Wipro Profit Falls 12% in Dec Qtr, Forecasts Flat Growth

New Delhi, Jan 12 (PTI) IT company Wipro on Friday posted a nearly 12 per cent decline in consolidated net profit at Rs 2,694.2 crore in the third quarter ended December 2023 amid a "cautious" demand environment and clients making conservative investments.

Wipro's competitor Infosys posted a 7.3 per cent decline in net profit, while Tata Consultancy Services and HCL have reported an 8.2 per cent and 6.2 per cent increase in consolidated profit in the December 2023 quarter.

The consolidated revenue from operations of Wipro also fell 4.4 per cent to Rs 22,205.1 crore during the December quarter, as against Rs 23,229 crore a year ago.
This is the fourth straight quarter when Wipro recorded decline in its IT services revenue.

Wipro said it expects de-growth or almost flat growth in revenue in the next quarter, thereby indicating a lower growth for the company for the fiscal on a year-on-year basis.

Wipro had reported a profit of Rs 3,052.9 crore in the quarter ended December 31, 2022.

The company's IT Services segment revenue dropped 4.5 per cent on a year-over-year basis to Rs 22,150.8 crore during the reported quarter from Rs 23,196 crore during the same period of 2022.

"The demand environment, overall let's be clear, remains cautious. Clients are still making conservative investments, still looking for efficiency, more returns on investments and better optimisation for existing investments. But we are seeing some indicators for growth," Wipro CEO and Managing Director, Thierry Delaporte told reporters.

Delaporte said Wipro's consulting business reported double-digit sequential growth in order booking, which is highest in the last four quarters.

"We know that when the market turns, consulting will be the first area to bounce back. In that context I'm pleased to share that we've had a good performance from our consulting business," he said.

The company said it expects revenue from the IT Services business segment to be in the range of USD 2,615 million (around Rs 21,845 crore) to USD 2,669 million (about Rs 22,296 crore) in March 2024 quarter.

"This translates to a sequential guidance of -1.5 per cent to + 0.5 per cent in constant currency terms," Wipro said. The company did not provide guidance for the full year.

"We expect margins to stay range bound. As the market starts to turnaround, on the back of our transformation and efficiency plays, we expect to see improvements in the coming quarter," Delaporte said.

The total headcount at the company declined by about 7 per cent to 2,40,234 during the reported quarter, from 2,58,744 a year ago. It reported the lowest attrition rate of 14.2 per cent in the last six quarters.

The company during the quarter booked deals worth USD 3.8 billion, down 13.5 per cent on a YoY basis in constant currency terms, during the quarter, while total contract value of large deals came down by 8.3 per cent in constant currency to USD 0.9 billion.

"Our IT services revenue for the quarter is at the top-end of our guidance. We have continued to book deals at a healthy pace. Even though Q3 is a short quarter due to year-end holidays, order bookings in total contract value terms extend at USD 3.8 billion. Our large TCV (total contract value) for the quarter was just about USD 900 million. On a year-to-date basis that is a 20 per cent growth," Delaporte said.

He said despite seasonal furloughs and the annual salary increases for company's employees, Wipro's margins have improved by more than 60 basis points on a year-to-date basis.

Wipro's continued to record decline in business in 'Americas 2' region comprising Canada and select verticals comprising banking, financial services and insurance, manufacturing, hi-tech, energy etc in US, Europe and APMEA market comprising Australia, New Zealand, India, Middle East, South East Asia, Japan and Africa both on YoY and sequential quarter basis.

The company reported decline in business across all the segments except health services which grew by 7.3 per cent.

Delaporte said AI is now moving from "curiosity and experimentation stage" to becoming vital to business strategy.

"In fact, we can confidently say that every long-term large deal now has an AI component. A substantial portion of our clients are looking for us to develop use cases tied to their business goals. They want us to use AI models to drive tangible results. AI is now embedded across most of our existing solutions and offerings," he said.

Leveraging Gen AI to lighten the load on service desks, deliver faster and better client service is now part of every RFP in this space. "We are seeing strong interest in AI in the automotive and manufacturing industries," he said.

The company has 2.1 lakh employees trained on AI.

"Our goal is to ensure that every one at Wipro has the skills to fully leverage AI in their everyday world and for AI related client projects. And it started with me. We are accelerating Gen AI adoption internally by integrating technology across our entire portfolio platforms," Delaporte said.