India's Wipro warns IT services rev could drop on slow client spending

By Sethuraman N R and Nishit Navin

BENGALURU (Reuters) -India's Wipro Ltd warned on Friday that revenue in its key IT services business could decline in the current quarter as clients delayed making spending decisions, a worry that the company's peers have flagged as well.

The Indian IT services industry, which enjoyed a pandemic-led boom, is now contending with slower spending or at least delays in decision-making due to growing fears of a global recession.

Earlier this week, both Tata Consultancy Services and HCLTech said European clients were tightening spending.

Bengaluru-based Wipro said its fourth-quarter IT services revenue, which accounts for about 98% of overall revenue, could range between a 0.6% sequential drop and a 1% sequential rise, in constant currency terms.

Wipro's IT services revenue rose 0.6% sequentially, to $2.80 billion in constant currency terms, in the third quarter, and had jumped 3.1% sequentially in the fourth quarter last year.

"The company has started winning large orders ... (but) there is certainly a little bit of a lag, a certain level of volatility in some sectors regarding discretionary spending and uncertainty," Thierry Delaporte, chief executive and managing director of Wipro, said at a media conference.

"The ramp-up of projects is taking a little more time due to the size (and) uncertainty. There is a little bit of lag in winning a contract and converting that into revenue."

Still, the company's total order bookings rose 26% year-over-year to $4.3 billion in the quarter ended Dec. 31.

That helped the company's net profit increase 2.8% to 30.53 billion rupees ($375.27 million), beating analysts' average estimate of 29 billion rupees, according to Refinitiv IBES data. ($1 = 81.3550 Indian rupees)

(Reporting by Nishit Navin in Bengaluru; Editing by Janane Venkatraman and Sohini Goswami)