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Informist, Wednesday, Apr. 16, 2025

By Anjana Therese Antony and Anand JC

MUMBAI/NEW DELHI – Amid mounting worries across global markets about US tariffs, Wipro Ltd. said one of its clients has paused its deal with the company as the tariffs are expected to have a huge impact on it. "They asked us to pause," the management said at a post-earnings press conference in Bengaluru. "It was not a cancellation, but it was paused because they wanted certainty." The information technology player said it was doing a 'large transformation programme' with the client, who decided to conserve cash for the quarter due to the hazy outlook on tariffs.

The Bengaluru-based firm said uncertainties have increased dramatically over the past year, and it expects clients to be more conservative as a result, especially on large transformation programmes and discretionary spends. Based on current visibility, the company guided for a sequential revenue growth of IT services sales of between (-)3.5% and (-)1.5% in constant currency terms in the June quarter. This would translate to revenue of between $2.51 billion and $2.56 billion, Wipro said.

The global environment for the IT industry remained uncertain throughout FY25, and the turmoil caused by US tariffs only added to the haziness, the company said. "As we enter FY26, we are faced with headwinds on an uncertain macroeconomic environment that is putting downward pressure on our revenues," Chief Financial Officer Aparna C. Iyer said. "...our endeavour will be to maintain the margins in the narrow band in the coming quarters." For the March quarter, the operating margin for Wipro's IT services was 17.5%, unchanged on quarter and up 110 basis points on year.

Clients, particularly in the Americas and Europe, are more concerned about when the uncertainty will end than with the actual tariffs, Wipro suggested. Europe is likely to be hit as it currently has a huge trade surplus with the US. But the tariffs imposed by the US on China are also likely to hit some of Wipro's European clients, the company said, since many of them also have trading links with Chinese suppliers and the rising costs could adversely affect their discretionary spending.

The consumer and manufacturing sectors will be hit directly by the prevailing tariff uncertainties, while clients in other sectors will also feel the indirect impact, the management said. The Americas account for 63% of Wipro's revenue, while Europe contributes at least 26%. 

Wipro said its banking, financial services, and insurance vertical is also feeling some of the heat, but the segment has been doing well. "We are going through some client-specific issues in BFSI in Europe, which is impacting our overall BFSI growth rate," the company said. BFSI is Wipro's biggest vertical, accounting for 34.2% of revenue in Jan-Mar and 34.3% in FY25.

Wipro said its challenges in Europe continue, and the company saw a decline in the continent's revenue contribution in Jan-Mar to 26.1% from 27.8% a year ago. However, it said the deal pipeline in the Americas and Europe continues to be strong, and it is focused on closing these deals.

The management said it continues to see strong momentum in large deals. In the March quarter, Wipro closed 17 large deals with a total value of $1.8 billion across markets and sectors. In FY25, it closed 63 large deals for a total value of $5.4 billion, up 17.5% from FY24. 

The management also said generative artificial intelligence is an opportunity. "I am personally very excited with the opportunity of Gen AI in the context of changing the game for our clients," Chief Executive Officer Srini Pallia said. Artificial intelligence was central to every deal opportunity in FY25, it said. 

Wipro also said a leading Indian private-sector bank had expanded its strategic partnership with the company for digital transformation during the reporting quarter. "We will provide AI-powered solutions to strengthen compliance management, addressing the critical need for regulatory compliance while enhancing the overall experience for this bank," Wipro said. "This will help the bank boost operational efficiency and realize its growth ambitions."

Speaking about its subsidiary Capco, a UK-based IT consultancy company, the company said it had had strong performance in Jan-Mar, growing 6% sequentially and 11% on year. Capco also had strong bookings, which could have been better if the macroeconomic environment had been better, the management said. In 2021, Wipro had acquired Capco to strengthen its presence in the BFSI space and give it a strong consultation footprint. The IT major had appointed Anne-Marie Rowland as chief executive officer of Capco in 2024.

The IT giant also said supporting and growing global talent are a priority for it. Wipro hired 10,000 freshers in FY25 and said it will hire more in FY26. About their salaries, it said there is a demand-supply issue. "I can only say that at any level in the organisation, we will always pay competitive compensation," Chief Human Resource Officer Saurabh Govil said. "As things change, we will obviously be changing (the compensation packages)." Wipro's headcount rose to 233,346 as of Mar. 31, from 232,732 a quarter ago.

For the three months ended Mar. 31, Wipro posted 6.4% sequential growth in consolidated net profit at INR 35.70 billion. The company's revenue grew 0.8% to INR 225.04 billion. While the bottom line beat the Street's expectation of INR 33.38 billion, the top line was lower than the anticipated INR 226.38 billion. Ahead of the quarterly results, Wipro's shares closed 1.5% higher at INR 247.65 on the National Stock Exchange. At 1945 IST, American Depository Receipts of Wipro were down 3.4% at $2.725.  End

US$1 = INR 85.67

Edited by Rajeev Pai

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