Wipro is betting on artificial intelligence (AI) and Cloud computing to earn more from its biggest contributor - the banking, financial services & insurance (BFSI) sector - which brought in 35 per cent of the revenue in FY23. The Bengaluru-headquartered firm also expects its consultancy arm Capco to aid in its vision. "Over the past few years, we have made significant investments in the BFSI sector and have improved our talent, capabilities, and processes in this space - both through organic investments and with the addition of Capco," Suzanne Dann, Wipro's chief executive officer for Americas 2 said.
Bengaluru-headquartered IT services major Wipro Limited on Thursday announced that it has signed an agreement to acquire Capco, a global management and technology consultancy to the banking and financial services industry, for USD 1.45 billion.
From the beginning of 2021 Wipro has moved on to a new organisational structure. Analyst tracking the company are now wondering if CEO Thierry Delaporte's attempt to bolster Wipro's presence in the BFSI (banking, financial services and insurance) space by acquiring Capco for $1.45 billion is a step taken too early. Though many agree that Capco as a target may be good, but Wipro, which has been the most aggressive player in acquiring firms compared to its Indian players, does not have much to show in terms of performance as it continues to lag peers.
Belgian IT company Capco on Wednesday opened its largest development centre outside Europe and plans to hire over 50 professionals this year to see India playing a core role in the firm's global IT operations.
IT company Wipro on Thursday reported a 21.2 per cent increase in its consolidated net profit to Rs 3,208.8 crore for the second quarter of FY25. It had reported a profit of Rs 2,646.3 crore in the year-ago period. The revenue from operations for the reporting quarter was Rs 22,301.6 crore, a 0.95 per cent decline from Rs 22,515.9 crore in Q2 FY24.
After startups and Big Tech, the layoff season may have begun at the $245 billion Indian information-technology (IT) industry. Bengaluru-based IT major Wipro is looking to cut hundreds of jobs, targeting mid-level employees working onsite as the company looks to improve margins, according to a media report, citing two sources. The company has said it is aligning its business and talent to the changing market environment.
Even as Srini Pallia, a Wipro veteran, is set to take charge as the chief executive officer (CEO) of the company, analysts expect the stock's underperformance to continue in the near-future. This, they believe, will be on the back of likely loss of market share, and difficult business environment. "We expect Wipro to underperform peers on growth once again in FY25 as channel checks and media reports suggest Wipro is losing share with select clients across multiple verticals.
Wipro on Friday revised upwards its IT services revenue outlook to 8-10 per cent sequential growth in the June 2021 quarter, following the completion of its $1.45 billion buyout of Capco. While announcing its March quarter results earlier this month, Wipro had said it expects to log a sequential growth of 2-4 per cent in its IT services revenues in the June 2021 quarter without including revenue from Capco and Ampion acquisitions. In March, Wipro had announced the acquisition of London-headquartered Capco in a $1.45 billion (over Rs 10,500 crore) deal - its largest ever till date.
The writing has been on the wall for some time. Exodus of senior leadership and growth behind its peers are reasons that have prompted Thierry Delaporte, the chief executive officer (CEO) of Wipro to resign, analysts said. Delaporte, Wipro's seventh CEO, also resigned without completing his five-year term, like his predecessor Abidali Neemuchwala decided to end his tenure prematurely in 2020. Phil Fersht, HFS Research CEO and chief analyst believes the change in leadership was at least six months overdue.
With the last quarter of 2023-24 (FY24) expected to have been soft owing to lower discretionary spend and macro uncertainty, many are hoping FY25 will be a year of recovery for the information-technology (IT) industry. The fourth quarter, January-March, is considered soft, and will continue to see the headwinds the sector has been facing. And the sector has entered the new financial year on a weak footing. Analysts are expecting Tier-I firms to report sequential growth of -1 per cent to 1.5 per cent and midcap players' growth may range between 0.7 per cent and 4 per cent.
'We have focused on it quarter after quarter and started to build the pipeline.'
'There is not one discussion with a client without a discussion around AI. They all have it on their mind.'
IT industry's growth will largely be led by next-generation technologies and services with areas like data, cloud and cybersecurity expected to see huge incremental growth, Wipro CEO Theirry Delaporte said. Wipro has also closed several acquisitions in the second half of FY21 across key markets like the US and Europe, which has helped the Bengaluru-based company strengthen its local presence and service offerings, he said in his note in the company's FY2020-21 annual report. "We know that industry growth will largely be led by next-generation technologies and services. "We can therefore expect to see huge incremental growth in areas such as digital, cloud, data, engineering, cybersecurity.
IT major Wipro on Thursday reported a 35.6 per cent jump in consolidated net profit to Rs 3,242.6 crore for the June 2021 quarter. Wipro had registered a net profit (attributable to equity holders) of Rs 2,390.4 crore in the year-ago period, as per Indian Accounting Standards (Ind-AS). Its revenue from operations increased by 22.3 per cent to Rs 18,252.4 crore in the reported quarter from Rs 14,913.1 crore in the same period last fiscal, Wipro said in a regulatory filing.
While Wipro leads the pack on absolute numbers, analysts for Infosys for reporting consistent growth, revising FY22 guidance and beating TCS on revenue growth.
A seasonally-strong quarter, with no immediate impact of the second wave and continued acceleration of digital transformation will allow the IT services sector to report a robust Q1 this financial year. However, key metrics to look out for will be attrition rate and margin lever as they will be impacted by salary hikes. Analysts expect growth for the quarter to be broad-based, with sectors like banking, financial services and insurance (BFSI), retail, manufacturing, hi-tech and life sciences driving revenue growth. Analysts across brokerage houses are pegging revenue growth in the range of 1.5 per cent to 4.5 per cent.
The analyst community tracking the Indian IT services industry took special note of Accenture's first quarter (Q1) performance, which showcased the rapid growth of its consulting business that outperformed its outsourcing business. Bookings indicate that the trend will continue. Consulting bookings increased 41.6 per cent year-on-year (yoy) to $9.4 billion, higher than the 17.6 per cent growth in outsourcing to $7.4 billion. The management commentary was also more bullish on the consulting business.
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