Wipro disappoints, posts surprise fall in Q3 profit

Revenues from IT services segment, which accounts for a significant portion of the company's topline, stood at $2.013 billion, remaining flat sequentially and up by 5.8 per cent year-on-year.

Wipro, India's third largest IT services firm, on Friday posted 8.4 per cent fall in consolidated net profit to Rs 1,931.3 crore for the December quarter but said it has been witnessing an improving trajectory of growth.

The company's net profit (attributable to shareholders) stood at Rs 2,109.6 crore in the year-ago period, as per Indian accounting norms (Ind AS).

Its revenue from operations was nearly flat at Rs 13,669 crore in the quarter under review.

The company missed its IT services revenue forecast of $2.014-2.054 billion, clocking $2.013 billion in the said quarter.

For the March 2018 quarter, it expects revenues from IT services business to be in the range of $2,033 million to $2,073 million.

"...we have been seeing an improving trajectory of growth over the past four quarters and our Q4 guidance further reflects that.

“While there are some customer specific uncertainties, CY18 commentary from our clients look positive and we are on the right track for FY19," Wipro CEO and member of the board Abidali Z Neemuchwala said.

He added that the company continues to see strong growth in digital, which now constitutes more than 25 per cent of its revenues.

"We are seeing ticket sizes in standalone digital deals increasing as customers are moving to the next level of digital adoption...We now have almost 90,000 technical employees trained on digital skills," he said.

The company said its IT services margin -- at 14.8 per cent --  was impacted by a provision of Rs 317.5 crore ($49.7 million) made with respect to insolvency of a customer post the balance sheet date.

Adjusted for this event, IT services margin was higher at 17.2 per cent.

Neemuchwala declined to name the client but said the customer is from the energy, natural resources and utilities (ENU) business.

The company has declared an interim dividend of Re 1 per share.

Neemuchwala said the company remains committed to increasing localisation in its global markets.

"...more than 95 per cent of our workforce in Latin America and nearly 2/3rd of our employees in Continental Europe are local.

“We are making progress on localisation in the UK and Singapore as well," he added.

IT products revenue for the third quarter was Rs 450 crore ($70 million).

The company saw its headcount at 162,553 at the end of the third quarter.

Saurabh Govil, president and chief human resources officer at Wipro, said the company has been hiring across the globe and on campuses, including this quarter.

"We continue to hire in all the new areas, specially on the digital technology side and as you heard- localisation, very clearly we have seen robust hiring happening in geographies as well," he added.

Photograph: Abhishek N Chinnappa/Reuters