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- There is a little bit of a resurrection of discretionary spending in the market, said
Wipro CEO. - Wipro reported a 1.7% sequential decline in constant currency revenues in the third quarter.
- Wipro has guided for a better quarter ahead as it hopes revenues to range between -1.5-0.5%.
Wipro’s CEO Thierry Delaporte said on Friday that the IT service market is seeing greenshoots of evolution. The market has been under pressure for all tech majors as clients have been ramping down projects and cutting down on spends. While there is no dramatic change in the situation, it has started going in the right direction, he says.
“We are seeing a little bit of a resurrection of discretionary spending in the market. This is something we couldn’t have said a quarter or two ago,” Delaporte said at the company’s third quarter earnings conference on Friday.
The Bangalore-based tech major’s Q3 constant currency revenues declined 1.7% sequentially. This slip however was at the top end of the guidance it has given in the last quarter. It also guided for a better quarter ahead as it hopes its Q4 revenues to range between -1.5-0.5%.
Delaporte also believes that as the market starts to turn, consulting business will be the first to recover where Wipro has a good presence. “We have benefited from vendor consolidation. We have also grown our business from existing clients,” he added.
Rampdowns that Wipro has been seeing where streams of projects within accounts were stalled – is largely gone now. “No project has been cancelled as such,” he added. Within segments, healthcare exhibited a positive sequential as revenues from it grew 7.3%. But the rest of the sector — including BFSI, manufacturing, communications and more declined during the quarter.
The company’s operating margins for the quarter stood at 16%. “We are building a more resilient, agile, and efficient organization which has helped us sustain our margins at 16%, a 63 basis point improvement on a year-to-date basis despite revenue headwinds,” said Aparna C Iyer, CFO of Wipro.
Its total bookings for the quarter stood at $3.8 billion which is 13.5% lower on a year on year basis.
‘Promotions will trigger churn’
Speaking about the many top leaders exits that the company has seen recently, Delaporte said that the company is prepared for it. Stephanie Trautman, the chief growth officer of the company quit last December. In September, its CFO Jatin Dalal had quit the company — a role that was taken over Aparna Iyer. A few other top leaders had also exited the company in the last one year.
“We are promoting a lot of talent. It’s our strategy to acquire, enhance, grow and invest in talent. That’s triggering churn and a few people are leaving. But we are prepared for it and not destabilized it,” Delaporte said.
Wipro has also sued a few former employees. “It’s a matter of contractual obligations. We are not against anyone’s aspirations or career goals,” said Saurabh Govil, chief HR officer.
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