Wipro's revenue in the September quarter came in at the upper end of its guidance, but fell short of the robust performance by its cross-town peer Infosys. The company has provided a muted revenue guidance for the December quarter, citing furloughs and slower ramp up in some deals.
India's third-largest IT services firm's revenue stood at $1.83 billion, a sequential dollar revenue growth of 2.1% and a constant currency growth of 3.1% in the September quarter - well within its guidance of 1.5% to 3.5%. Infosys had a sequential revenue growth of 6%, but TCS was about the same as Wipro's.
Wipro's growth was led by growth in the healthcare & life sciences vertical, manufacturing and hi-tech, and consumer, transportation and government business.
The company expects revenues in the December quarter to be in the range of $1.84 billion to $1.87 billion, a sequential growth of 0.5% to 2.5%. Analysts had estimated that Wipro needs to grow at 2%-4% if it wants to touch 8%-10% year-on-year growth in 2015-16.
"For the guidance, the difficult thing to estimate is the impact of furloughs (employee leaves that a company mandates normally during the December holiday season). The second reason is lower working days and slower ramp ups of the deals we have closed," said T K Kurien, CEO of Wipro.
In the September quarter, the company's operating margin was 20.7%, slightly lower than the 21% it reported in the June quarter. This was largely on account of wage hikes. Wipro announced annual wage increments in June. Wipro CFO Jatin Dalal said the company's investments in next-gen delivery practices generated productivity that significantly mitigated the impact of wage hikes and utilization on operating margins.
Kurien said there is strong competition around large deals and there is pressure on pricing in large deals. Wipro is betting big on artificial intelligence, automation and process simplification as key levers to achieving operational efficiency. "There are plenty of margin levers. As we push automation, we are going to see significant uptick in terms of ability to take out applied manpower from projects. We believe digital is a massive opportunity, it is growing 2x compared to the rest of the business," Kurien said.
Among the verticals, healthcare and life sciences grew 3.8% sequentially and 5.8% year-on-year, while retail, consumer goods and transportation grew 2.4% sequentially and 11.9% over the same period last year. Wipro, which has a higher exposure to the oil & gas vertical compared to its peers, continues to witness pain in the sector as oil prices have been on a downward spiral. The segment's sequential revenue growth declined 1.4% and by 9.6% compared to the same period last year.
Kurien said the vertical was bottoming out. "Where there is consolidation happening in our large clients, we are winning all the deals. The negative is that, we are going through a transition and the revenue will kick in from the fourth quarter," he said.
India's third-largest IT services firm's revenue stood at $1.83 billion, a sequential dollar revenue growth of 2.1% and a constant currency growth of 3.1% in the September quarter - well within its guidance of 1.5% to 3.5%. Infosys had a sequential revenue growth of 6%, but TCS was about the same as Wipro's.
Wipro's growth was led by growth in the healthcare & life sciences vertical, manufacturing and hi-tech, and consumer, transportation and government business.
The company expects revenues in the December quarter to be in the range of $1.84 billion to $1.87 billion, a sequential growth of 0.5% to 2.5%. Analysts had estimated that Wipro needs to grow at 2%-4% if it wants to touch 8%-10% year-on-year growth in 2015-16.
"For the guidance, the difficult thing to estimate is the impact of furloughs (employee leaves that a company mandates normally during the December holiday season). The second reason is lower working days and slower ramp ups of the deals we have closed," said T K Kurien, CEO of Wipro.
In the September quarter, the company's operating margin was 20.7%, slightly lower than the 21% it reported in the June quarter. This was largely on account of wage hikes. Wipro announced annual wage increments in June. Wipro CFO Jatin Dalal said the company's investments in next-gen delivery practices generated productivity that significantly mitigated the impact of wage hikes and utilization on operating margins.
Kurien said there is strong competition around large deals and there is pressure on pricing in large deals. Wipro is betting big on artificial intelligence, automation and process simplification as key levers to achieving operational efficiency. "There are plenty of margin levers. As we push automation, we are going to see significant uptick in terms of ability to take out applied manpower from projects. We believe digital is a massive opportunity, it is growing 2x compared to the rest of the business," Kurien said.
Among the verticals, healthcare and life sciences grew 3.8% sequentially and 5.8% year-on-year, while retail, consumer goods and transportation grew 2.4% sequentially and 11.9% over the same period last year. Wipro, which has a higher exposure to the oil & gas vertical compared to its peers, continues to witness pain in the sector as oil prices have been on a downward spiral. The segment's sequential revenue growth declined 1.4% and by 9.6% compared to the same period last year.
Kurien said the vertical was bottoming out. "Where there is consolidation happening in our large clients, we are winning all the deals. The negative is that, we are going through a transition and the revenue will kick in from the fourth quarter," he said.
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