Wipro Ltd Q2 FY2024 Concall Summary

Key Takeaways

• Revenue declined, margin held: Constant-currency revenue fell 2% QoQ as discretionary spending stayed soft and large deals converted slowly, yet operating margin remained steady at 16.1% for H1, 110 bps above the H1 FY22 level.
• Large-deal engine hit a record: TCV of \$1.3 billion across 14 deals (each >\$30 mn) was the highest in nine quarters, including a deal close to half a billion dollars, showing the account-focus strategy is producing bigger wins even in a weak market.
• GenAI is scaling fast inside Wipro: 180,000 employees trained and active projects doubled quarter-on-quarter; the company is building a pipeline of use cases it intends to take to clients shortly.
• Europe surprised on the downside, but bookings provide cover: A slowdown in financial services and manufacturing drove the decline, yet 10% YoY TCV growth in order bookings underpins management's confidence in a swift rebound.
• What to watch next quarter: Whether the guided revenue decline of -3.5% to -1.5% QoQ materialises amid bigger furloughs, whether the restructuring spillover costs finally end, and whether Europe's strong bookings actually convert into a rebound.

Demand Environment

• What hurt Q2: Lower discretionary spending, slower conversion of the order book into revenue, and transformation programs being replaced by new ones at a slower pace. The consulting-heavy Americas-II region and BFSI sector felt the macro slowdown most acutely.
• Where the money is going: Client attention has shifted "certainly a lot bigger" toward cost takeout, cost optimization, and margin productivity in deals compared to a few quarters ago. Banks are focusing on cost takeout and vendor consolidation, which management frames as an opportunity.
• The market is not growing: Management was blunt that "this is not a growth market right now," citing macro instability, uncertainty, and client cautiousness. The first two years of the three-year strategy saw 40%+ growth; the current phase is about transformation, efficiency, and margin defence.
• Recovery timing is uncertain: Management declined to guide beyond Q3 or indicate a rebound from Q4 or Q1 of next fiscal. The consulting business is expected to bounce back first when demand returns, but no timeline was given.

Delaporte: "This is not a growth market right now. Let's face it, right."

Deal Wins & Order Book

The large-deal machine is becoming systematic: Wipro moved from winning large deals occasionally to doing so more systematically, with 14 deals above \$30 mn TCV this quarter and a pipeline that now includes mega deals above \$500 mn.

• Renewal vs new debate: Revenue from existing customers is ~99.6% vs 95-96% last year. Management said there is a "good balance between new and renewals" and that renewals can include increased scope in consolidation deals, but did not directly answer whether the large-deal TCV is mostly renewals.
• Conversion lag: Large deals take more time to convert into revenue, while the lower volume of discretionary spend removes the "now type of revenue" the company normally relies on.

Delaporte: "While we win large deals that may take a little bit more time to convert into revenue. There's a lower volume of discretionary spend being clocked if you like with our clients, that is the kind of now type of revenue that we are missing."

Vertical & Regional Performance

• Account strategy is deliberate: The company doubled top accounts (over \$10 crore) from 11 to 22 in two years by pruning smaller ones. Middle accounts (top 80) have "resisted a lot better" than smaller ones, confirming the strategy. The moderation in new client additions is consistent with this focus.

Delaporte: "You cannot invest unilaterally across the board. You have to make choices. And that makes a lot more sense to invest into partnership relationship with clients."

AI & GenAI

Internal adoption

• 180,000 employees trained in GenAI, with active projects doubling quarter-on-quarter. Use cases deployed include HR candidate background verification, marketing content generation and translation, sales research, knowledge engineering, and quality engineering and testing. Rollout to all employees is underway.
• Client examples: A US-based health insurer is using a GenAI chatbot for agents, driving a 30-40% reduction in operation costs. A European multinational telecom is using Wipro to generate high-quality synthetic data.
• Commercialisation path: Management said learnings from internal adoption will be taken to customers "shortly," with demand for GenAI services and expertise expected to increase greatly over the next 6 to 12 months.

Ecosystem

• GenAI Center of Excellence launched with IIT Delhi.
• Adoption is rapid across healthcare, consumer, financial services, hi-tech, and utilities.

Margins & Efficiency

• Margin steady despite revenue softness: Operating margin for H1 FY24 was 16.1%, 110 bps higher than H1 FY22, supported by delivery excellence, operational efficiencies, pivoting to high-quality businesses, reducing loss-making accounts, and faster bench deployment.
• Utilisation levers working: Utilisation rose 80 bps QoQ to 84.5% through sustained bench reduction, pyramid optimisation, onshore/offshore rationalisation, and tighter subcontracting cost control.
• Q3 headwinds are material: Wage hikes effective 1st December, slower growth, and bigger furloughs than the previous year make the margin endeavour "a challenging task." Management expects margins to stay range bound versus recent quarters.
• Restructuring spillover: The ₹220 crore reconciling item in Q2 is the spillover of the Q1 restructuring program (employee severance). Management called it "one-off in nature" but would not commit to it being over from Q3.
• Sales and marketing spike is non-recurring: The increase was driven by accelerated amortisation of one customer intangible, not a trend.

People & Operating Model

• New four global business line model implemented, enabling a "One Wipro" service excellence approach.
• NPS expanded by 840 bps, reflecting improved performance on client delivery, program governance, and capabilities.
• Partnership strategy deepening: Booking through partners increased from 25% in FY22 to 44% in FY23 to 53% in Q2.
• One new \$100 mn+ client added in Q2, bringing the total to 22 accounts.

Guidance & Commitments

Key Metrics