'Level of uncertainty among clients': Wipro CEO sounds a note of caution amid headwinds

As major economies face macroeconomic headwinds and confront the risk of a prolonged slowdown in growth, Wipro CEO and managing director Thierry Delaporte sounded a note of caution. Wipro acknowledges a sense of uncertainty has gripped clients. “In speaking to our clients every day, we have seen a change in the level of optimism as businesses around the world are dealing with inflationary pressures, geopolitical turmoil, energy crisis and rising interest rates. They are not saying that they are cutting spends on technology. They are saying we don’t know. There is a level of uncertainty,” Delaporte said, during the company’s Q2FY23 earnings press conference on October 12.

Delaporte, however, did express confidence about posting double-digit full-year growth in FY23 on the back of the firm’s ‘deep engineering expertise’ and ‘comprehensive set of offerings’.

Articulating the nature of the slowdown across sectors, Delaporte said that certain segments stand the risk of being more exposed to inflation and the economic deceleration that some regions are experiencing. “The retail sector will be a bit more exposed. We have already seen that the technology companies that have been growing tremendously are slowing down. It’s a fact,” Delaporte said.

The Bengaluru-based IT firm reported a 9% year-on-year drop in consolidated net profits during the quarter that ended September 30, 2022. Wipro’s consolidated net profit stood at ₹2,659 crore in Q2FY23 against a net profit of ₹2,930 crore reported in the year-ago period. Consolidated revenue from operations, though, increased by a decent 14.6% to ₹22,540 crore in Q2FY23. The firm posted revenues worth Rs 19,667 crore in the same period last year. Delaporte termed the Q2 performance as ‘strong’ given the shaky macroeconomic landscape.

“Our business strategy is strong and our value proposition continues to resonate among clients across markets. This is reflected in robust bookings, healthy deal signings, growth in revenues as well as operating margins,” Delaporte said.

In Q2FY23, Wipro bagged 11 deals with a TCV (total contract value) of $725 million—a strong booking trajectory, which Delaporte claims is translating into a 42% year-on-year growth in the firm’s large deal bookings for the first half of the fiscal year. “Large deal wins have continued to be really strong. Large, transformative deals are occupiers of our growth strategy. Our order bookings and large deals reflect improved market competitiveness and prove that our strategy is working,” Delaporte said.

To emerge as a service provider of choice and help its clients gain what the firm describes as ‘new, competitive edge’ amid a brewing economic crisis, Wipro is expanding its capabilities in areas like AI, data, 5G and IoT. “Our bookings are in data, cloud, security, and engineering more than ever,” said Delaporte.

The CEO assuaged market concerns by saying there has been no slowdown in bookings and the projection of bookings for the coming quarter is strong. “Are we seeing a slowdown in demand? I don’t think so. Is there a slowdown in decision processes? It is difficult to qualify. Are we seeing it sometimes? Yes. I believe large technology companies are slowing down,” reiterated Delaporte.

The CEO believes the nature and mix of deal portfolios will change and evolve in accordance with external conditions. “I think we are acknowledging the fact that we are in a time of more uncertainty and the market has changed compared to a year ago,” Delaporte added.