Wipro has posted strong Q4 and full FY19/20 results, but also declined to offer guidance for the future.
The services giant’s full year revenue was US$8.1 billion, up 4.2 percent year on year. Net income grew by eight percent to $1.3bn. Q4 was a good one with $2.1bn of revenue representing 4.7 percent growth while net income grew 6.3 percent to $308.5m.
Execs were pleased with those numbers, suggesting they reflect the overall strength of its business and the quality of the services provided to clients.
They also addressed the impact of the coronavirus pandemic on the company’s finances. For Q4, Wipro thinks it took a revenue hit of between $14m and $16m, but still landed the quarter within its previous guidance. However the company decided not to issue Q1 20/21 guidance, as: “Due to the uncertainty around the course of the COVID-19 pandemic, we do not have visibility into the extent to which it will disrupt our operations”.
We already see instances of budget reductions, cuts in discretionary spend, request for temporary discounts and pricing pressure and restructuring of existing spends.
The pandemic then naturally dominated the company’s earning calls. Execs said 93 percent of staff now work from home, as do 90 percent of client-facing workers.
“In the past few days, our teams have settled into the new ways of working,” said CEO and managing director Abid Neemuchwala. “Managers are conducting daily standup calls to track people, their welfare, their wellbeing, and the customer service delivery is being managed through this.
“I'm pleased to report that our SLA performance has been stable, and we are collaborating well with our customers on delivering our commitments to them. Most of our customers have appreciated our business continuity planning and our ability to help them.”
Execs also pointed out that the things clients need most at this time is cloud and security, and that Wipro is pleased to have made big bets on both! The company is also pleased that its IP in fields such as virtual desktops allowed it to deliver quickly for customers, and feels that its consulting expertise will be appreciated as customers decide how to do things like price products and services in a post-pandemic economy.
But Neemuchwala also worried that if national lockdowns go deep into the July quarter, things could go pear-shaped.
“This is likely obviously to have a significant impact on our customers' business and earnings,” he said. “And hence, a cascading effect on their IT spends. We already see instances of budget reductions, cuts in discretionary spend, request for temporary discounts and pricing pressure and restructuring of existing spends. Sectors like retail, hospitality, airlines, energy, especially oil and gas and auto segment in the manufacturing business are experiencing a more immediate and deeper impact.”
While understandably guarded about its own future and its clients’ prospects, the company sees some upside in the current situation in that it has time to retrain staff who aren’t currently flat out on client projects.
Complicating matters further is that in January Neemuchwala announced his intention to step down. He re-iterated his intention to stay in his role until a replacement is found.
Amidst all the talk of coronavirus, Wipro’s new partnership with Microsoft didn’t even rate a mention! That alliance was announced mid-March and will see the Indian company create a global team to advise on and implement all three of Microsoft’s clouds - Azure , Modern Workplace and Business Apps – and offer an integrated service spanning them all. Wipro told us its ambitions for the alliance are “To bring unique value to our customers by accelerating adoption of horizontal cloud offerings, providing new vertical cloud solutions, leveraging partner ecosystem, building new accelerators leveraging Wipro’s domain knowledge, and grow our joint business.” ®