Wipro Q1 trails peers; revenue down 1.4% to $2.6 bn | Bengaluru News
Bengaluru: Wipro struck a cautious note on near-term demand after reporting a modest June-quarter performance compared with its larger peers, saying clients continue to prioritise AI investments while remaining selective on discretionary spending.For the quarter ended June, Wipro’s IT services revenue stood at $2.6 billion, down 1.4% sequentially but up 1% year-on-year. In constant currency, revenue declined 1.2% sequentially and increased 0.9% year-on-year. IT services operating margin fell to 16%, down 130 basis points sequentially and 120 basis points from a year earlier, reflecting the impact of wage hikes and continued investments. Total bookings stood at $3.3 billion, while large deal bookings rose 12.9% sequentially in constant currency to $1.6 billion.By comparison, TCS reported June-quarter revenue of $7.6 billion, up 2.7% year-on-year and largely flat sequentially, while HCLTech posted revenue of $3.6 billion, down 0.9% sequentially but up 3% year-on-year. In constant currency, TCS grew 0.4% sequentially and 3.2% year-on-year, while HCLTech declined 0.5% sequentially but grew 2.6% year-on-year.The company guided Sept-quarter IT services revenue in the range of $2.5 billion to $2.6 billion, implying sequential constant currency growth of -1.5% to 0.5%. “While the demand pipeline remains healthy, there is still uncertainty, and that has been factored into our guidance,” CEO Srini Pallia said.Pallia said the demand environment has not weakened materially, but spending patterns have become more disciplined.“Technology investments have not slowed — they have become more focused,” he said during the earnings call. “Clients continue to invest in AI, data, cloud modernisation, cybersecurity and productivity-led transformation, but decision cycles have become longer and spending is being measured with greater rigour.”He said enterprises are increasingly reallocating budgets from conventional IT projects to AI initiatives, resulting in softer discretionary spending. “The pipeline is primarily driven by cost optimisation and vendor consolidation. Clients are taking costs out of traditional IT spending to fund AI investments,” he said.Pallia said conversations around AI have become more sophisticated, with enterprises seeking measurable business outcomes. “Clients are increasingly focused on net productivity and require a tighter linkage between their AI investments and business outcomes,” he said, adding that while concerns around rising LLM token consumption persist, the industry is likely to stabilise as AI adoption matures.Regionally, Wipro continues to see strong momentum in BFSI, particularly in the Americas, although healthcare remains under pressure due to ongoing transitions in the US market.Responding to concerns about margin pressure, chief financial officer Aparna Iyer said the recent wage hike had created temporary headwinds but expressed confidence that margins would recover over the next few quarters.On hiring, chief human resources officer Saurabh Govil said Wipro did not hire freshers during the quarter. Last year, the company onboarded about 7,500 graduates, taking the headcount tally to about 2.4 lakh employees. “We will reassess hiring depending on the demand environment, but we are not providing any hiring guidance at this point,” Govil said.
