Wipro's growth lags peers, co cautious about recovery

BENGALURU: It's an uphill task for the hiker. Wipro 's new CEO , Srini Pallia, faces significant challenges as the company's performance lags behind its peers across various financial metrics. Despite this, Wipro's shares rose 3% in early trading on the NYSE, reflecting a realistic growth forecast in a volatile demand environment.

In the March quarter, Wipro's revenue declined by 0.3% sequentially in constant currency, attributed to ongoing weakness in the banking, financial services, manufacturing, and communications sectors. IT firms remain cautious about the near-term recovery of discretionary spending, indicating continued pressure.

For 2023-24, Wipro's revenue declined by 4.4% in constant currency, a significant drop compared to the modest growth rates of 3.4% and 1.4% achieved by its peers, TCS and Infosys, respectively. "Last year posed big challenges for the whole industry. It has affected Wipro's performance too. The economic environment is still uncertain, and there might be more challenges in the short term," Wipro CEO Srini Pallia said in the earnings press conference on Friday.

Pallia stated that while the organizational structure and strategy remain unchanged, he has identified five immediate priorities to accelerate growth. These include enhancing large deal momentum, strengthening relationships with key clients and partners, focusing on industry-specific offerings and business solutions, building talent scale, simplifying the operating model, and emphasizing execution rigour with speed.

Wipro's IT services margins expanded by 40 basis points sequentially to 16.4%, primarily due to reduced subcontractor costs offsetting the impact of two months of wage hikes. The company's total bookings grew by 5.5% in constant currency to $14.9 billion in the 2023-24 financial year, while its large deal bookings increased by 17.4% to $4.6 billion.

However, Wipro's revenue growth forecast for the June quarter was below expectations, guiding for a growth of -1.5% to 0.5%, lower than market anticipation and signalling stress in the demand environment. Wipro's headcount continued to decline for the sixth consecutive quarter, with a reduction of 6,180 employees in the March quarter. Over FY24, the company's workforce decreased by 24,516 to 2.3 lakh employees as automation gives more headroom to drive efficiency.