India’s Wipro warns IT services rev could drop on slow client spending

INDIA’S Wipro warned on Friday (Jan 13) that revenue in its key IT services business could decline in the current quarter as clients delayed making spending decisions, a worry that the company’s peers have flagged as well.

The Indian IT services industry, which enjoyed a pandemic-led boom, is now contending with slower spending or at least delays in decision-making due to growing fears of a global recession.

Earlier this week, both Tata Consultancy Services and HCLTech said European clients were tightening spending.

Bengaluru-based Wipro said its fourth-quarter IT services revenue, which accounts for about 98 per cent of overall revenue, could range between a 0.6 per cent sequential drop and a 1 per cent sequential rise, in constant currency terms.

Wipro’s IT services revenue rose 0.6 per cent sequentially, to US$2.80 billion in constant currency terms, in the third quarter, and had jumped 3.1 per cent sequentially in the fourth quarter last year.

“The company has started winning large orders ... (but) there is certainly a little bit of a lag, a certain level of volatility in some sectors regarding discretionary spending and uncertainty,” Thierry Delaporte, chief executive and managing director of Wipro, said at a media conference.

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“The ramp-up of projects is taking a little more time due to the size (and) uncertainty. There is a little bit of lag in winning a contract and converting that into revenue.”

Still, the company’s total order bookings rose 26 per cent year-over-year to US$4.3 billion in the quarter ended Dec 31.

That helped the company’s net profit increase 2.8 per cent to 30.53 billion rupees (S$496.4 million), beating analysts’ average estimate of 29 billion rupees, according to Refinitiv IBES data. REUTERS