Wipro says it sees green shoots in demand, caveats discretionary spend still elusive

Wipro

IT services major Wipro, on January 12, said it sees green shoots as far as demand is concerned but caveated by saying discretionary spending is yet to pick up while announcing its December quarter results.

"We are seeing a little bit of the beginning of the evolution of the market and we are seeing a positive trend in terms of revenue from a deceleration to almost stabilisation and going back to growth," said Thierry Delaporte, CEO of Wipro.

He said the consulting business will be the first one to bounce back when demand returns. In that context, the CEO said performance in bookings by Wipro's subsidiaries, which are in the consulting businesses specifically Capco and Rizing, gives the company reason to be optimistic.

Consulting services in IT involve providing advice to clients to evaluate various technology strategies. This process aims to ensure the alignment of technology strategies with their overall business or process strategies.

"We are cautiously observing the evolution, but I don't think this (better demand in consulting subsidiaries) is something we would have said a quarter or two or three ago," Delaporte said.

However, Delaporte also said that discretionary spending by clients has still not picked up. "The market hasn't changed dramatically... (it) continues to be the market... where there was significant reduction in the discretionary spend," Delaporte said.

The overall demand still remains cautious, Delaporte said. "Clients are still making conservative investments, looking for efficiency, more returns on investments, and better optimisation of investments."

Consequently, the company won large deals worth $0.9 billion in Q3FY24, lower than the $1.28 billion it won in the last quarter. Total deal wins stood at $3.8 bln, which is similar to what the company had recorded in the September quarter.

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The management said it sees improvement in its largest vertical -Banking, Financial Services and Insurance (BFSI), which contributes over 30 percent to the topline. Healthcare, automotive, and energy verticals are doing well, the management said.

For the quarter ended December 31, the BFSI vertical decreased by 4.9 percent, the health vertical grew by 7.3 percent, and energy, natural resources and utilities were flat. The contribution of the BFSI vertical reduced to 32.7 percent in Q3 from 33.6 percent in the previous quarter.