'Market continues to be difficult for consulting business,' says Wipro CEO amid Q2 revenue drop

The macroeconomic and market conditions have been difficult for Wipro’s consulting business, Chief Executive Officer Thierry Delaporte said on Wednesday at a post-Q2 earnings' press conference in Bengaluru.

Delaporte said: “Consulting is a market where discretionary spending has been significantly reduced. The BFSI sector is down, and hence consulting from there has also been impacted a lot.”

Despite the ongoing slowdown in markets, the CEO remains optimistic of the business once discretionary spending improves.

“This will come back. They bounce back as soon as, you know, the volume of discretionary comes back,” he said.

The Indian IT major restructured its operations into four broad verticals– Wipro FullStride Cloud, Wipro Enterprise Futuring, Wipro Engineering Edge, and Wipro Consulting.

Wipro Consulting brings together the IT company’s acquisitions, including Capco, Designit, and Wipro’s domain and consulting business under one banner. The CEO noted that due to the cutbacks in discretionary spends, the consulting business has been impacted even more.

"We saw higher than usual impact of macroeconomic slowdown. Slowing demand and reprioritisation of client spends has weighed on our European business," he said.

The Indian IT company reported a sequential drop in revenue in the September ended quarter. Gross revenue came in at Rs 225.2 billion, $2.7 billion, which is a decrease of 0.1 per cent YoY. The IT services segment revenue was at $2,713.3 million, a decrease of 2.3 per cent QoQ. The Non-GAAP constant currency IT Services segment revenue decreased 2.0 per cent QoQ. Consolidated net profit at the company fell to Rs 2,646 crore in the quarter, from Rs 2,659 crore a year ago.

The recently appointed CFO of the company, Aparna Iyer, noted: “We remain focused on profitable growth despite a challenging market. Our disciplined approach to improve efficiency, productivity and utilization has led to an increase of 100 bps YoY in our IT services operating margins. Our absolute IT services segment EBIT grew 6 per cent YoY. We generated strong operating cash flow of 145 per cent of net income for the quarter.”

The CEO also shared a negative guidance for the upcoming quarters. He said,  "We expect revenue from our IT Services business segment to be in the range of $2,617 million to $2,672 million. This translates to sequential guidance of -3.5% to -1.5% in constant currency terms."