include:

 

   

Acceleration of e-commerce, implementing operating models to re-imagine supply chains to be resilient and low contact, automated front offices, automated manufacturing back office (supply chain solutions, HOLMESTM) and agile planning, among other things.

 

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Virtual and community work models leveraging our solutions, such as Talent as a Service (“TaaS”) through Topcoder; agile, hybrid cloud-based, modular scale-out VDI solutions; software-defined networking in a wide area network (“SD-WAN”).

Our acquisition of Rational Interaction, Inc., a full-service digital CX company, will help us scale our offerings for Chief Marketing Officers, by connecting Rational Interaction, Inc.’s ability to map and orchestrate the customer journey with our ability to design and build experiences at a global scale.

Modernization

Modernization, the second of our four pillars, is about taking an integrated cloud-first and automation-first approach across applications, infrastructure and data to modernize the IT landscape, and leverages our cloud studios, Wipro HOLMESTM, new ways of working, Application Programming Interface (“API”) and microservices.

We work with clients to help them drive resilience and adaptability through modernization and automation. Our strategy is to leverage our assets, like cloud studios across various geographies, which provide services such as cloud assessment, cloud migration (Lift and Shift), cloud native and DevOps, among others.

Wipro HOLMESTM helps enterprises hyper-automate processes and offload specific cognitive tasks to the AI platform to gain cost efficiencies, agility and enhanced user experience. Wipro HOLMESTM helps businesses adopt a hybrid mode of operation (i.e., pairing automation and human effort), which is achieved through a combination of virtual agents, predictive systems, cognitive process automation, visual computing applications, knowledge virtualization and AI reasoning.

We also offer automation advisory services to help clients in their journey of AI/automation through designing automation roadmaps and setting up Digital Centers of Excellence for automation initiatives. In addition to the Wipro HOLMESTM platform, we are building a collaboration ecosystem for automation, working with partners such as Robotics Process Automation providers (e.g., Automation Anywhere, Inc.), start-ups (e.g., Avaamo, Inc. and Arago, GmbH) and established partners (e.g., IBM, Amazon.com, Inc., Google LLC, Microsoft Corporation, SAP SE, Oracle Corporation and ServiceNow, Inc.).

For our API and microservices, we have significantly scaled our consulting talent pool and solutions, which includes our Digital Modernization platform.

Connected Intelligence

Connected Intelligence, the third of our four pillars, focuses on driving outcomes through our market leading platforms such as Wipro HOLMES, Data Discovery Platform, and use-case based AI solutions. Our “connected” capabilities and solutions leverage technologies such as 5G and IoT and are deployed across industries to deliver innovations in areas such as autonomous systems and Industry 4.0.

We continue to invest in scaling end-to-end capabilities across sensors, gateways, connectivity, platforms, analytics, machine learning (“ML”) and artificial intelligence to drive transformation in a hyper-connected world. We are scaling assets and capabilities in emerging areas such as IoT, 5G, and autonomous systems.

Trust

Trust, the fourth pillar, addresses the changing security, privacy, ways of working (virtual, remote and distributed) and regulatory landscape, driven by ubiquitous technology. We use a consulting-led approach in areas such as cyber security, enterprise risk management, data privacy and control assurance. We have leveraged cognitive automation, e.g., automated incident detection and response, to drive security and are building assets such as our cyber defense assurance platform (“CDAP”) and working with security ecosystem partners and governing bodies, such as Cloud Security Alliance and Wipro Ventures Portfolio.

Key enablers underlying our strategy

Our delivery model that enables a virtual, agile, distributed, intelligent and automated enterprise-based on the fundamental principles of distributed, no-shore, agile workforces and a cloud-first approach. Our delivery model enables flexibility anywhere by anyone and will leverage the community model through Topcoder. The model is predicated on seamless connectivity with seamless end-point security, access from anywhere and real-time collaboration in every workflow.

 

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Focus on Talent

Our Talent strategy is predicated on scaling global, diverse, local and distributed talent, including scaling p/X-shaped talent, product managers, scrum masters and full stack engineers with a product-centric mindset with creative talent to deliver innovation with impact.

Products, Platforms and Solutions

Underlying our strategy is our focused execution approach and investment rigor. We have a robust product and platform portfolio of cross-industry and industry-specific platforms and products. For example, we have solutions and platforms which have increased relevance during the COVID-19 pandemic, such as Virtuadesk (virtual desktop), cloud studios that enable secure and effective cloud migration, our Topcoder platform enabling TaaS, Wipro HOLMESTM solutions for remote working and drug discovery, as well as our cyber defense platform. We are also scaling and building industry platforms and solutions that are delivered in an as-a-service construct. Examples of our domain and industry intellectual property (“IP”) are Netoxygen in our Banking, Financial Services and Insurance business unit and Medicare Advantage in our Health Business Unit.

Open Innovation

Open Innovation is about engaging with the “external innovation” ecosystem to tap leading-edge innovation and disruptive technologies to bring the best solutions to our clients. It is about tapping the global innovation network through vehicles such as Wipro Ventures, Research Partnerships and Horizon Program, crowdsourcing models, such as Topcoder and M&A.

 

   

Wipro Ventures: The strategic investment arm of Wipro, Wipro Ventures invests in early- to mid-stage enterprise software startups. Wipro Ventures was launched as a $100 million Fund in early 2015. In February 2020, Wipro Ventures received an additional allocation of $150 million for Wipro Ventures Fund II. As of March 31, 2020, Wipro Ventures has active investments in and partnered with 14 startups in the following areas – AI (Avaamo, Inc., Vicarious FPC, Inc.), Business Commerce (Tradeshift, Inc.), Cybersecurity (IntSights Cyber Intelligence Ltd., Vectra Networks, Inc. CyCognito, CloudKnox), Data Management (Incorta), Industrial IoT (Altizon Systems Private Ltd.), Fraud and Risk Mitigation, Testing Automation (Headspin, Inc., Tricentis GmbH, Sealights) and Cloud Infrastructure (CloudGenix, Moogsoft). In addition to direct investments in emerging startups, Wipro Ventures has invested in five enterprise-focused venture funds: B Capital, TLV Partners, Work-Bench Ventures, Glilot Capital Partners and Boldstart Ventures.

 

   

Research Partnerships: Collaboration with academic institutions and associations in the United States, Europe, Israel and India in the fields of computer and electrical engineering to promote innovative technology research and capability.

 

   

Horizon Program: The goal of the Horizon Program is to drive organic incubation in emerging areas covering products, platforms, solutions and capabilities. In order to achieve this objective, we are investing in key areas such as AI, robotics, software-defined everything, autonomous vehicle, connected cars, digital twins, cybersecurity, Industry 4.0 and industry solutions such as cargo management. During the year ended March 31, 2020, we funded 12 projects as part of this program.

 

   

Crowdsourcing (Topcoder): A community and crowdsourcing platform with over one million developers, designers, data scientists and testers. Topcoder provides focused enterprise offerings around AI/ML and analytics, digital experience (“DX”), Quality as a Service (“QaaS”), workforce transformation, TaaS and hybrid (certified) communities. We are also using the Topcoder Hybrid Crowd Platform to scale and engage in-house talent pools in emerging technologies such as Full Stack, DevOps, AI/ML, Cloud, Analytics and other Digital skills with our internal TopGear hybrid community. It also acts as a structured learning path for accounts providing hands-on experience across more than 200 skills. We are creating a pool of Challenge Architects, Topcoder Co-pilots and Reviewers to expand the percentage of work delivered through crowdsourcing.

 

   

Partner Ecosystem: We have a dedicated unit to drive and deepen our partner ecosystem and to drive creation of new markets and solutions, expand in key verticals and geographies, drive innovation in our offerings and drive go-to-market outcomes. We have subdivided the partner ecosystem into the following categories:

 

  a.

Strategic Partners: Multiple product lines with significant business volume and potential.

 

  b.

Growth Partners: Single practice alliances.

 

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  c.

Niche Partners: Niche products with differentiated solutions.

 

   

M&A: Acquisitions are key enablers for us and drive our capability to build industry domain, focus on key strategic areas, strengthen our presence in emerging technology areas, including Digital, and increase market footprint in newer markets. We focus on opportunities where we can further develop our domain expertise, specific skill sets and our global delivery model to maximize service and product enhancements and create higher margins. We also evaluate business units to determine if divestitures would maximize our focus on key priorities.

Operating Segment Overview

Our business comprises of the IT Services, IT Products and ISRE segments. The ISRE segment consists of IT services offerings to ISRE Customers. Our revenues for the last three fiscal years by business segment are as follows:

 

     Year ended March 31,  
     2018      2019      2020  
     ( in millions)  

IT Services

     517,716        568,253        594,041  

IT Products

     17,998        12,312        11,010  

ISRE

     10,694        8,544        8,400  

Reconciling items

     (49      (49      (50
  

 

 

    

 

 

    

 

 

 
     546,359        589,060        613,401  

Our revenues for the last three fiscal years by geographic areas are as follows:

 

     Year ended March 31,  
     2018      2019      2020  
     ( in millions)  

India

     43,099        30,999        30,158  

Americas

     283,515        325,432        352,319  

Europe

     138,597        147,074        144,876  

Rest of the world

     81,148        85,555        86,048  
  

 

 

    

 

 

    

 

 

 
     546,359        589,060        613,401  

Additionally, we provide our IT Services segment revenue and results by industry verticals. Our industry verticals are subject to change and may vary depending on industry trends. Please see Note 34 of the Notes to Consolidated Financial Statements for additional information regarding our segments and IT Services verticals.

IT Services Offerings

We are a leading provider of IT services to enterprises across the globe. We provide a range of services, which include digital strategy advisory, customer-centric design, technology consulting, IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, global infrastructure services, business process services, cloud, mobility and analytics services, research and development and hardware and software design. We offer these services globally leveraging our products, platforms and solutions through a team of over 175,000 employees using our global delivery model. Our key service offerings are outlined below:

 

   

Application Services

 

   

Digital: Wipro Digital, the digital unit of Wipro, has worked to establish itself as the go-to partner for companies seeking to leverage modern technologies to attract, engage and retain customers. Enterprises have embraced digital transformation as core to their business, transforming their business models and technology platforms, while investing in innovations to fuel their future products, services and success.

Wipro Digital was launched with an objective to help clients operate at the intersection of strategy, design and engineering. Clients continue to recognize our ability to help them transform from the inside out as well as from the outside in. This objective is more relevant today than ever, as enterprises seek to build agility into their business so they can find success amid fast-changing and uncertain times.

 

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We are enabling our clients to expand their definition of agility from customer responsiveness to financial and talent agility. Our Design and Data-led Agile approach helps clients identify, prioritize and invest in promising programs by sensing and responding to market success. Our ‘Agile Anywhere’ delivery model supports the talent model that clients increasingly seek. This model enables us to deliver services from distributed locations with visibility and high productivity. This model integrates with Topcoder, the world’s largest crowdsourcing community, to provide talent solutions at a global scale to our clients.

Our end-to-end offerings can be categorized into five themes: Product Strategy and Design, IT Operating Model Transformation, Digital CMO, Intelligent Processes, and High-Performance Software Engineering. These areas account for a large part of our clients’ investment and attention, and we are able to deliver value in these areas cohesively from a single unit, Wipro Digital.

Cloud services are one of the biggest change catalysts and a common thread across digital initiatives for our clients. During the past year, we embraced this trend. Through Wipro Digital, we created a seamless transformation and digitization partner for clients by combining our existing capabilities in design, strategy, and engineering with Application Services expertise in cloud, modernization and application management services.

Intelligent processes for customers and employees, enabled by advanced artificial intelligence, are a second change catalyst. We have integrated the use of Wipro HOLMESTM for Business with our Intelligent Process Automation consulting and engineering practices to offer business function-specific solutions powered by advanced AI.

Wipro Digital is also well positioned to help customers navigate uncertainty and transform business environments. The importance of technology and digitization in enabling individuals and companies in their work has never been greater. Our capabilities and thought leadership are designed to help companies minimize business disruptions while considering their employees’ well-being. Applicable across various industries, Wipro Digital is focused on four critical aspects of business continuity to help enterprises react, recover and retain their organizational agility. These four key areas are: managing the employee and workforce experience, leveraging digital technologies, optimizing and reimagining IT, and increasing organizational resilience.

 

   

Cloud Enterprise Platforms (“CEP”): Digital transformation, at its core, involves application of digital technologies to reimagine businesses and their models by fundamentally changing how value is generated by the enterprise (Digital Ox), and how value is delivered to the consumer (Digital Cx). Enterprise applications provide a strong IT backbone to organizations. Many of these organizations are grappling with technical debt from legacy systems that are unable to scale and support the agility needed by modern businesses.

Wipro has a rich set of customers with whom we have been engaged for several years, gaining profound knowledge of their domains and processes. This presents a unique opportunity for CEP to drive the “digital flip” of their enterprise applications and enable the digital transformation of their businesses.

CEP is comprised of five units: SAP, Oracle, Salesforce/Appirio Cloud Services, Microsoft Dynamics and Process Transformation and Growth.

The SAP and Oracle units each offer end-to-end services for SAP and Oracle stack both on-premises and on cloud platforms, towards application modernization and digital transformation. In SAP services, we are increasing focus on SAP S/4HANA, SAP Leonardo, cloud applications and platform migration. For Oracle services, we are increasing focus on Oracle cloud and industry solutions.

In the Process Transformation and Growth Practices unit, the Process Transformation group provides advisory services to transform clients’ business processes such as Record-to-Report, Order-to-Cash, Procure-to-Pay and Hire-to-Retire. The Growth Practices group helps customers adopt SaaS based solutions across growing cloud platforms such as Infor, ServiceNow, Zuora, Coupa, iCertis and Kinaxis, among others.

CEP focuses on driving application transformation with contextual solutions for our customers from front office to back office by combining consulting, design and development, continuous testing and integration, automation and operational excellence across all industries.

 

   

Cloud and Infrastructure Services (“CIS”): CIS is an end-to-end cloud and IT infrastructure services provider that helps global clients accelerate their digital journey. Our offerings include public and hybrid cloud/modern datacenter solutions, software-defined, DevOps and micro-services, Digital workplace services, ‘connected intelligence’ services including Digital intent-aware network, IoT and 5G across advisory and consulting, transformation and system integration, business continuity services, testing and managed services. Through industry recognized IPs, assets and accelerators such as BoundaryLess Enterprise (BLE), Wipro Virtuadesk

 

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(VDI), CloudStudio, Wipro Smart i-Connect (IOT), WANFreedom (SD-WAN), Wipro HOLMES (intelligent automation), AppAnywhere and FluidIT, our investment in IP, a comprehensive partner ecosystem and our skills in emerging technologies like software-defined everything, opensource, DevOps and IoT ensure that we are a one-stop shop for all cloud and IT infrastructure needs.

 

   

Industrial and Engineering Services (“IES”): IES is the driver of our engineering services portfolio and facilitates more than 375 clients across multiple industries and/or verticals by providing a platform to innovate and engineer the products, platforms and technologies at scale. This platform of services offerings, called “EngineeringNXT”, combines the maturity of engineering processes, the passion for latest technology and the access to a diverse ecosystem to deliver value to customers at various stages of the product or platform life cycle.

Over the years, IES has created value with our engineering services offerings for numerous multinational corporations by engineering innovative customer experiences, personalizing products and technologies for new markets, integrating next-generation technologies, facilitating faster time to market and ensuring global product compliance. Today, with more than 400 patents, IES continues to deliver these services by leveraging its innovative solutions, engineering processes and delivery excellence across the spectrum, covering connectivity (wireless technologies), Cloud and Data Platforms, Systems Design, very-large-scale integration (“VLSI”), next generation software development and testing, electronic data system (“EDS”), PLM, IoT and Industry 4.0.

 

   

Data, Analytics and AI: As a preferred partner for our customers’ data and insights transformations, we help them in their journey to transform into intelligent enterprises by automating decision making, powered by insights and driven by rich datasets. Wipro leverages AI, ML, advanced analytics, big data and information management capabilities to deliver measurable business outcomes across customers’ journey from data to decisions, focusing on:

 

   

Insights transformation – Transforming legacy decision-making processes into modern, elastic and AI and ML driven, insights-centric capabilities that enable smarter processes. This ensures that our clients get pertinent insights in real-time to the right decision-makers to fuel innovation, productivity and investment, as their organizations become intelligent enterprises.

 

   

Data transformation – Helping clients adopt modern data platforms, processes and methods in on-premises, cloud and hybrid ecosystems to support analytics, AI and ML workloads through a set of themes that brings transformative change to the data landscape.

 

   

Cybersecurity and Risk Services (“CRS”): CRS enables next generation global enterprises to enhance their business resilience through an intelligent and integrated risk approach that has modernizing security at its core. CRS enables the customers to define their cyber strategy and the cybersecurity needs, envisaging best practices across people, process and technology. Leveraging a large pool of experienced security professionals and a global delivery model that leverages our Cyber Defense Centers, we execute implementation projects and deliver managed and hosted services backed by our Cyber Defense Platform. Our unique top-down risk-based approach delivers innovative security platforms for better scalability, improved cost efficiency and greater agility.

 

   

Digital Operations and Platforms (“DO&P”): Wipro is a leader in providing next generation technology-led business process services to global enterprises. Our mission is to drive superior customer experience and maximize returns by bringing down operating costs and improving efficiency, quality and productivity. In an era of heightened competition, we help drive faster benefit realization and competitive advantage. We manage operations across all industries. Our process excellence and domain expertise helps us reimagine, redesign, standardize and transform business processes to maximize returns. This, combined with our enterprise operations transformation, has successfully helped clients leverage and deliver benefits from robotics process automation (“RPA”), AI, analytics and other emerging technologies. Some of our leading offerings are:

 

   

Digital Customer Experience: Our analytics powered customer service platform that resolves low complexity interactions via AI chatbots. Complex calls are directed to our subject matter experts with high first call resolution. We also leverage AR and VR in customer care.

 

   

Supply Chain Management: RPA and AI automate our end-to-end order management platform for more than 15 million annual transactions we currently process.

 

   

Finance and Accounting: We manage end-to-end finance and accounting services for global clients, delivering benefits through smart operations.

 

   

Marketing-as-a-Service : We manage marketing operations to cover both above and below the line marketing operations across design, content management, social media marketing, analytics, and more.

 

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Trust and Safety: We help companies with online presences monitor, police and prevent fraudulent behavior.

IT Services Clients

We service clients from a broad array of industry sectors. Several of our clients engage our services across multiple service offerings. We seek to increase business with our existing clients by expanding the type and range of services we can provide to them. The table below sets forth the number of our client project engagements as measured by revenues.

 

     Number of clients in  

Per client revenue (US$)*

   Year ended
March 31,
2018
     Year ended
March 31,
2019
     Year ended
March 31,
2020
 

1-3 million

     238        232        233  

3-5 million

     89        77        81  

5-50 million

     229        221        220  

50-100 million

     31        31        25  

> 100 million

     8        10        15  
  

 

 

    

 

 

    

 

 

 

Total > 1 million

     595        571        574  

 

*

Note: During the year ended March 31, 2019, we carved out ISRE as a separate segment from our global IT Services business. The Company is now organized into three operating segments: IT Services, IT Products and ISRE. Comparative information has been restated to give effect to these changes.

The largest client of our IT Services business accounted for 3.2%, 3.7% and 3.2% of revenues from the IT Services business as a whole for the years ended March 31, 2018, 2019 and 2020. The five largest clients of our IT Services business accounted for 11.4%, 12.7% and 12.8% of our total IT Services revenues for the years ended March 31, 2018, 2019 and 2020, respectively.

IT Services Sales and Marketing:

We sell and market our IT services through our direct sales force. Our customer facing functions are predominantly locally staffed in markets such as the U.S., Latin America, continental Europe, U.K., India, the Middle East and Africa. Our sales efforts are complemented by our marketing team, which assists in brand building and other corporate and field-level marketing efforts.

Sales: We believe that the customer always comes first. We believe we can achieve higher levels of client sales and client satisfaction by structuring ourselves based on the following key elements:

 

   

Client Relationship: We have designated global client partners that have primary responsibility for the client relationship, providing single-person accountability and single-person sales responsibility.

 

   

Industry Focus: Our sales teams are dedicated to a specific industry segment and often have significant experience and training in their domain and industry.

 

   

Proactive Solutions: We have a consulting-led approach to sales where our sales teams provide proactive solutions to clients and prospective clients rather than only respond to requests for proposals.

 

   

Geographic Focus: Our sales teams are dedicated to a specific country or region to increase our knowledge of the local business culture, anticipate prospective and existing client needs and increase our market penetration.

In a program we call “OneVoice,” we are enabling our sales teams to sell our Digital services to ensure that we are digital partners for our key customers. We seek to position ourselves as a strategic solutions provider that has the resources and capabilities to provide a comprehensive range of IT services.

Marketing: In May 2017, in keeping up with contemporary changes in industry, we unveiled our new brand identity. The new brand focuses on how Wipro is transforming its capabilities, offerings, and ways of working to cater to the transforming IT services business.

Our marketing organization complements our sales teams by:

 

   

Building on our brand as a global leader in consulting and IT services;

 

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Positioning our brand with clients as a thought leader and a solution provider that utilizes innovative techniques to solve difficult as well as day-to-day problems; and

 

   

Participating in industry events which drive sales by showcasing our services, products and strategic alliances.

IT Services Competition

The market for IT services is competitive and rapidly changing. Our competitors in this market include global consulting firms and IT services companies as well as local and niche services providers.

The following factors differentiate us from our competition:

 

  1.

The comprehensive and integrated suite of IT solutions, including digital strategy advisory, customer-centric design, technology consulting, IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, global infrastructure services, cloud, mobility and analytics services, business process services, research and development and hardware and software design.

 

  2.

Crowdsourcing (Topcoder): A community and crowdsourcing platform with of over one million developers, designers, data scientists and testers. Topcoder provides focused enterprise offerings around AI/ML and analytics, DX, QaaS, workforce transformation, TaaS and hybrid (certified) communities.

 

  3.

Wipro Digital’s integrated propositions in customer mapping and interaction, seamless integration and data science and insight differentiate its approach with customer journey engineering.

 

  4.

Our organizational culture of innovation and our early start in deploying cutting edge platforms and technologies that drive hyper-automation and achieve industrialization of service delivery, such as Wipro HOLMESTM.

 

  5.

Our investments in developing IP across products, platforms, frameworks, solutions, components, accelerators, tools and apps that enable us to provide standardized solutions to our customers and obtain enormous time-to-market advantage.

 

  6.

Our decades of experience in serving in the IT business, proven track record of delivery excellence and satisfied customers who recommend our services to other corporations.

 

  7.

Our ability to provide an entire range of research and development services from concept to product realization.

 

  8.

Our global delivery model, that leverages our global, regional and local near-shore development centers and collaborative technologies to help us better serve our clients in this modern technology era.

 

  9.

Our ability to access, attract and retain highly skilled personnel across key markets.

 

  10.

Our emphasis on engaging the culture of our new age acquisitions and integrating these technologies with our executional experience and service offerings to maximize synergies for our clients.

 

  11.

Our ability to offer opportunities to work with cutting edge technologies and focus on training is a critical differentiator to the quality of our manpower.

 

  12.

The Wipro brand that is recognized globally for its comprehensive portfolio of services, a practitioner’s approach to delivering innovation and an organization-wide commitment to sustainability.

 

  13.

Our commitment to the highest levels of corporate governance.

IT Services Industry Verticals

For the year ended March 31, 2020, our IT Services business is organized into the following seven industry verticals:

 

  1.

Banking, Financial Services and Insurance

 

  2.

Health Business Unit

 

  3.

Consumer Business Unit

 

  4.

Energy, Natural Resources and Utilities

 

  5.

Manufacturing

 

  6.

Technology

 

  7.

Communications

 

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Our IT Services business is organized into seven industry verticals:

 

   

Banking, Financial Services and Insurance (“BFSI”): The BFSI business unit serves over 100 clients globally across Retail Banking, Investment Banking, Capital Markets, Wealth Management and Insurance. We have been instrumental in delivering success to our clients by aligning with their business priorities; we have done this by leveraging state-of-the-art technology and process transformation solutions, digital capabilities, service design innovation, domain expertise, IP and integrated offerings, end-to-end consulting services, adoption of “new ways of working”, and an ongoing focus on delivery excellence. We also harness the power of cognitive computing, hyper-automation, robotics, cloud, analytics, and emerging technologies, to help our clients adapt to the digital world.

 

   

Health Business Unit (“Health BU”): Health BU is focused on creating superior experiences, efficiency and outcomes across the healthcare continuum. Wipro’s innovation ecosystem integrates the best in technology, strategy, and design and is the perfect partner to enterprises working to deliver better patient outcomes. Shifting the focus from process-first to people-first, we are working to reshape healthcare and life sciences around human-shaped experiences.

 

   

Consumer Business Unit (“CBU”): CBU offers a full array of innovative solutions and services to cater to the entire value chain where the consumer is at the core, through a blend of domain knowledge, technology expertise and delivery excellence. We offer an integrated environment that allows organizations to model, optimize, forecast, budget, execute, manage and measure product, and customer performance across the globe. Our domain specialists work with customers to provide strong consumer-centric insights and project execution skills that maximize value for our customers’ technology investments across retail and distribution, consumer packaged goods, transportation, travel and hospitality, media and education, the new age segment and the public sector.

 

   

Energy, Natural Resources and Utilities (“ENU”): Our in-depth understanding of the energy sector has equipped us to help oil and gas, utilities and mining customers to transform their assets, consumers, workforce and businesses by adopting digital technologies. We actively partner with customers to help them navigate the transition to digital. Building on this experience and capability, we have expanded our customer base to smart infrastructure industries, such as airports, engineering, facilities, real estate management and construction. Analysts have recognized the ENU business unit as an industry leader and major player for delivering great customer and digital experiences in critical industry domain areas.

 

   

Manufacturing (“MFG”): Wipro’s MFG business unit caters to manufacturing companies across the industry segments of aerospace and defense, automotive, industrial and process manufacturing. By coupling our digital and extensive domain expertise, we help our customers transform their business processes across product design, supply chain, and aftermarket services to achieve their digital transformation objectives. We have leveraged our network of partners and academia, to develop IP, platforms and industry-focused solutions. Our after-market solutions and services are helping manufacturing customers capture additional market share by adopting new business models. Our ongoing investments in emerging technologies like autonomous systems and robotics, Industry 4.0, aftermarket, industrial IoT, augmented reality and virtual reality are helping customers create new business solutions and create new revenue models.

 

   

Technology (“TECH”): Companies across the high-tech value chain; from the silicon providers to software companies, are serviced by Wipro’s TECH business unit. Our extensive customer portfolio includes marquee companies in semiconductors, compute and storage, networking and edge, peripherals, consumer electronics, software products and gaming. We help our customers transition to new business models by helping them build digital products and solutions, digitize their operations, enable their digital marketing and servitization strategies, and transform their business model to an “As a Service” model. With extensive focus on 5G, IOT, Analytics, AI, Edge and cloud native based solutions we bring together an ecosystem of expertise to build IP, platforms and domain/industry-focused solutions that help our customers reach their business goals. Our deep domain knowledge, wide range of service offerings, investments and capabilities in cybersecurity, cloud, open source and next generation engineering services and solutions has positioned us as a top integrated hardware and software research and engineering service provider.

 

   

Communications (“COMM”): Wipro has been enabling the digital transformation journey of Communications Service Providers (“CSPs”) across the globe as they transform to become Digital Service Providers. Our digital business solutions are tailored for CSPs customer context, with capabilities in technologies such as 5G, cloud, software-defined networking and network functions virtualization, AI, IoT, blockchain, cybersecurity and a digital workplace in order to focus on new ways of working. We enable the convergence of network, IT and business processes across the entire customer lifecycle. Our investments in new-age start-ups through Wipro Ventures, along with a comprehensive partner ecosystem are enabling CSPs globally to create services that enable new revenue opportunities, build business agility and reduce their time to market in Business-to-Consumer and Business-to-Business environments. Our focus on continuous improvement, alignment to industry standards, investments in the technology solutions of tomorrow, especially as we gear up for the 5G revolution, deliver proven business value to global CSP customers.

 

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IT Products

We provide IT products as a complement to our IT services offerings rather than sell standalone IT products.

IT Products Customers

We provide our offerings to enterprises in all major industries, primarily in the India market, including government, defense, IT and IT-enabled services, telecommunications, manufacturing, utilities, education and financial services sectors. We have a diverse range of customers. For the year ended March 31, 2020, we had one customer that accounted for 21.9% of our overall IT Products segment revenue.

IT Products Sales and Marketing

We are valued-added resellers of third-party enterprise products through our direct sales force. Our sales teams are organized by industry vertical. Our global client partners receive support from our corporate marketing team to assist in brand building and other corporate level marketing efforts for various market segments.

IT Products Competition

Our competitors in the IT Products market include global system integrators as well as local and niche services providers operating in specific geographies like India. One of the major challenges we encounter is margin pressure due to competitive pricing. Achieving mindshare and market share in a crowded market place requires differentiated strategies on pricing, branding, delivery and products design. In the system integration market, we believe we are favorably positioned based on our brand, quality leadership, expertise in target markets and our ability to create customer loyalty by delivering value to our customers. The following factors differentiate us from our competition:

 

  1.

Our decades of experience in serving in the IT business, proven track record of delivery excellence and satisfied customers who recommend our services to other corporations.

 

  2.

Our deep understanding of the market especially in the India

 

  3.

Our trusted ability to provide impartial advice on selection of products.

 

  4.

The Wipro brand that is recognized for serving the Indian market of over seventy years.

 

  5.

Our commitment to environmental sustainability as well as deep engagement with communities.

ISRE

The ISRE segment consists of IT Services offerings to departments or ministries of the GoI and/or the Indian State Governments, as well as to corporate entities where more than 51% of the paid-up capital is held by the GoI or any Indian State Government, either individually or jointly (i.e., a “Public Sector Undertaking”). In certain cases, corporate entities which are held by the Central / State Government (more than 51%), in turn hold more than 51% stake of paid-up capital in other entities (i.e., a controlling stake), such other entities are also classified as an ISRE.

We have pivoted our ISRE strategy to focus more on consulting and digital engagements and to be selective in bidding for SI projects with long working capital cycles.

We will be leveraging our strong practices in areas such as taxation and e-governance, oil and gas and utilities, along with our strong partner system, to work with Indian government entities, Public Sector Undertakings and other large companies classified as ISREs. For BFSI projects in our ISRE segment, we aim to replicate our successes in areas such as core banking transformation, and consulting.

ISRE Customers

We have customers across the GoI, Indian State Governments and in industry segments such as BFSI and ENU in the form of corporate entities where more than 51% of the paid-up capital is held by the Central and/or State governments of India. We work with multiple ISRE customers and our top two ISRE customers contributed approximately 27% of our ISRE revenues for the year ended March 31, 2020. Our largest ISRE customer and second largest ISRE customer accounted for 15.9% and 11.1%, respectively, of our overall ISRE segment revenue for the year ended March 31, 2020.

 

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ISRE Sales and Marketing

Our ISRE business unit will focus on the unique customer requirements and will create a “Go To Market” (“GTM”) approach that will address the needs of the present as well as future.

ISRE Competition

In the ISRE sector, our competition comes from both local and global IT services companies, including large global consulting firms. For the GoI segment, several small companies have entered the market as disruptors, with most of these small companies focused on penetration strategy.

The following factors differentiate us from our competition:

 

  1.

Our deep technology knowledge and domain expertise specifically in BFSI and ENU.

 

  2.

Our strong partnership with key alliance partners including hardware and software partners.

 

  3.

Significant experience in successfully delivering key marquee programs and strong referenceability across the ISRE sector.

Intellectual Property

We believe that IP is increasingly a strong driver of business competitiveness and profits, especially in a knowledge intensive economy. Our IP portfolio is key to our strategy to drive non-linearity, and we believe that our IP will differentiate our products and services, introduce new benefits, reduce costs and improve products and services quality. We rely on a combination of patent, copyright, trademark and design laws, trade secrets, confidentiality procedures and contractual provisions to protect our IP.

We have invested in developing IP across products, platforms, frameworks, solutions, components, accelerators, tools and apps. This IP development enables us to provide standardized solutions to our customers and obtain significant time-to-market advantage over the general preference for customized solutions which entail higher cost and longer timelines. Using our IP, we are able to offer innovative commercial models in delivering services.

As of March 31, 2020, we have 741 registered patents in various countries. We have filed 255 patents during the year ended March 31, 2020 and currently have approximately 1,560 patent applications pending registration in various jurisdictions across the world.

As of March 31, 2020, we held 365 registered trademarks including registered community trademarks in India, Japan, the United States, Malaysia and over 70 other countries. Over 60 trademark applications are pending for registration in various jurisdictions across the world.

We require employees, independent contractors and, whenever possible, vendors to enter into confidentiality agreements upon the commencement of their relationships with us. These confidentiality agreements generally provide that any confidential or proprietary information being developed by us or on our behalf be kept confidential. These agreements also provide that any confidential or proprietary information disclosed to third parties in the course of our business be kept confidential by such third parties. However, our clients usually own the IP in the software we develop for them.

India is compliant with all World Trade Organization requirements with respect to IP protection which means that India meets the international mandatory and statutory requirements regarding the protection of IP rights. Our competitors may independently develop similar technology or duplicate our products and/or services. Unauthorized parties may infringe upon or misappropriate our products, services or proprietary information. We are entitled to use all provisions of law to prevent infringement and to seek suitable compensation for any such infringement.

While we invest resources in developing, maintaining and protecting our IP, we deeply respect the IP held by our customers, vendors and other business partners.

Effect of Government Regulation on our Business

Regulation of our business by governments across the world affects our business in several ways. Our registered office is in India and we are subject to the regulations notified by the GoI. We benefit from certain tax incentives promulgated by the GoI, including the export of IT services from SEZs. As a result of this incentive, our operations have been subject to relatively lower Indian tax liabilities.

 

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Indian laws also place additional requirements on our business, including that we are generally required to obtain approval under various legislations from the RBI, Securities and Exchange Board of India and/or the Ministry of Finance of the GoI to acquire companies organized outside India, and we are generally required, subject to some exceptions, to obtain approval from relevant authorities in India in order to raise capital outside India or conduct other activities. We may also be required to obtain the approval of the Indian stock exchanges and/or the Securities and Exchange Board of India to take certain actions, such as the acquisition of, or merger with, another company. The conversion of our equity shares into ADSs is governed by guidelines issued by the RBI.

We are also subject to several legislative provisions relating to environmental protection, pollution control, essential commodities and operation of manufacturing facilities.

Please see the section titled “Risk Factors” in Item 3, Key Information, as well as the section titled “Additional Information” in Item 10, for more information on the effects of governmental regulation on our business.

Organizational Structure

Refer to Note 32 of the Notes to Consolidated Financial Statements for information on organizational structure of the Company.

Property, Plant and Equipment

Our registered office is located at Doddakannelli, Sarjapur Road, Bengaluru, India. The offices are approximately 0.30 million square feet. We have approximately 1.34 million square feet of land adjoining our corporate offices for future expansion plans. In addition, we have approximately 23.80 million square feet of land for future expansion plans. We have 17.94 million square feet of owned software development facilities in India and over 6.16 million square feet of leased software development premises in India.

We have approximately 2.80 million square feet of leased offices, software development and data center facilities in countries outside India, which includes approximately 1.24 million square feet at various locations in the Americas. We have approximately 0.13 million square feet of owned offices, software development and data center facilities in countries outside India.

We incurred total cash outflow of 21,870 million, 22,781 million and 23,497 million on capital expenditure during the fiscal years ended March 31, 2018, 2019 and 2020, respectively. These capital expenditures were primarily incurred on new software development facilities in India and investments in IT assets.

We have 72 sales/marketing offices, data centers, development and training centers in the Americas. In addition, we have 163 similar facilities located in the following regions: Europe, Middle East, Africa and Asia-Pacific region (other than India).

We have two manufacturing sites, which are approximately 0.3 million square feet and approximately 0.1 million square feet of land, respectively. We own one of these facilities, located in Pondicherry, India. We have taken the other facility located in Kotdwar, India on a long-term lease.

Our software development facilities are equipped with a world class technology infrastructure that includes networked workstations, servers, data communication links, captive power generators and other plants and machinery. We believe that our facilities are optimally utilized and that appropriate expansion plans are being developed and undertaken to meet our future growth.

Material Plans to Construct, Expand and Improve Facilities

As of March 31, 2020, we had contractual commitments of 14,001 million primarily related to capital expenditures on construction or expansion of software development facilities. These expenditures are expected to be funded largely through cash generated from operations, existing investible surplus in the form of cash and cash equivalents, short-term investments and other external financing sources.

Legal Proceedings

In the ordinary course of business, we may from time to time become involved in certain legal proceedings. As of the date of this Annual Report on Form 20-F, we are not party to any pending legal proceedings whose resolution could have a material impact on our financial position. We also receive tax assessment orders in ordinary course of business from various tax authorities. Please see the description of our tax proceedings before various tax authorities under the section titled “Income Taxes” under Item 5 of this Annual Report.

 

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Item 4A.

Unresolved Staff Comments

None.

 

Item 5.

Operating and Financial Review and Prospects

Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the notes thereto included in Item 8 of this Annual Report on Form 20-F. This section and other parts of this Annual Report on Form 20-F contain forward-looking statements that involve risks and uncertainties. Forward-looking statements can also be identified by words such as “ambition,” “anticipates,” “expects,” “believes,” “plans,” “predicts,” and similar terms. Forward-looking statements are not guarantees of future performance and our actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to those discussed in the subsection entitled “Risk Factors” above.

Overview

Wipro Limited is a leading global IT, consulting and business process services company. We harness the power of cognitive computing, hyper-automation, robotics, cloud, analytics and emerging technologies to help our clients adapt to the digital world and make them successful.

A company recognized globally for its comprehensive portfolio of services, strong commitment to sustainability and good corporate citizenship, we have over 175,000 dedicated employees serving clients across six continents. Together, we discover ideas and connect the dots to build a better and a bold new future.

Trend Information

Due to the uncertainty around the course of the COVID-19 pandemic, we are currently unable to predict the extent to which the pandemic will disrupt our business and operations. In March 2020, as the COVID-19 pandemic rapidly spread, governments across the world announced public health measures, including complete or partial lockdowns restricting movement of people, goods and services. Economic activity was severely impacted, including disrupting the businesses of our customers.

As a response to COVID-19, we activated our COVID-19 Global Crisis Management task force in early March 2020. The task force is chaired by our Chief Operating Officer and consists of several cross-functional teams, including business continuity, Chief Information Officer (“CIO”) and cybersecurity. Most of our employees were quickly asked to work from home. In order to better support employees working from home, we have enhanced our cybersecurity measures by installing secure agents in our systems. While various cybersecurity control mechanisms are deployed and periodically reinforced, security control mechanisms may not always be successful, considering the complexity of the environments, inter-dependencies, sophisticated attack methodologies, highly dynamic heterogeneous systems, global digital presence hosted both in cloud and on premises with work from home arrangements. In parallel to our employees working from home, we reached out to our customers, briefed them of the measures we were adopting and sought their approval. Through these efforts, we have been able to continue to support the majority of our customers.

Our teams have settled into the new ways of working and our managers are tracking employee welfare, productivity and customer service delivery progress through the use of various tools, and we are collaborating with our customers on delivering on our commitments. However, the markets we serve continue to undergo massive disruptions due to the COVID-19 pandemic. Unlike past financial crises, triggered by weaknesses in capital markets, COVID-19 is a public health crisis that has necessitated restrictions on social interactions across the globe, leading to significant economic uncertainty across all industries. The IMF predicts that the global economy will shrink by 3% in the year 2020. Ultimately, the economic fallout of and the subsequent recovery from COVID-19 will depend on multiple factors, such as recovery driven by containment efforts, supply chain disruptions, impact of lockdowns, repercussions of the dramatic tightening in global financial markets, shifts in consumer behaviour and spending patterns and volatile commodity prices, including oil prices.

The continued spread of COVID-19, and any related adverse public health developments, could adversely affect workforces, customers, economies and financial markets globally, potentially leading to further economic downturn. This could decrease technology spending, adversely affect demand for our products, increase pricing pressure including customer requests for price discounts and supply-side constraints, impact cash conversion cycles and otherwise harm our business and results of operations. The conditions caused by the COVID-19 can also affect the rate of customer spending, including through cancellations or ramp-downs of existing projects, increased requests for furloughs, customers’ decreased ability or willingness to purchase our offerings, delays to prospective customers’ purchasing decisions, adverse impacts on our ability to provide on-site services to our customers or delays to the provisioning of our offerings, including due to various travel restrictions, all of which could adversely affect our business and overall financial performance.

 

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There is uncertainty caused by COVID-19 across sectors and in all geographies that we operate in. Economic activity has slowed and nearly all of our industry verticals are likely to be impacted in the short term, and recovery may be staggered across sectors depending on the course of the pandemic. This is likely to have a significant impact on our customers’ earnings and their IT spending with us. The potential impact to our results going forward will depend to a large extent on future developments regarding COVID-19 that cannot be accurately predicted at this time, including the duration and severity of the pandemic, the extent and effectiveness of containment actions and the impact of these and other factors on our employees, customers, partners and vendors.

IT Services: Global IT service providers offer a range of end–to-end software development, digital services, IT business solutions, research and development services, technology infrastructure services, business process services, consulting and related support functions. According to the NASSCOM Report, IT export revenues from India grew by 8.1% to an estimated $147 billion in fiscal year 2020. India’s IT industry grew by 7.7% to reach $191 billion during the year ended March 31, 2020. According to the NASSCOM Report, “Digital” continues to drive growth (more than 50% of growth in fiscal year 2020) and now contributes $51 billion to the overall IT industry in India. Technologies such as industrial automation, robotics, cloud, IoT, AR/VR and blockchain continue to fuel growth.

Growth in core traditional services revenues are expected to be moderate, whereas digital technology is continuing to gain prominence due to increased technology adoption by governments and businesses upgrading platforms, products and solutions to enhance the consumer experience. The markets we serve continue to undergo rapid changes due to the pace of development in technology, innovation in business models and changes in clients’ sourcing strategies. Digital business has changed the nature of demand for IT services. Big data and analytics, cloud computing, cybersecurity and advanced technologies such as AI, ML, IoT, robotics, and 3D printing are profoundly impacting enterprise, government and end consumer segments by enabling new business opportunities across sectors. Two-thirds of enterprises are building cloud native applications to support cloud-based AI-workloads and AI-powered business models.

We have invested in developing intellectual property (“IP”) across products, platforms, frameworks, solutions, components, accelerators, tools and applications. Our IP has enabled us to provide standardized solutions to our customers and obtain significant time-to-market advantages over the previous customized solutions which incurred higher costs and required a longer time to develop. An example of our IP is Wipro HOLMESTM, an artificial intelligence platform. Further, we have invested in acquiring new technology and skills. In the last three fiscal years, we have completed several mergers and acquisitions, including the acquisitions of:

 

   

International TechneGroup Incorporated, a global digital engineering and manufacturing solutions company and a world leader in CAD and PLM interoperability software services;

 

   

Rational Interaction, Inc., a full-service digital CX solutions firm that brings the strategic capabilities of a consultancy together with the creative and digital prowess of an agency;

 

   

Cooper Software Inc., an award-winning design and business strategy consultancy, which expands our digital reach in North America and adding capabilities in professional design education; and

 

   

InfoSERVER S.A., an IT services provider providing custom application development and software deployment services in the Brazilian market.

Gross profit as a percentage of revenue in our IT Services segment for the year ended March 31, 2020 is 30.1%. We anticipate challenges in significantly improving our gross profits largely due to the following reasons:

 

   

Limited ability of the market to accept increase in prices;

 

   

Customer demand for price discounts and productivity improvement;

 

   

Loss of revenue due to vendor consolidation at customer end;

 

   

Lower utilization rates for our resources arising from reduction in demand for our services from customer or contract terminations;

 

   

Regular increases in salaries, a cost which accounts for a major part of our expense line;

 

   

The impact of exchange rate fluctuations on our Indian Rupee realizations;

 

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Higher investment in research and development and other emerging technology areas;

 

   

Investment in acquisitions with potentially lower contribution to margins; and

 

   

In the short term, there may be a decrease in gross margins due to any decrease in technology spending, lower demand for IT products, lower rate of customer spending, delay in customers’ purchasing decisions resulting from the ongoing COVID-19 pandemic.

In response to COVID-19, we are focusing on various cost optimization initiatives, including:

 

   

Re-skilling and re-deployment of our workforce from our existing pool of talent, and new hiring will be done only for business-critical reasons;

 

   

Optimization of costs relating to travel, facilities and other discretionary spends like marketing events;

 

   

Deferment of annual increases in salary and progression cycles; and

 

   

Optimization of our variable workforce (i.e., sub-contractors), including replacing them with our existing internal pool of talent.

In response to the increased competition in the market place for IT services and pressure on gross margins, we are focusing on:

 

   

Differentiating our offerings by providing premium services across the Digital value-chain, including consulting and advisory, strategy, design, cloud and connected offerings;

 

   

Investing in non-linearity through our IP portfolio that de-link the linear relationship between revenue and efforts expended;

 

   

Investing in customer experience to establish deeper client relationships and provide a wider range of services;

 

   

Aligning our resources to expected demand and pivoting ourselves to meet new opportunities;

 

   

Leveraging Wipro HOLMESTM to increase use of automation within our client organizations to gain cost efficiencies, agility and enhanced user experiences;

 

   

Using next-generation technology-led business process services to drive superior customer experience and maximize returns and bring down operating costs

 

   

Driving revenue and cost synergies of acquired businesses; and

 

   

Emphasizing a talent and delivery model to increase the utilization of our IT professionals.

IT Products: The key components of the hardware industry are servers, desktops, notebooks and tablet computers, storage devices, peripherals, printers and networking equipment. According to the NASSCOM Report, - the domestic market in India for hardware was estimated to be $16 billion in fiscal year 2020. The emergence of cloud computing technologies is negatively affecting the demand for IT products such as servers. In our IT Products segment, we continue to experience pricing pressures due to increased competition among IT companies. Our IT Products segment is subject to seasonal fluctuations. Our IT Products revenue is driven by the capital expenditure budgets and spending patterns of our clients, who often delay or accelerate purchases in reaction to tax depreciation benefits on capital equipment and macroeconomic factors. We provide IT products as a complement to our IT services offerings rather than sell standalone IT products, and our focus continues to be on consulting and digital engagements, with a more selective approach in bidding for SI engagements. Accordingly, our revenue, operating income and profit for our IT Products segment have varied significantly in the past and we expect that they are likely to vary in the future.

ISRE: In the government sector, spending on IT and IT services is expected to grow much faster in the coming years given the focus on “Digital India” initiative by the GoI. Digital India is a flagship program of the GoI with a vision to transform India into a digitally empowered society and knowledge economy. Some of the key initiatives by GoI include Smart City Projects, Aadhar, GSTN, internet infrastructure (Wifi-hotspots), and financial inclusion initiatives such as mobile-banking, e-wallets, digital payments and lending and eKYC, among others. The GoI is also driving large scale transformation by adopting cloud technologies and a mobile-first approach. Our ISRE segment consists of IT services offerings to entities and/or departments owned or controlled by ISRE Customers. During the year ended March 31, 2019, we carved out ISRE as a separate segment from our global IT Services business. We made this decision because we changed our strategy for providing services to ISRE Customers. Comparative historical information included in this Annual Report has been restated to give effect to this change in our operating segments.

 

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In response to COVID-19, the GoI is now prioritizing investments to fight disease prevention, for outbreak management and to create an infrastructure for early detection, tracking and effective response management. Emerging technologies such as geographic information systems, big data analytics, artificial intelligence, machine learning, blockchain, facial recognition, image analytics, drone-based surveillance and IoT enablement will be used to achieve zero touch operations and enhanced service delivery. Most of the GoI processes and working environments, which otherwise would have taken longer to adopt, will now undergo rapid digital transformation. We, therefore, see opportunities around digitization, business process management, ERP, cloud adoption, among other things. However, we also anticipate delays in the GoI decision making processes, particularly for long-term transformation initiatives.

Shareholder Returns

We have always strived to enhance shareholder value for our investors. The Company’s policy has been to provide regular, stable and consistent distribution of return. There is no change in our philosophy on shareholder return.

Cash Dividends: During the year ended March 31, 2019 we declared a dividend of 1 per equity share. The cash dividend paid per equity share during the year ended March 31, 2020 was interim dividend of 1. The Board recommended the adoption of the interim dividend of 1 per equity share as the final dividend for the year ended March 31, 2020.

Buyback of equity shares: During the year ended March 31, 2020, we concluded the buyback of 323,076,923 equity shares at a price of 325 ($4.31) per equity share, as approved by the Board of Directors on April 16, 2019 and by shareholders resolution dated June 1, 2019 passed through postal ballot and electronic voting. This has resulted in a total cash outflow of 105,000 million ($1,393 million). As a result of the buyback, our share capital has been reduced by 646 million ($8.57 million).

Issue of Bonus Equity Shares: During the fiscal year ended March 31, 2019, we issued a stock dividend, which is commonly known as an issuance of bonus shares in India, in the proportion of one equity share for every three equity shares held (including ADS holders) as of March 7, 2019, the record date fixed for this purpose. This issue of stock dividend was approved by the shareholders of the Company vide a resolution dated February 22, 2019 which was passed through postal ballot and electronic voting. The Company allotted 1,508,469,180 shares for the bonus issuance.

Results of Operations

The below discussion of our results of operations omits a comparison of our results for the years ended March 31, 2018 and March 31, 2019. Such omitted discussions can be found in Item 5 of our annual report on Form 20-F for the year ended March 31, 2019, filed with the SEC on June 11, 2019.

Our revenues and profits for the years ended March 31, 2019 and 2020 are provided below:

 

     Wipro Limited and subsidiaries  
     Year ended March 31,     Year on Year change  
     2019     2020     2020-19  
     ( in millions except earnings per share data)  

Revenue (1)

     589,060       613,401       4.13

Cost of revenue

     (413,033     (436,085     5.58

Gross Profit

     176,027       177,316       0.73

Selling and Marketing expenses

     (44,510     (42,907     (3.60 )% 

General and administrative expenses

     (35,951     (29,823     (17.05 )% 

Other operating income (2)

     4,344       1,144       (73.66 )% 

Operating income

     99,910       105,730       5.83

Profit attributable to equity holders

     90,031       97,218       7.98

As a percentage of revenue:

      

Selling and marketing expenses

     7.56     6.99     (57 )bps 

General and administrative expenses

     6.10     4.86     (124 )bps 

Gross margin (3)

     29.66     28.85     (81 )bps 

Operating margin (3)

     16.84     17.20     36 bps 

Earnings per share

      

Basic

     14.99       16.67    

Diluted

     14.95       16.62    

 

(1)

For segment reporting, we have included the impact of exchange rate fluctuations in revenue. Excluding the impact of exchange rate fluctuations, revenue, as reported in our statements of income, is 585,845 million and 610,232 million for the years ended March 31, 2019 and 2020, respectively. Further, finance income on deferred consideration earned under multi-year payment terms in certain total outsourcing contracts is included in the revenue of the respective segment and is eliminated under reconciling items. Please see Note 34 of the Notes to the Consolidated Financial Statements for additional details.

 

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(2)

Other operating income represents:

 

  (i)

For the year ended March 31, 2019, net gain on sale of (a) hosted data center services business, and (b) the Workday business and Cornerstone OnDemand business.

 

  (ii)

For the year ended March 31, 2020, (a) change in fair value of the callable units upon partial achievement of business targets pertaining to sale of data center business, and (b) gain on sale of assets pertaining to Workday business and Cornerstone OnDemand business in Portugal, France and Sweden.

Please see Note 26 of the Notes to the Consolidated Financial Statements for additional details.

 

(3)

Gross margin and operating margin as a percentage of revenue have been calculated by including Other operating income with Revenue.

During the year ended March 31, 2019, we carved out ISRE as a separate, standalone segment from our IT Services business. The Company is now organized into three operating segments: IT Services, IT Products and ISRE. Comparative historical information included in this Annual Report has been restated to give effect to these changes.

Our revenue and segment results are as follows:

 

     Year ended March 31,      Year on Year change  
     2019      2020      2020-19  
     ( in millions)         

Revenue:

        

IT Services

     568,253        594,041        4.54

IT Products

     12,312        11,010        (10.58 )% 

ISRE

     8,544        8,400        (1.69 )% 

Reconciling items

     (49      (50      (2.04 )% 
  

 

 

    

 

 

    

 

 

 
     589,060        613,401        4.13
  

 

 

    

 

 

    

 

 

 

Segments results:

        

IT Services

     102,503        107,685        5.06

IT Products

     (1,047      (282      73.07

ISRE

     (1,829      (1,822      0.38

Reconciling items

     283        149        (47.35 )% 
  

 

 

    

 

 

    

 

 

 
     99,910        105,730        5.83
  

 

 

    

 

 

    

 

 

 

Analysis of Results

On April 1, 2019, the Company adopted IFRS 16, Leases, applied to all lease contracts outstanding as of April 1, 2019 using the modified retrospective method by recording the cumulative effect of initial application as an adjustment to retained earnings at the date of initial application. Under this method, the Company has not restated comparative numbers. On adoption of IFRS 16, expenses relating to operating leases (primarily relating to rent on leased premises), which were earlier recorded under “Facilities expenses” have now been recorded under “Depreciation, amortization and impairment”. Further, payment of operating leases which were earlier recorded as operating cash outflow is now recorded as financing cash outflow. For further information on the adoption of IFRS 16, please refer to Notes 3(viii) and New Accounting Standards adopted by the Company in the Notes to the Consolidated Financial Statements.

 

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Results of operations for the years ended March 31, 2020 and 2019

Revenue: Our revenue increased by 4.13%.

The IT Services segment revenue increased by 4.54%. The revenue of all our industry verticals, except for TECH, grew during the year. The growth was led by three of our industry verticals, BFSI, CBU and ENU. The growth in these industry verticals was a result of increase in our differentiated offerings across our geographic and digital capabilities, as well as depreciation of the Indian Rupee against foreign currencies, including the U.S. Dollar, Euro, United Kingdom Pound Sterling and Canadian Dollar. Growth was partially offset by a decline in revenues due to the sale of our hosted data center business, divestment of Workday and Cornerstone OnDemand business to Alight Solutions LLC, and the negative impact of COVID-19 on our revenues by an estimated 1,055 million to 1,206 million ($14 million to $16 million).

Revenue of the IT Products segment declined by 10.58%, which was primarily due to our focus on providing IT products as a complement to our IT services offerings rather than selling standalone IT products and our change in strategy to focus on consulting and digital engagements with ISRE clients rather than SI engagements.

Revenue of the ISRE segment declined by 1.69%, which was primarily due to scaling down of large engagements as we are pivoting our ISRE strategy to focus on consulting and digital engagements and to be selective in bidding for SI projects.

The table below gives our revenue by geographic segments for the year ended March 31, 2019 and 2020:

 

     Percentage of revenues  
     Year ended March 31,  

Geographic Segments

   2019     2020  

India

     5     5

Americas (1)

     55     57

Europe

     25     24

Rest of the world

     15     14

 

(1)

The Americas refer to North and South America.

In absolute terms, cost of revenues increased by 5.58% primarily because of increase in employee compensation due to the impact of salary increases, increase in headcount during the year and depreciation of the Indian Rupee against foreign currencies, including the U.S. Dollar, Euro, United Kingdom Pound Sterling and Canadian Dollar. This was partially offset by a reduction in sub-contracting/technical fees and a reduction in the cost of hardware and software. The following tables present our cost of revenues:

 

     Year ended March 31,      Year on Year change  

Cost of revenues

   2019      2020      2020-19     2020-19  
     ( in millions)        

Employee Compensation

     251,818        279,356        27,538       10.94

Cost of hardware and software

     13,567        11,490        (2,077     (15.31 )% 

Sub-contracting / technical fees

     93,974        89,890        (4,084     (4.35 )% 

Travel

     13,142        12,775        (367     (2.79 )% 

Depreciation, amortization and impairment

     14,658        15,590        932       6.36

Facility expenses

     17,390        17,648        258       1.48

Communication

     3,979        4,208        229       5.76

Others

     4,505        5,128        623       13.83
  

 

 

    

 

 

    

 

 

   

 

 

 
     413,033        436,085        23,052       5.58
  

 

 

    

 

 

    

 

 

   

 

 

 

As a result of the foregoing factors, our gross profit as a percentage of our total revenue decreased by 81 basis points (“bps”).

Our selling and marketing expenses as a percentage of total revenue decreased from 7.56% for the year ended March 31, 2019 to 6.99% for the year ended March 31, 2020. In absolute terms, selling and marketing expenses decreased by 3.60% primarily because in the year ended March 31, 2019, there was an impairment charge on certain intangibles assets recognized on acquisitions. This decrease has been

 

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partially offset by the increase in travel expenses in the year ended March 31, 2020 as compared to the year ended March 31, 2019. The following tables present our selling and marketing expenses:

 

     Year ended March 31,      Year on Year change  

Selling and marketing expenses

   2019      2020      2020-19     2020-19  
     ( in millions)        

Employee Compensation

     30,972        30,763        (209     (0.67 )% 

Travel

     2,557        3,029        472       18.46

Depreciation, amortization and impairment

     4,712        3,539        (1,173     (24.89 )% 

Facility expenses

     1,650        737        (913     (55.33 )% 

Communication

     466        536        70       15.02

Marketing and brand building

     2,714        2,532        (182     (6.71 )% 

Others

     1,439        1,771        332       23.07
  

 

 

    

 

 

    

 

 

   

 

 

 
     44,510        42,907        (1,603     (3.60 )% 
  

 

 

    

 

 

    

 

 

   

 

 

 

Our general and administrative expenses as a percentage of revenue decreased from 6.10% for the year ended March 31, 2019 to 4.86% for the year ended March 31, 2020. In absolute terms, general and administrative expenses decreased by 17.05%, primarily due to charges paid against a one-time settlement of a legal claim against the company included under “Others” in the year ended March 31, 2019. These decreases have been partially offset by the increase in legal and professional fees and travel in the year ended March 31, 2020 as compared to the year ended March 31, 2019. The following tables present our general and administrative expenses:

 

     Year ended March 31,      Year on Year change  

General and administrative expenses

   2019      2020      2020-19     2020-19  
     ( in millions)        

Employee Compensation

     16,984        16,452        (532     (3.13 )% 

Travel

     2,069        2,365        296       14.31

Facility expenses

     3,173        1,348        (1,825     (57.52 )% 

Legal and professional fees

     3,510        4,156        646       18.40

Lifetime expected credit loss and provision for deferred contract cost

     980        1,043        63       6.43

Others

     9,235        4,459        (4,776     (51.72 )% 
  

 

 

    

 

 

    

 

 

   

 

 

 
     35,951        29,823        (6,128     (17.05 )% 
  

 

 

    

 

 

    

 

 

   

 

 

 

Other operating income:

During the year ended March 31, 2020, we recorded (a) 992 million toward change in fair value of the callable units upon partial achievement of first and second year’s business targets pertaining to sale of hosted data center business, and (b) 152 million toward gain on sale of assets pertaining to the Workday business and Cornerstone OnDemand business in Portugal, France and Sweden, as “Other operating income.”

During the year ended March 31, 2019, we concluded the sale of our hosted data center services business and Workday business and Cornerstone OnDemand business and reduced our holding in Wipro Airport IT Services Limited. Net gain from the sale of our hosted data center services business, Workday business and Cornerstone OnDemand business, and reduction in our holdings in Wipro Airport IT Services Limited, in the total amount of 4,344 million, has been recorded as “Other operating income.”

As a result of the foregoing factors, our operating income increased by 5.83%, from 99,910 million for the year ended March 31, 2019 to 105,730 million for the year ended March 31, 2020. As a result of the above, our results from operating activities as a percentage of revenue (operating margin) increased by 36 bps from 16.84% to 17.20%.

Finance expenses: Our finance expenses decreased from 7,375 million for the year ended March 31, 2019 to 7,328 million for the year ended March 31, 2020. This decrease is primarily due to a decrease in interest expenses on repayment of loan during the year ended March 31, 2020, which was partially offset by an increase in interest expense on adoption of IFRS 16. Refer to Notes 3(viii) and New Accounting Standards adopted by the Company in the Notes to the Consolidated Financial Statements for further information on the adoption of IFRS 16.

 

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Finance and other income: Our finance and other income increased from 22,923 million for the year ended March 31, 2019 to 24,081 million for the year ended March 31, 2020. The increase is primarily due to an increase in interest income by 1,503 million during the year ended March 31, 2020 as compared to the year ended March 31, 2019.

Income taxes: Our income taxes decreased by 443 million from 25,242 million for the year ended March 31, 2019 to 24,799 million for the year ended March 31, 2020. Please refer to Note 21 of the Notes to the Consolidated Financial Statements for further information. Our effective tax rate has decreased from 21.87% for the year ended March 31, 2019 to 20.24% for the year ended March 31, 2020. This decrease is primarily due to changes in Indian tax laws during the year ended March 31, 2020.

Profit attributable to non-controlling interest: It has increased from 142 million for the year ended March 31, 2019 to 495 million for the year ended March 31, 2020.

As a result of the foregoing factors, our profit attributable to equity holders increased by 7,187 million or 7.98%, from 90,031 million for the year ended March 31, 2019 to 97,218 million for the year ended March 31, 2020.

Segment Analysis

Our business comprises of the IT Services, IT Products and ISRE segments.

The ISRE segment consists of IT services offerings to entities and/or departments owned or controlled by the GoI and ISRE Customers. During the year ended March 31, 2019, we carved out ISRE as a separate segment from our global IT Services business. We made this decision because we changed our strategy for providing services to ISRE Customers. Historically, projects in our ISRE business have been primarily SI projects that have complex deliverables and, compared to our IT Services segment, longer working capital cycles and different downstream processes, including billing and collections. Most ISRE deals come in the form of a tender process, with little room to negotiate the terms and conditions. We have pivoted our ISRE strategy to focus more on consulting and digital engagements and to be selective in bidding for SI projects with long working capital cycles.

Comparative information included in this Annual Report has been restated to give effect to the above changes.

IT Services: The IT Services segment primarily consists of IT Services offerings to customers organized by industry verticals. During the year ended March 31, 2020, our industry verticals were as follows: Banking, Financial Services and Insurance (“BFSI”), Health Business Unit (“Health BU”), Consumer Business Unit (“CBU”), Energy, Natural Resources and Utilities (“ENU”), Manufacturing (“MFG”), Technology (“TECH”) and Communications (“COMM”).

IT Products: The Company is a value-added reseller of desktops, servers, notebooks, storage products, networking solutions and packaged software for leading international brands. In certain total outsourcing contracts of the IT Services segment, the Company also delivers hardware, software products and other related deliverables, and revenue relating to these items is reported as IT Products revenue.

ISRE: This segment consists of IT services offerings to entities and/or departments owned or controlled by the GoI and/or any Indian State Governments. Most ISRE deals come in the form of tender process, with little room to negotiate the terms and conditions.

IT Services

Our IT Services segment provides a range of IT and IT enabled services which include digital strategy advisory, customer centric design, technology consulting, IT consulting, custom application design, development, re-engineering and maintenance, systems integration, package implementation, cloud and infrastructure services, business process services, cloud, mobility and analytics services, research and development and hardware and software design. Information by industry verticals for the IT Services segment for the years ended March 31, 2019 and 2020 are as follows:

 

     Year ended March 31,      Year on Year change  
     2019      2020      2020-19  
     ( in millions)         

Revenue:

        

IT Services industry verticals

        

BFSI

     175,262        184,457        5.25

Health BU

     75,081        78,240        4.21

CBU

     89,313        97,008        8.62

ENU

     72,830        76,443        4.96

TECH

     76,591        75,895        (0.91 )% 

MFG

     46,496        48,158        3.57

COMM

     32,680        33,840        3.55
  

 

 

    

 

 

    

 

 

 
     568,253        594,041        4.54
  

 

 

    

 

 

    

 

 

 

Segments Result:

        

IT Services industry verticals

        

BFSI

     33,831        34,132        0.89

Health BU

     8,638        12,027        39.23

CBU

     16,828        16,729        (0.59 )% 

ENU

     7,081        12,176        71.95

TECH

     15,916        14,312        (10.08 )% 

MFG

     8,327        9,252        11.11

COMM

     4,396        5,336        21.38

Unallocated

     3,142        2,577        (17.98 )% 

Other Operating Income

     4,344        1,144        (73.66 )% 
  

 

 

    

 

 

    

 

 

 
     102,503        107,685        5.06
  

 

 

    

 

 

    

 

 

 

 

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Please see Note 34 of the Notes to the Consolidated Financial Statements for additional details regarding our operating segments.

Our IT Services segment accounted for 96.4% and 96.8% of our total revenue for the years ended March 31, 2019 and 2020, respectively and 102.6% and 101.8% of our operating income for the years ended March 31, 2019 and 2020, respectively.

Operating results of the IT Services segment are as follows:

 

     Year ended March 31,     Year on Year change  
     2019     2020     2020-19  
     ( in millions)        

Revenue (1)

     568,253       594,041       4.54

Cost of revenue

     (390,197     (415,253     6.42

Gross Profit

     178,056       178,788       0.41

Selling and Marketing expenses

     (44,207     (42,412     (4.06 )% 

General and administrative expenses

     (35,690     (29,835     (16.41 )% 

Other operating income

     4,344       1,144       (73.66 )% 

Segment Results (2)

     102,503       107,685       5.06

As a percentage of revenue:

      

Selling and marketing expenses

     7.78     7.14     (64 )bps 

General and administrative expenses

     6.28     5.02     (126 )bps 

Gross margin (3)

     31.10     30.04     (106 )bps 

Segment Results (3)

     17.90     18.09     19 bps 

 

(1)

For the purpose of segment reporting, we have included the impact of exchange rate fluctuations amounting to 3,208 million and 3,232 million for the years ended March 31, 2019 and 2020, respectively, in revenue. Further, finance income on deferred consideration earned under multi-year payment terms in certain total outsourcing contracts is included in the revenue of the respective segment and is eliminated under reconciling items.

(2)

Includes Other operating income, which is being included to present the effect from the sale of hosted data center business and Workday business and Cornerstone OnDemand business, in the year ended March 31, 2019 and, in the year ended March 31, 2020, the Company’s concluding the sale of assets pertaining to the Workday business and Cornerstone OnDemand business in Portugal, France and Sweden and the recognized change in fair value of the callable units upon partial achievement of business targets pertaining to sale of the hosted data center business.

(3)

Gross margin and segment results as a percentage of revenue have been calculated by including Other operating income with Segment Revenue.

 

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Note: Comparative information has been restated to give effect to the change due to carving out of ISRE. Please see Note 34 of the Notes to the Consolidated Financial Statements for additional details.

Our revenue and segment results by IT Services industry verticals, expressed in terms of percentages, are provided below:

 

     Year ended March 31,  
     2019     2020  
     Percentage
of revenues
    Percentage of
Segment

results
    Percentage
of revenues
    Percentage of
Segment

results
 

Industry verticals

        

BFSI

     30.8     33.0     31.0     31.7

Health BU

     13.2     8.4     13.2     11.2

CBU

     15.7     16.4     16.3     15.5

ENU

     12.8     6.9     12.9     11.3

TECH

     13.5     15.6     12.8     13.3

MFG

     8.2     8.1     8.1     8.6

COMM

     5.8     4.3     5.7     5.0

Unallocated

     NA       3.1     NA       2.3

Other Operating Income

     NA       4.2     NA       1.1

The IT Services segment revenue increased by 4.54%. Revenue for all our industry verticals, except for TECH, grew during the year ended March 31, 2020. The growth was led by three of our industry verticals, BFSI, CBU and ENU. The growth in these industry verticals was a result of increasing our differentiated offerings across our geographic and digital capabilities, as well as depreciation of the Indian Rupee against foreign currencies, including the U.S. Dollar, Euro, United Kingdom Pound Sterling and Canadian Dollar. Growth was partially offset by a decline in revenues due to the sale of our hosted data center business, divestment of Workday business and Cornerstone OnDemand business to Alight Solutions LLC and the negative impact of COVID-19 on our revenues by an estimated 1,055 million to 1,206 million ($14 million to $16 million).

Our gross profit as a percentage of our revenue from our IT Services segment decreased by 106 bps, primarily because of increases in employee compensation due to salary increases, increase in headcount during the year and depreciation of the Indian Rupee against foreign currencies, including the U.S. Dollar, Euro, United Kingdom Pound Sterling and Canadian Dollar. This was partially offset by a reduction in sub-contracting/technical fees.

Selling and marketing expenses as a percentage of revenue from our IT Services segment decreased from 7.78% for the year ended March 31, 2019 to 7.14% for the year ended March 31, 2020. In absolute terms, selling and marketing expenses decreased by 1,795 million primarily because of an impairment charge on certain intangibles assets recognized on acquisitions in the year ended March 31, 2019. This decrease has been offset by the increase in travel expense in the year ended March 31, 2020 as compared to the year ended March 31, 2019.

General and administrative expenses as a percentage of revenue from our IT Services segment decreased from 6.28% for the year ended March 31, 2019 to 5.02% for the year ended March 31, 2020. In absolute terms, general and administrative expenses decreased by 5,855 million, primarily due to charges paid against a one-time settlement of a legal claim against the company in the year ended March 31, 2019. This was offset by an increase in legal and professional fees.

During the year ended March 31, 2020, we recorded (a) 992 million toward change in fair value of the callable units upon partial achievement of first and second year’s business targets pertaining to sale of hosted data center business, and (b) 152 million toward gain on sale of assets pertaining to the Workday business and Cornerstone OnDemand business in Portugal, France and Sweden, as “Other operating income”.

As a result of the above, segment results as a percentage of our revenue from our IT Services segment increased by 19 bps, from 17.90% to 18.09%. In absolute terms, the segment results of our IT Services segment increased by 5.06%.

IT Products

While we focus on being a strategic provider of IT services, we provide IT products as a complement to our IT services offerings. Our range of third-party IT Products is comprised of Enterprise Platforms, Networking Solutions, Software Products, Data Storage, Contact Center Infrastructure, Enterprise Security, IT Optimization Technologies, Video Solutions and End-User Computing solutions. Revenue from the hardware products and software licenses sold is recorded under the IT Products segment. We have diverse range of clients across all major industries, primarily in the India and Middle East market.

 

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Our IT Products segment accounted for 2.1% and 1.8% of our revenue for the years ended March 31, 2019 and 2020, respectively, and (1.0)% and (0.3)% of our operating income for each of the years ended March 31, 2019 and 2020, respectively.

Operating results of the IT Products segment are as follows:

 

     Year ended March 31,     Year on Year change  
     2019     2020     2020-19  
     ( in millions)        

Revenue (1)

     12,312       11,010       (10.58 )% 

Cost of revenue

     (12,567     (10,890     (13.34 )% 

Gross Profit

     (255     120       147.06

Selling and Marketing expenses

     (168     (274     63.10

General and administrative expenses

     (624     (128     (79.49 )% 

Segment Results

     (1,047     (282     73.07

As a percentage of revenue:

      

Selling and marketing expenses

     1.36     2.49     113 bps 

General and administrative expenses

     5.06     1.16     (390 )bps 

Gross margin

     (2.07 )%      1.09     316 bps 

Segment Results

     (8.50 )%      (2.56 )%      594 bps 

 

(1)

For the purpose of segment reporting, we have included the impact of exchange rate fluctuations amounting to (2) million and (26) million for the years ended March 31, 2019 and 2020, respectively, in revenue. Further, finance income on deferred consideration earned under multi-year payment terms in certain total outsourcing contracts is included in the revenue of the respective segment and is eliminated under reconciling items. Please see Note 34 of the Notes to the Consolidated Financial Statements for additional details.

Our revenue from the IT Products segment decreased by 10.58%. The decline was primarily due to our focus on providing IT products as a complement to our IT services offerings rather than sell standalone IT products, and our adoption of a more selective approach in bidding for SI engagements.

Our gross profit as a percentage of our IT Products segment revenue increased by 316 bps, primarily because of optimization in cost of delivery in certain customer contracts and reduction in sub-contracting/technical fees.

Selling and marketing expenses as a percentage of revenue from our IT Products segment increased from 1.36% for the year ended March 31, 2019 to 2.49% for the year ended March 31, 2020. In absolute terms, selling and marketing expenses increased by 106 million.

General and administrative expenses as a percentage of revenue from our IT Products segment decreased from 5.06% for the year ended March 31, 2019 to 1.16% for the year ended March 31, 2020. In absolute terms, general and administrative expenses decreased by 496 million primarily on account of decrease in lifetime expected credit loss.

As a result of the above, in absolute terms, segment results of our IT Products segment recorded a loss of 282 million for the year ended March 31, 2020 as compared to segment loss of 1,047 million for the year ended March 31, 2019.

ISRE

Our ISRE segment accounted for 1.5% and 1.4% of our revenue for the years ended March 31, 2019 and 2020, respectively, and (1.8)% and (1.7)% of our operating income for each of the years ended March 31, 2019 and 2020, respectively.

 

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Operating results of the ISRE segment are as follows:

 

     Year ended March 31,     Year on Year change  
     2019     2020     2020-19  
     ( in millions)        

Revenue (1)

     8,544       8,400       (1.69 )% 

Cost of revenue

     (9,926     (9,460     (4.69 )% 

Gross Profit

     (1,382     (1,060     23.30

Selling and Marketing expenses

     (294     (368     25.17

General and administrative expenses

     (153     (394     157.52

Segment Results

     (1,829     (1,822     0.38

As a percentage of revenue:

      

Selling and marketing expenses

     3.44     4.38     94 bps 

General and administrative expenses

     1.79     4.69     290 bps 

Gross Margins

     (16.18 )%      (12.62 )%      356 bps 

Segment Results

     (21.41 )%      (21.69 )%      (28 )bps 

 

(1)

Finance income on deferred consideration earned under multi-year payment terms in certain total outsourcing contracts is included in the revenue of the respective segment and is eliminated under reconciling items. Please see Note 34 of the Notes to the Consolidated Financial Statements for additional details.

Our revenue from the ISRE segment decreased by 1.69%. This was primarily due to scaling down of large engagements and pivoting our ISRE strategy to focus on consulting and digital engagements and to be selective in bidding for SI projects.

Our gross profit as a percentage of our ISRE segment revenue increased by 356 bps, primarily on account of closure of loss-making engagements.

Selling and marketing expenses as a percentage of revenue from our ISRE segment increased from 3.44% for the year ended March 31, 2019 to 4.38% for the year ended March 31, 2020. In absolute terms, selling and marketing expenses increased by 74 million, primarily due to increase in employee compensation.

General and administrative expenses as a percentage of revenue from our ISRE segment increased from 1.79% for the year ended March 31, 2019 to 4.69% for the year ended March 31, 2020. In absolute terms, general and administrative expenses increased by 241 million. This was primarily on account of increase in lifetime expected credit loss.

As a result of the above, in absolute terms, segment results of our ISRE segment recorded a loss of 1,822 million for the year ended March 31, 2020 as compared to a loss of 1,829 million for the year ended March 31, 2019.

Acquisitions

Refer to Item 4, and Note 7 of the Notes to the Consolidated Financial Statements for a description of the acquisitions during the reported period.

Divestitures

Refer to Item 4, and Note 26 of the Notes to the Consolidated Financial Statements for a description of the divestitures during the reported period.

Foreign exchange gains/(losses), net

Our net foreign exchange gains/(losses) for the years ended March 31, 2019 and 2020 were 3,215 million and 3,169 million, respectively.

Our foreign exchange gains/(losses), net, comprise of:

 

   

exchange differences arising from the translation or settlement of transactions in foreign currency, except for exchange differences on debt denominated in foreign currency (which are reported within finance expense, net); and

 

   

the changes in fair value for derivatives not designated as hedging derivatives and ineffective portions of the hedging instruments. For forward foreign exchange contracts which are designated and effective as cash flow hedges, the marked to market gains and losses are deferred and reported as a component of other comprehensive income in stockholder’s equity and subsequently recorded in the income statement when the hedged transactions occur, along with the hedged items.

Although our functional currency is the Indian Rupee, we transact a significant portion of our business in foreign currencies, including the U.S. Dollar, the United Kingdom Pound Sterling, the Euro, the Canadian Dollar and the Australian Dollar. The exchange rate between the Indian rupee and these currencies has changed substantially in recent years and may fluctuate substantially in the future. Consequently, the results of our operations are affected as the Indian rupee fluctuates against these currencies. Our exchange rate risk primarily arises from our foreign currency revenues, cash balances, payables and debt. We enter into derivative instruments to primarily hedge our forecasted cash flows denominated in certain foreign currencies, foreign currency debt and net investment in overseas operations. Please refer to Notes 14 and 19 of the Notes to the Consolidated Financial Statements for additional details on our foreign currency exposures.

 

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Income taxes

Our profits for the period earned from providing services at client premises outside India may be subject to tax in the country where we perform the work. Most of our taxes paid in countries other than India can be applied as a credit against our Indian tax liability to the extent that the same income is subject to taxation in India.

Currently, we benefit from certain tax incentives under Indian tax laws. These tax incentives include a tax holiday from payment of Indian corporate income taxes for our businesses operating from specially designated SEZs. The tax holiday for all our Software Technology and Hardware Technology Parks ended in the fiscal year ended March 31, 2011. We continue to be eligible for exemptions from certain other taxes, including customs duties in these Software Technology and Hardware Technology Parks.

Units in designated SEZs which began providing services on or after April 1, 2005, are eligible for a deduction of 100% of profits or gains derived from the export of services for the first five years from commencement of provision of services and 50% of such profits or gains for a further five years. Certain tax benefits are also available for a further five years subject to the unit meeting certain defined conditions. Profits from certain other undertakings are also eligible for preferential tax treatment.

Due to these tax incentives, a substantial portion of our pre-tax income has not been subject to a significant tax in India in recent years. When our tax holiday and income tax deduction/exemptions expire or terminate, our costs will increase. The expiration period of the tax holiday for each unit within a SEZ is determined based on the number of years since commencement of production by that unit for a maximum of fifteen years. The tax holiday period currently available to the Company expires in various years through fiscal year 2034. The expiration period of tax holiday for each unit within a SEZ is determined based on the number of years that have lapsed following year of commencement of production by that unit. The impact of tax holidays has resulted in a decrease of current tax expense of 15,390 million and 11,963 million for the years ended March 31, 2019 and 2020, respectively, compared to the effective tax amounts that we estimate we would have been required to pay if these incentives had not been available. The per share effect of these tax incentives for the years ended March 31, 2019 and 2020 was 2.56 and 2.05, respectively.

In September 2019, the GoI amended the Income Tax Act, 1961 by enacting The Taxation Laws (Amendment) Act, 2019, and has provided an option for companies to pay tax at a lower rate of 22% (plus surcharge and cess) by foregoing all the deductions available under chapter VI-A and other profit linked deductions under the Income Tax Act, 1961. This option, if exercised, is irrevocable and the corresponding MAT credit available will be lapsed. We have evaluated the option and have decided to continue under the existing regime and not to avail ourselves of the lower tax rate. In the future, if we opt for the lower tax rate, it may lead to increase in tax outflow and the MAT credit available to us will be lapsed. Further there has been a reduction in the tax rate under MAT provisions from 21.54% to 17.47%.

In March 2004, the Company received a tax demand for the year ended March 31, 2001 arising primarily on account of denial of deduction under section 10A of the Income Tax Act, 1961 in respect of profit earned by the Company’s undertaking in Software Technology Park at Bengaluru. The same issue was repeated in the successive assessments for the years ended March 31, 2002 to March 31, 2011 and the aggregate demand is 47,583 million (including interest of 13,832 million). The appeals filed against the said demand before the Appellate authorities have been allowed in favor of the Company by the second appellate authority for the years up to March 31, 2008. Further appeals have been filed by the Income tax authorities before the Hon’ble High Court. The Hon’ble High Court has heard and disposed-off majority of the issues in favor of the Company up to years ended March 31, 2004. Department has filed a Special Leave Petition before the Supreme Court of India for the years ended March 31, 2001 to March 31, 2004.

On similar issues for years up to March 31, 2000, the Hon’ble High Court of Karnataka has upheld the claim of the Company under section 10A of the Income Tax Act, 1961. For the year ended March 31, 2009, the appeals are pending before Income Tax Appellate Tribunal (“ITAT”). For years ended March 31, 2010 and March 31, 2011, the Dispute Resolution Panel allowed the claim of the Company under section 10A of the Income Tax Act, 1961. The Income tax authorities have filed an appeal before the ITAT.

For the year ended March 31, 2013, the Company received the final assessment order in November 2017 with a demand of 3,286 million (including interest of 1,166 million), arising primarily on account of section 10AA issues with respect to exclusion from Export Turnover. The Company has filed an appeal before Hon’ble ITAT, Bengaluru within the prescribed timelines.

For the year ended March 31, 2014, the Company received the final assessment order in September 2018 with a demand of 1,030 million (including nil interest), arising primarily on account of transfer pricing issues. The Company has filed an appeal before the Hon’ble ITAT, Bengaluru within the prescribed timelines.

 

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For the year ended March 31, 2015, the Company received the final assessment order in October 2019 with an estimated demand of 1,347 million (including nil interest), arising primarily on account of capitalization of wages. The Company has filed an appeal before the Hon’ble ITAT, Bengaluru within the prescribed timelines.

For the year ended March 31, 2016, the Company received the draft assessment order in December 2019 with an estimated demand of 704 million (including nil interest), arising primarily on account of capitalization of wages. The Company has filed the objections before the Dispute Resolution Panel (Bengaluru) within the prescribed timelines.

For the year ended March 31, 2007 to the year ended March 31, 2012, the Company has received tax demand of 227 million (including interest of 102 million) for non-deduction of tax at source on some payments. The Company has already deposited the demand under protest. The Company received order issued by ITAT, Bengaluru rejecting company’s appeal. The Company has filed an appeal against the order with the Hon’ble High Court of Karnataka within the prescribed timelines. The Company has received a favorable order on this issue from the Hon’ble High Court of Karnataka for the earlier years.

Income tax demands against the Company amounting to 66,441 million and 77,873 million are not acknowledged as debt as of March 31, 2019 and March 31, 2020, respectively.

These matters are pending before various Appellate Authorities and the management expects its position will likely be upheld on ultimate resolution and will not have a material adverse effect on the Company’s financial position and results of operations. Although we currently believe we will ultimately prevail in our appeals, the result of such appeals, and any subsequent appeals, cannot be predicted with certainty. Should we fail to prevail in our appeal, or any subsequent appeals, in any reporting period, the operating results of such reporting period could be adversely affected materially.

U.S. tax reform legislation, known colloquially as the “Tax Cuts and Jobs Act”, makes, among other things, significant changes to the rules applicable to the taxation of corporations, such as changing the corporate tax rate to a flat 21% rate, modifying the rules regarding limitations on certain deductions for executive compensation, introducing a capital investment deduction in certain circumstances, placing certain limitations on the interest deduction, modifying the rules regarding the usability of certain net operating losses and adding certain anti-base erosion rules. As a result of the operational structure of the Company, the application of the recently enacted U.S. tax reform legislation did not have a material and adverse impact on our operating results, cash flows and financial condition.

We have calculated our domestic tax liability after considering MAT and accordingly, a deferred tax asset of nil and 3,425 million has been recognized in the statement of financial position for the years ended March 31, 2019 and 2020, respectively. The excess tax paid under MAT provisions over and above normal tax liability can be carried forward for a period of fifteen years and set-off against future tax liabilities computed under normal tax provisions.

Liquidity and Capital Resources

The Company’s cash flow from its operating, investing and financing activities, as reflected in the Consolidated Statement of Cash Flows, is summarized in the table below:

 

     Year ended March 31,      Year on Year change  
     2019      2020      2020-19  
     ( in millions)  

Net cash generated by/(used in):

        

Operating activities

     116,316        100,643        (15,673

Investing activities

     50,126        34,012        (16,114

Financing activities

     (49,369      (150,998      (101,629

Net change in cash and cash equivalents

     117,073        (16,343      (133,416

Effect of exchange rate changes on cash and cash equivalents

     526        1,922        1,396  

As of March 31, 2020, we had cash and cash equivalent and short-term investments of 334,134 million. Cash and cash equivalent and short-term investments, net of total debt, was 256,092 million.

In addition, we have unutilized credit lines of 45,404 million. To utilize these lines of credit, we require the consent of the lender and compliance with certain financial covenants. We have historically financed our working capital and capital expenditures through our operating cash flows and through bank debt, as required.

Cash generated by operating activities for the year ended March 31, 2020 decreased by 15,673 million while profit for the year increased by 7,540 million during the same period. The decrease in cash generated by operating activities is primarily due to increased working capital requirements. This was partially offset by income tax refunds for the previous year received during the year ended March 31, 2020.

 

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Cash generated by operating activities for the year ended March 31, 2019 increased by 32,083 million while profit for the year increased by 10,089 million during the same period. The increase in cash generated by operating activities is primarily due to optimization of working capital.

Cash generated from investing activities for the year ended March 31, 2020 was 34,012 million. The cash generated from sale of investments (net of purchases) amounted to 34,579 million. Cash utilized for the payment for business acquisitions amounted to 10,003 million. We purchased property, plant and equipment amounting to 23,497 million which was primarily driven by the growth strategy of the Company

Cash generated from investing activities for the year ended March 31, 2019 was 50,126 million. We had a net cash inflow of 26,103 million from the sale of our hosted data center business. The cash generated from sale of investments (net of purchases) amounted to 24,340 million. We purchased property, plant and equipment amounting to 22,781 million which was primarily driven by the growth strategy of the Company.

Cash used in financing activities for the year ended March 31, 2020 was 150,998 million as against 49,369 million for the year ended March 31, 2019. This is primarily on account of outflow for an equity share buyback amounting to 105,311 million and increased outflow on account of partial repayment of loans taken for acquisitions. Payment toward the dividend including dividend distribution tax for the year ended March 31, 2020 amounted to 6,863 million. Dividends paid in the year ended March 31, 2020 represents interim (and final) dividend declared for the year ended March 31, 2020 amounting to 1 per share.

Cash used in financing activities for the year ended March 31, 2019 was 49,369 million. This is primarily on account of increased outflow on account of partial repayment of loans taken for acquisitions. Payment toward the dividend including dividend distribution tax for the year ended March 31, 2019 amounted to 5,434 million. Dividends paid in the year ended March 31, 2019 represents interim (and final) dividend declared for the year ended March 31, 2019 amounting to 1 per share.

We maintain a debt/borrowing level that we have established through consideration of a number of factors including cash flow expectations, cash required for operations and investment plans. We continually monitor our funding requirements, and strategies are executed to maintain sufficient flexibility to access global funding sources, as needed. Please refer to Note 14 of our Notes to the Consolidated Financial Statements for additional details on our borrowings.

As discussed above, cash generated from operations is our primary source of liquidity. We believe that our cash and cash equivalents along with cash generated from operations will be sufficient to meet our working capital requirements as well as repayment obligations with respect to debt and borrowings. Our choices of sources of funding will be driven with the objective of maintaining an optimal capital structure. COVID-19 may have an impact on our cash conversion cycle due to delays in customer payments and may result in increased working capital requirements. However, we believe that we have sufficient cash balances to overcome the incremental increase in working capital requirements.

As of March 31, 2020, we had contractual commitments of 14,011 million ($185.8 million) related to capital expenditures on construction or expansion of software development facilities and 17,024 million ($225.8 million) related to other purchase obligations. Plans to construct or expand our software development facilities are determined by our business requirements.

We will rely on funds generated from operations and external debt to fund potential acquisitions and shareholder returns. We expect that our cash and cash equivalents, investments in liquid and short-term mutual funds and the cash flows expected to be generated from our operations in the future will generally be sufficient to fund the growth aspirations, as applicable.

In the normal course of business, we transfer certain accounts receivables and net investment in finance lease (financial assets) to banks on a non-recourse basis. The incremental impact of such transactions on our cash flow and liquidity for the years ended March 31, 2019 and 2020 is not material. Please refer to Note 19 of our Notes to Consolidated Financial Statements.

Our liquidity and capital requirements are affected by many factors, some of which are based on the normal ongoing operations of our businesses and some of which arise from uncertainties related to global economies and the markets that we target for our services, as well as uncertainties around COVID-19. We cannot be certain that additional financing, if needed, will be available on favorable terms, if at all.

 

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As of March 31, 2019 and 2020, our cash and cash equivalents were primarily held in Indian Rupees, U.S. Dollars, United Kingdom Pound Sterling, Euros, and Australian Dollars. Please refer to “Financial risk management” under Note 19 of our Notes to the Consolidated Financial Statements for more details on our treasury activities.

Off-Balance Sheet Arrangements

Performance and financial guarantees are provided by banks on behalf of the Company to the Indian government, customers and certain other agencies, as part of the banks’ line of credit arrangements. These arrangements are sometimes referred to as a form of off-balance sheet financing. Please refer to Notes 14 and 33 of the Notes to the Consolidated Financial Statements for more details.

Contractual Obligations

The table of future payments due under known contractual commitments as of March 31, 2020, aggregated by type of contractual obligation, is given below:

 

     Total
contractual
payment
     Payments due in  

Particulars

   2020-21      2021-23      2023-25      2025-26
onwards
 
     ( in millions)  

Short-term borrowings (1)

     54,020        54,020        —          —          —    

Long-term borrowings (1)

     24,022        19,182        4,783        57        —    

Estimated interest payment on borrowings(2)

     1,501        1,461        40        —          —    

Lease liabilities(3) (4)

     21,067        7,322        9,431        3,037        1,277  

Capital commitments (5)

     14,011        7,521        6,489        1        —    

Purchase obligations (6)

     17,024        14,069        2,539        416        —    

Other non-current liabilities (7)

     291        —          291        —          —    

 

(1)

For further information on currency and interest rate structures, refer to Note 14 of the Notes to Consolidated Financial Statements.

(2)

Interest payments for long-term fixed rate debts have been calculated based on applicable rates and payment dates. Interest payments on floating rate debt have been calculated based on the payment dates and implied forward interest rates as of March 31, 2020 for each relevant debt instrument.

(3)

Includes future cash outflow toward deferred interest on lease liabilities.

(4)

For further information on lease liabilities, refer to Notes 3(viii) and New Accounting Standards adopted by the Company in the Notes to Consolidated Financial Statements.

(5)

Represents contractual commitments related to capital expenditures on construction or expansion of software development facilities.

(6)

Our purchase obligations include all commitments to purchase goods or services of either a fixed or minimum quantity that meet any of the following criteria: (1) they are non-cancelable, or (2) we would incur a penalty if the agreement was terminated.

(7)

Other non-current liabilities and non-current tax liabilities in the statement of financial position include 7,537 million in respect of employee benefit obligations and certain other liabilities and 13,205 million towards uncertain tax positions, respectively. For these amounts, the timing of repayment/settlement cannot be reliably estimated or determined at present and accordingly have not been disclosed in the table above.

Research and Development

Wipro’s research and development initiatives continue, as in past years, to focus on strengthening and extending our capabilities across multiple new and emerging technology areas as well as in the discovery of innovative potential at the intersection of these technologies. We are also focused on the application of the research and development work to develop cutting-edge solutions for our customers. Our investments are around relevant advanced technology areas (5G, ADAS/autonomous vehicles, commercial wearables, machine vision, AR/VR, smart assistants, natural language processing and understanding, blockchain technology, quantum computing, smart machines, cyber security, cloud native applications, among other things).

 

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During the year ended March 31, 2020, our research and development work has contributed to some significant patent applications in key technology domains. We have been investing in building a focused patent portfolio that protects critical Wipro IP. As of the year ended March 31, 2020, we have a total of 2,301 patents filed in various patent jurisdictions around the world, of which 741 have been granted.

Our Open Innovation programs extend our innovation capabilities by co-opting an extended innovation ecosystem of startup partners, academia and expert networks. During the year ended March 31, 2020, we were successful in bringing in new innovative partners and in scaling some of our existing relationships through joint engagements. We expanded our academia research footprint by entering into new research collaboration agreements with multiple universities across the world. Today our research teams work with the University of Texas at Austin, Tel Aviv University, Israel, Swinburne University, Melbourne, IIT Kharagpur, IIT Madras, IISc Bangalore, University of Agricultural Sciences, Bangalore, among others where we cover AI, NLP, encryption, 5G, Blockchain, autonomous vehicles, CV and other critical new technologies. We also do some interesting work in a few major consortiums and standards organization that extend our views and influence in the innovations being developed through their work.

Our innovation incubation centers, the Technovation Center at Bengaluru and the Silicon Valley Innovation Center in Mountain View, California, build technology-led innovation to visualize the “art of the possible” in emerging business environments for our customers globally. These Centers bring together an innovation ecosystem, a set of best practices, IP and research and development resources to help our clients develop successful initiatives and hosted around 350 of our customers and other visitors over the last year and showcased our best technologies and solutions.

Our Robotics group is developing smart factory solutions using robots, cobots, drones and other technologies that aim to significantly optimize production lines. A few projects for smart production lines are currently under deployment and testing. For all of our Robotics projects, we are digitizing, running the process using AI and generating rich analytics that will help reimagine production. We believe that these initiatives will enable the factory of the future.

We are also working on building capability in application of 5G technologies. We are engaging with IIT Kharagpur and University of Oulu on RF, new waveform and precision localization technology research for 5G and beyond. Any new generation of wireless technology evolution relies on advances in the technologies related to radio access network where power and spectral efficiency play a significant role. With increased use cases involving cyber physical systems, precision location plays a key role in enabling connected intelligent devices to localize themselves with the help of the network with which they are connected. As an engineering solutions organization, we are investing in building our IP portfolios, in contributing to standards build, in creating use cases to demonstrate new possibilities and enabling customers to embark on new technology journeys.

AutoInsights, a connected vehicle and mobility platform, is a strategic investment by Wipro. Today, this platform is used across the globe by various automotive original equipment manufacturers (“OEMs”) and related ecosystem players to help them maximize a vehicle’s lifetime value. Recently, we have also signed a co-innovation agreement with a motorcycle OEM to customize AutoInsights patented solutions to build a unique and industry-first dealership digitalization experience using connected motorcycle data and voice enabled smart helmets. We also have a number of patents associated with AutoInsights.

We have invested in crowdsourcing through Topcoder, a Wipro Company, the world’s largest technology network and on-demand digital talent platform with more than 1.5 million developers, designers, data scientists, and testers around the globe. Topcoder empowers organizations to leverage the flexibility of its key enterprise offerings around Enterprise Crowdsourcing (Design, QA, Dev, Data Science), TaaS, and Workforce Transformation (Strategic Consulting). Our community and our customers come together on the Topcoder platform to collaborate and build enterprise-grade digital assets. Enterprises distribute work through the platform where community members develop innovative solutions, win money, gain experience, and earn recognition. Topcoder became a part of Wipro Limited in November 2016.

We are also investing in TopGear, our social learning and crowdsourcing platform. TopGear is a powerful learning platform, focusing on workforce transformation in Digital and “in-demand” skills. It consists of over 2,000 learning assignments and case studies across 200 skills in addition to live projects. It provides hands-on experience to employees on emerging digital skills that enable them to become customer-deployable on those skills. Employees can self-select projects that interest them and prepare themselves for future projects. TopGear also enables workforce transformation through structured learning paths aligned to business-specific needs.

 

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Wipro HOLMES enhanced its end-to-end problem-solving IP capabilities delivering persona-based solutions, targeted at specific stakeholders of the enterprise. The intent is to automate all tasks for that role, irrespective of it being infrastructure or application oriented, resulting in accelerated tighter linkage between Work-done by-Bots and Enterprise Margins. ‘Automation Coaches,’ which discover inefficient and broken processes along with catalogue driven use cases enables existing and/or new programs to jump start automation. New deals are on-boarded through the “Go green program” which envisages automation during transition.

Responding to the challenges presented by the ongoing COVID-19 pandemic, Wipro HOLMES focuses on launching solution packs targeting aspects of business continuity, compliance, remote worker solutions and employee wellbeing, among other things. The solutions, while delivering business outcomes to its clients, are also deployed at Wipro internally, under the concept ‘Wipro-on-Wipro’ to automate processes in the Wipro CIO role as well as in shared services such as Finance and HR.

Wipro HOLMES, to address the challenges, risks, and ‘black-box’ issues associated with AI solutions, introduced ‘Designed for Trust’ – a framework to instill confidence that the AI solutions are fair, explainable, and trustworthy.

Our research and development expenses for the years ended March 31, 2019 and 2020 were 3,942 million and 4,619 million, respectively.

Significant accounting policies, estimates and judgments

Please refer to Notes 2(iv) and 3 of the Notes to Consolidated Financial Statements for a description of significant accounting policies, estimates and judgments.

 

Item 6.

Directors, Senior Management and Employees

Our directors and executive officers, along with their ages and positions as of March 31, 2020 are detailed below:

 

Name

  

Age

  

Position

Rishad A. Premji(1)

   43    Chairman of the Board (designated as “Executive Chairman”)

Azim H. Premji(2)

   74    Non-Executive, Non-Independent Director (designated as “Founder Chairman”)

Abidali Z. Neemuchwala(3)

   52    Chief Executive Officer and Managing Director