Wipro Cites U.S., U.K. ‘Uncertainties’ In Growth Next Quarter

Wipro announced gains in revenue, but warned in an earnings call that growth next quarter may be up only slightly or flat, due to uncertainties in the U.S. and with Brexit in the U.K., said CEO Abidali Neemuchwala.

“We don’t see any change in the demand environment at this point in time, but we do see at a macro level -- both in our two largest markets U.S. and some of the results that we've seen right now and in the U.K. due to Brexit that we all know -- our guidance incorporates some of those uncertainties,” he told investors last week. “Also, as we see a robust demand, we continue to see a very high level of pressure on talent and our ability to fulfill talent, and some of that risk is also built into our guidance.”

Neemuchwala told investors to expect 2 percent growth, at the top end, and no growth on the low end. He said during the third quarter the company also felt pressure in its health care business as well, which saw a 10 percent drop in enrollments, and that could carry over into January.

“Just to give you a sense, the open enrollment season is over for most markets, it will be over in January for all the markets. We’ve seen about 10 percent lower enrollment compared to our base last year,” Neemuchwala said. “The 10 percent lower enrollment, this is a price per member kind of business so it will result into a lower revenue and that has been incorporated in our guidance as well.”

Wipro saw revenue gains of 3.6 percent year over year, on $2.2 billion in sales during the quarter ending Dec. 31. IT Services drew in much of those dollars with that segment earning $2.04 billion, this quarter up 1.8 percent over last quarter. The company recorded $360.8 million in net income, 29.6 percent higher, year over year.

“The demand environment in the global markets is stable,” Neemuchwala said. “We do not see any immediate impact of the micro headwinds that some of the large economies have cautioned, but we continue to remain quite watchful. The traction in U.S. and Asia-Pacific and other emerging market remains healthy, and the growth this quarter is across industry segments.”

Among the larger deals signed this quarter: a large food distribution company hired Wipro to modernize and digitally transform its business, which will include incorporating data science and infrastructure services. An Australasian government agency hired Wipro to migrate its work to the cloud, and use Wipro HOLMESTM, an automation and artificial intelligence platform to move existing applications into a cloud work space.

Wipro also won a managed security services contract from a leading U.S. telecommunications company.