Wipro continues to be impacted by macro challenges which are weighing on its growth. In line with its commentary from last quarter, Chief Executive Officer Thierry Delaporte said that the market has remained largely unchanged — with discretionary spends being impacted and clients focusing on cost efficiency and vendor consolidation.
When it comes to verticals, the company has seen a decline of 4.3 percent QoQ in CC terms in the BFSI (banking, financial services and insurance) vertical, 3.5 percent in Consumer, 1.3 percent in health, 4.9 percent in in energy, natural resources and utilities, and 0.5 percent in Communications.
The technology vertical, however, grew 0.1 percent, and manufacturing at 0.9 percent.
Wipro's bookings for the quarter stood at $3.7 billion, falling sequentially from last quarter’s $4.17 billion. However, its large deal TCV came in at $1.2 billion, marginally higher than last quarter’s $1.08 billion.
As the number of its active customers declined by 35 from last quarter, Chief Financial Officer Jatin Dalal said that the company is pivoting its business from doing tiny amounts of work for a small customer to doing “more value-added work for strategic customers,” adding that the software provider had six more customers in the $20 million deal band and two more in the $100 million-plus deal band.
“...We are closing more large deals than we used to before. But at the same time, there is a reduction in discretionary spends, smaller engagements, for one quarter for two,” he said while adding that large programs are not ending and that relationships haven’t ended.
“Frankly, it's really more a direct consequence of the spending pattern of our clients,” Dalal said.
He added that the company’s revenue guidance of -2 percent to 1 percent for the next quarter takes into account the fact that the market could evolve in either direction.
Demand environment
Delaporte said Wipro is witnessing tech investment normalise after the sharp acceleration in spending during the pandemic.
“More and more clients are expecting faster returns on investments and optimising cost through increased use of automation and vendor consolidation. In parallel, we continue to see solid demand in high growth areas like cloud, mostly around cloud transformation,” he said.
He, however, maintained that a lot of smaller discretionary spending has either been postponed or stopped. There also isn’t much clarity on client spending in the immediate months.
"For the time being, I continue to see more or less the same market that we saw a quarter ago,” he said but added that large and mega deals are in the pipeline.
“Typically, we have more of these deals in our pipe than we had two or three years ago. There are not necessarily only focusing on cost takeout, but certainly there is an expectation to drive productivity and efficiency,” Delaporte said.
Consulting business
The company has spent $2.3 billion in acquisitions since the time Delaporte took over as CEO in 2020. Capco ($1.45 billion) and Rizing are among Wipro's biggest deals.
Delaporte maintained that the consulting expertise they provide is “critical”, and the acquisitions were made “completely consciously knowing that the consulting business is by definition a market that is growing fast in a growth market and slowing down in a slowing market,” he concluded.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
