Wipro on Wednesday said that the demand for IT services remains strong and the firm’s clients are not cutting back on technology spends, shrugging off concerns over fears of a looming global recession. “Despite the uncertainties of the macroeconomic environment, if I look at our pipeline, our order booking and the discussion we are having with our customers, there has been no slowdown or pullback of spends for us. The demand for IT services is robust. Our overall pipeline is in fact at an all time high,” CEO and managing director Thierry Delaporte said in a post-results press briefing.
Clients continue to bet on services like cloud, digital, engineering services and cybersecurity. In fact, cloud now accounts for more than a quarter of the IT major’s business. “Our bookings in cloud are up 35% year-on-year,” Delaporte said.
Wipro’s order bookings in terms of TCV (total contract value) grew over 30% y-o-y during the April-June quarter while bookings in terms of ACV (annual contract value) grew 18% y-o-y during the period as transformational deals gathered pace. “The cloud transformative deals are a key pillar of our growth. They provide excellent opportunities to showcase our capabilities and scale. Our large deal bookings were nearly $1.1 billion which is almost three times of what we did last quarter,” said Delaporte.
The company doubled its count of customers in the more than $100 million bracket from 10 to 20 in the past two years while the tally of clients in the over $50 million bracket increased by eight in the past 12 months, said Delaporte, attributing the growth to the firm’s segmentation strategy.
“We have created a segmentation strategy to grow in key markets by deepening our relationship with existing clients and also by bringing on new clients who are looking for a strong business and technology transformation partner to help them digitise their businesses... we are pivoting our go to market investment to allow us to do that. This strategy has been paying off every single quarter,” said Delaporte.
Delaporte is confident about Wipro’s growth trajectory and is hopeful that the company will ‘comfortably’ grow in double digits in the current financial year. “We have guided for a revenue growth of 3-5% sequentially (for the next quarter) which will translate into a growth of 11.6-15.8% y-o-y in constant currency terms. We are very optimistic about the rest of the year,” said Delaporte.
Wipro posted revenues of ₹21,529 crore in Q1FY23, higher than revenues of ₹18,252 crore reported in the year-ago period. Net profits, though, decreased to ₹2,564 crore during the April-June quarter from profits of ₹3,232 crore in Q1FY22, a decline of about 21% year-on-year on the back of higher expenses.
Faced with a barrage of questions on the firm’s optimistic outlook for the next quarter despite the global economy being in the grip of macro-economic headwinds, Delaporte said that technology is not weighed in terms of costs anymore, rather it is an investment. “It is a way to transform and improve productivity and that’s probably why even in a cycle where there’s a bit less optimism macro-economically, companies continue to invest in technology. We should not underestimate the impact of a very strong performance in our bookings in this quarter,” said Delaporte.
“We have continued to see very good growth in the business. The interaction that we have with our clients across industries, across markets, all of that is giving this level of confidence that we will deliver this performance. We do not see a slowdown in spending,” he added.
Attrition rate at the firm stood at 23.3% during Q1FY23, a steep increase over the year-ago period when attrition rate stood at 15.5%. Chief human resources officer Saurabh Govil expects attrition to stay above 20% for a couple of quarters more post which some stabilisation is expected to set in. Wipro hired over 10,000 freshers during the quarter and is aiming to onboard more than 30,000 freshers during the year.
“We have been quite active in terms of making sure that our employees are paid fairly... the growth we experienced has also created a lot of opportunities for people. Our talent investments are paying off. Our attrition has continued to moderate and we expect further moderation ahead,” said Delaporte.
Shares of Wipro were trading in the green on the BSE on Thursday, last trading at ₹413.30 apiece, up 0.27%.