Tough Quarter for Indian IT Giant
Wipro, a leading Indian IT services company, reported a lackluster performance for the third quarter of FY24, witnessing a 12% decline in net profit compared to the same period last year. This adds to a concerning trend, marking the fifth consecutive quarter of falling revenue for the company.
Challenges on Multiple Fronts
The decline can be attributed to a combination of factors, including a challenging business environment, internal leadership changes, and decreased bookings. Wipro’s consolidated revenue stood at Rs 22,205 crore, a 5% year-on-year drop. In US dollar terms, their core IT services revenue also dipped by 6%.
Management Perspective
Despite the negative outcomes, CEO Thierry Delaporte maintained a positive outlook, highlighting the company’s ongoing investments in people, processes, and operations. He emphasized their strong deal booking momentum, particularly in large deals, and saw early signs of growth in the Consulting segment.
Internal Churn and Margin Pressure
Wipro faced additional challenges due to internal churn in its top management and a difficult external environment. Their total bookings for the quarter were down 13.5% year-on-year, and operating margins declined from 16.2% to 16%. CFO Aparna Iyer assured that the company’s efforts to build a more resilient organization helped maintain margins despite revenue headwinds and investments.
Employee Impact and a Glimmer of Hope
The downturn impacted Wipro’s employee strength, resulting in a 21,875 decrease over the year, bringing the total to 240,234. However, a slight silver lining emerged with a revised revenue guidance for IT services in Q4, now ranging from -1.5% to +0.5%. This is an improvement from their previous guidance of -3.5% to -1.5%.
Looking Ahead
While Wipro navigates challenges and implements changes, questions remain about their ability to reverse the downward trend. Their performance in the coming quarters will be crucial in determining their success in overcoming the current obstacles and returning to sustained growth.
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