Wipro loses $14 -$16 million to coronavirus in March quarter, skips revenue guidance for Q1FY21

• Wipro dollar revenue falls 1% sequentially
• Operating margins take 80 basis points hit
• Management cautions decreased discretionary spend and pricing pressure from clients

Bengaluru-based tech giant Wipro's IT services registered a revenue of $2,073.7 million in the fourth quarter of FY20, a sequential decrease of 1%, while the operating margins took a hit of 80 basis points on quarter-on-quarter at 17.6%.  

For the financial year 2019-20, Wipro reported a 1.7% year-on-year growth in revenue from IT services segment at $8,256.2 million.

In just a couple of week's exposure to COVID-19, the company estimated a revenue impact of around $14 -$16 million dollars, or 0.7%-0.8% of revenues, for the fourth quarter ended March 31, 2020.  Also for the first time since the listing on New York Stock Exchange (NYSE) in 2000, the company refrained from providing guidance for the quarter going ahead, owing to lack of visibility in disruption of operations caused by COVID-19 pandemic.

Wipro cautioned that the coming quarter will also see a decline in revenues with margins coming under pressure as clients looking at budget reductions, cuts in discretionary spend, pricing pressures and restructuring of existing spends. "Sectors like retail, hospitality, airlines, energy and manufacturing will experience a more immediate and deeper impact," said Abidali Neemuchwala, CEO & MD, Wipro.

Also Read: Wipro net profit rises 8% to Rs 9,772 crore in FY20; suspends revenue guidance on coronavirus uncertainty

The company, however, in order to sustain its revenue could see some trade-off in areas like hiring, salary increases, discretionary spends and sub-contracting costs during the year. While Wipro said it would honour the campus offers made, however, the on boarding has been deferred. The company has also deferred its increment and promotion cycle which typically was undertaken in April-June period (Q1).

In an update on the CEO search, Saurabh Govil, President and Chief Human Resources Officer, said the company was under the process of selection and expect to complete it by the end of the quarter with a COVID-19 caveat.

The company said it has enabled nearly 1.65 lakh billable client-facing employees to work from home (WFH). "We moved massive number of desktops, additional laptops and data-cards to employees' homes. We also created additional capacity for Cloud VDI, VPN etc" said Abidali Neemuchwala.

"All these hectic efforts ensured that today nearly 93% of our employees are approved to WFH by our customers. Around 90% of our staff engaged in projects have been enabled globally to WFH," he added. The company said currently 98% of IT services employees and 75% of the BPO employees are working from home.