The results were announced after local markets closed on Thursday, so the impact on the Indian bourses will be known on Friday.
The better performance is the result of rising demand for digital transformation, a trend that is positively impacting most major IT services companies.
Wipro’s deal pipeline is good, and it is making fresh bets in newer technology areas and markets under its new chief executive Thierry Delaporte.
For the first quarter, Wipro’s sequential revenue guidance is between 2-4%, excluding its recent acquisition of British IT consultancy firm Capco and Australian cybersecurity services provider Ampion.
“That 2%-4% sequential growth translates into a year-on-year double digit growth of 11%-13%,” Delaporte said.
The good performance – if Delaporte can sustain it over the full year – comes after years of painfully sluggish growth. Wipro has been hobbled by internal business restructurings and bets on certain sectors which went awry, and which widened the gap between itself and rivals TCS and Infosys.
It also lost the tag of India’s third largest IT services company to HCL a few years ago.
For the fourth quarter ended March 31, the company’s revenue was up 0.5% on constant currency basis, compared to last year, while reported revenue was up 3.8% to $2.1 billion.
It added $82 million incremental revenue in the last three months. Those numbers are very low compared to those of Infosys and TCS, but for Wipro, it is its best fourth quarter in 10 years.
The impact on its shares on the BSE will be seen on Friday. Under Delaporte, who took over as CEO in July last year, the company’s shares have almost doubled.
“You may ask what has led to this performance. First of all, there is increased activity in the market that we have leveraged very well. Secondly, our numbers reflect the large deals we have been able to close. We have closed 12 large deals, resulting in a TCV (total contract value) of $1.4 billion,” Delaporte said.
Growth in the fourth quarter was driven by the consumer and technology verticals, which were sequentially up 2.9% and 7.1% respectively. BFSI was almost flat at 0.6%. The other businesses such as manufacturing, communications and health reported negative growth.
Operating margin rose 340 basis points compared to last year to 21%, but that will drop in this quarter as the company provides skill-based differential bonus and salary hikes to senior employees and promotion cycles across bands.
“We are in the top quarter of the guidance we had given for Q4. Margins have been quite healthy despite the investments we have made in the frontline as well salary increases and promotions of junior employees,” said chief financial officer Jatin Dalal.
Wipro said it has robust hiring plans for this fiscal. IT services companies are generally looking to ramp up their talent base due to more projects flowing in from clients.
“Fairly robust hiring planned in the coming quarters to meet the demand,” said Saurabh Govil, the company’s chief human resources officer. Demand refers to the digital transformation deals that clients are undertaking, including adoption of cloud, data & analytics, and cyber security.
That demand for such skills has also led to a talent war in the ecosystem resulting in higher attrition. Wipro’s was up to 12.1% from 11% sequentially, while Infosys saw it climbing to about 15% from 10% . Both are trying to keep their better-performing resources from jumping ship.
“The idea is to ring-fence the talent that is critical for our clients,” Govil added. Such interventions include promotion, and skill-based differential bonus.
The company added 7,404 employees in the fourth quarter, taking its total employee strength to 197,712 at the end of March. Total hiring for last year was 14,826.