Wipro on January 13 reported a mixed bag in terms on numbers for Q3FY23, but while providing revenue growth guidance for the fourth quarter, the company said that would be in the range of -0.6 percent and 1 percent, which was below estimates.
Despite this, Chief Executive Officer Thierry Delaporte said there was “no real reason to believe there is any slowdown in demand”. However, he added that there is uncertainty and a shift in client priorities.
Wipro reported revenues of $2.8 billion for the quarter, up 0.2 percent sequentially. The company saw its large deals increase sequentially from last quarter’s $725 million to around $1 billion this quarter. It also saw total bookings of over $4.3 billion for the quarter.
Delaporte said he believes clients continue to see technology as a driver of performance, and but that they may be shifting their priority to deals “that are delivering a rapid return on investment, are focusing on efficiency and possibly, also reducing or slowing down discretionary spending.”
He maintained that Wipro expects to have a strong performance in bookings in the March quarter as well.
When asked about the slowdown in verticals, Delaporte said, “There is no doubt. I think I will surprise nobody. Technology sector has known incredible growth over the last four quarters and years and is slowing down. It’s a reality…I would say possibly in the retail sector, particularly in America might see a potential slowdown.”
On clients moving away from discretionary spends, he added that the macro uncertainty drives a “certain level of volatility”, and on that front, there is a lag in conversion.
“Bookings look rather promising so far for Q4, there's no reason to believe that growth will not be here for the next quarters,” he said.
On the possible degrowth in revenue for Q4 based on the guidance, Delaporte said that there is a certain level of uncertainty that is balanced by their volume of business. However, he maintained that while some clients are impacted, decision-making has not slowed down.
He attributed it to a “potential lag that exists between the moment you win a contract and the conversion into revenue.”
Chief Growth Officer Stephanie Trautman said that the company is seeing a lot of vendor consolidation: “One for simplification, and two for cost takeout”.
She added that clients are seeing where they can optimise and get more value from either their current providers or new ones. They're looking for that value, especially in these economic times, she said.
On slowing tech spends, Trautman said clients are trying to “spend wiser than they did before and really make sure that it adds value to their business”.
Pressure, she said, is being experienced in mainstream parts of the business.
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