IT demand is ‘normalising’ after pandemic highs, says Wipro CEO

• Wipro guided its constant currency revenues to move in the range of -2% to 1% sequentially.
• The company reported total bookings to the tune of $3.7 billion in the quarter which went up 3% year on year.
• BFSI, tech and communications are seeing low discretionary spending, while healthcare, energy and utilities are doing better.
  

Tech major Wipro’s MD & CEO Thierry Delaporte said on Thursday that technology investments are normalising after a sharp acceleration in spending in the second half of the pandemic.

“More clients are optimising costs and expecting faster returns on investments. Parallelly we are seeing demand in high growth areas like cloud transformation,” Delaporte said in the Q1 earnings press conference.

He added that sectors like banking and financial services, technology and communications are seeing low discretionary spending, while those like healthcare, energy and utilities are doing better.

“The Americas have seen a slowdown first and Europe has been holding well for us,” Delaporte said.

The company has reported total bookings to the tune of $3.7 billion in the quarter which went up 3% year on year. Its total contract value for large deals stood at $1.2 billion, which is up 9% in constant currency terms.

Softness in revenues, margins steady

Wipro reported a 2.8% fall in constant currency revenues for the first quarter of FY24 QoQ to $2.78 billion, in line with analyst expectations. It also maintained its operating margin at 16%.

The company said that despite softness in revenues, it has maintained margins in Q1 due to improved productivity, better utilisation of talent and by managing fixed costs.

It said that its constant currency revenues will move in the range of -2% to 1%, sequentially. “We expect revenue from our IT services business segment to be in the range of $2.72 billion to $2.8 billion,” the company said. It also expects to maintain its margins in the same range as Q1.

“We are in a market that could evolve one way or another,” said Delaporte explaining the wide range of guidance.

Attrition hits 8-month low; No fresher hiring in Q1

Wipro, like its peers, is seeing attrition falling every quarter and in Q1, it fell to 17.3%.

“Voluntary attrition has continued to moderate QoQ, coming in at an eight-quarter low of 14% in Q1,” the company said in a press release.

It refused to give any outlook in hiring for the fiscal year. “Hiring will depend on the macroeconomic environment. We will hire in areas like AI, security and calibrate it,” Saurabh Govil, chief human resources officer of Wipro, admitting that they have not brought any freshers onboard during the first quarter.

The company also said their variable pay payout stands at 80%, without giving further details.

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