Q2 2025 Wipro Ltd Earnings Call
Ladies and gentlemen, Ghatayan welcome to Vipro Limited Q2 F5 25 earnings call
Unknown Executive: As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference has been recorded.
Speaker Change: As a reminder, all participants' lines will be in the list in only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touchtone phone.
Deepak Bohra: I now hand the conference over to Mr. Deepak Bohra, Senior Vice President, Corporate Treasurer and Investor Relations.
Speaker Change: Please note that this conference is being recorded. I now hand the conference over to Mr. Deepak Bohra, Srinivas Presiden, Corporate Treasurer and Investor Relations. Thank you, and over to you, sir.
Unknown Executive: Thank you, and over to you, sir.
Deepak Bohra: Thank you, Yashashri. Warm welcome to our Quarter to Financial Year 25 earnings call. We will begin the call with the business highlights and overview by Srinivas Kaliya, our Chief Executive Officer and Managing Director, followed by updates on financial overview via CFO Uparna IR.
Deepak Bohra: Yeah, thank you Yashashri. Warm welcome to our Quarter 2 Financiallyer 25 earnings call. We'll begin the call with the business highlights and overview by Srinivas Pallia, our Chief Executive Officer and managing director followed by updates on financial overview via CFO Apparna Iyer. We also have our CHRO sort of govil on this call. Afterwards, the operator will open the bridge for Q&A with our management team.
Deepak Bohra: We also have our CHRO, Saurav Gowil, on this call. Afterwards, the operator will open the bridge for Q&A with our management team.
Deepak Bohra: Before Srinivas starts, let me draw your attention to the fact that during this call, we may make certain forward-looking statements within the meaning of Private Securities Litigation Reform Act 1995. These statements are based on management's current expectations and are associated with uncertainties and risks, which may cause the actual results to differ materially from those expected. The uncertainties and risk factors are explained in our detailed filings with the SEC. Vipro does not undertake any obligation to update the forward-looking statements, to deflect events and circumstances after the date of filing.
Deepak Bohra: Before 3D starts, let me draw your attention to the fact that during this call, we may make certain forward-looking statements. Within the meaning of private security's litigation reform at 1995.
Deepak Bohra: These statements are based on management, current expectation and are associated with uncertainties and risk, which may cause the actual results to differ materially from those expected. The uncertainties and risk factors are explained in our detail filings with SEC.
Deepak Bohra: Viprot has not undertaken any obligation to update the forward looking statements, to reflect events and circumstances after the date of filing.
Deepak Bohra: The conference call will be archived, and a transcript will be available on our website.
Speaker Change: The conference call will be archived and a transcript will be available on our website. With that, I would like to turn over the call to Srinivas.
Deepak Bohra: With that, I would like to turn over the call to Srinivas Kaliya.
Srinivas Pallia: Thanks, Deepak.
Srinivas Pallia: Hello, everyone. Thank you for joining me and my leadership team for our second quarter results for the financial year 2024-25. In Q2, we met our expectations for revenue, bookings, and margins. The long-term potential of our business is strong, and we are prepared to handle the current economic uncertainties. We continue to focus on our five strategic priorities and building a strong talent pool to capture AI opportunities. Now, let me go over the financial highlights for the quarter and share some specific insights on our markets and industry sectors. All the revenue growth numbers I share will be in constant currency.
Srinivas Presiden: Thanks Dipak.
Srinivas Presiden: Hello everyone!
Srinivas Presiden: Thank you for joining me and my leadership team for our second quarter results.
Srinivas Presiden: So, the financial year 2024-25.
Srinivas Presiden: Thank you too.
Srinivas Presiden: We met our expectations for revenue, bookings and margins.
Srinivas Presiden: The long term potential of a business is strong.
Srinivas Presiden: and we have prepared to handle the current economic uncertainties.
Srinivas Presiden: We continue to focus on our five strategic priorities.
Srinivas Presiden: and Building a strong talent pool to capture the eye opportunities.
Srinivas Presiden: Now, let me go over the financial highlights for the quarter.
Srinivas Presiden: and share some specific insights on our markets and industry sectors.
Srinivas Presiden: All the revenue growth numbers I share will be in constant currency.
Srinivas Pallia: Our IT services revenue for quarter two was $2.66 billion, reflecting a sequential growth of 0.6%. This brings us closer to the upper end of our guidance. Operating margins came in at 16.8%, which is an expansion of 35 basis points quarter-on-quarter and 71 basis points year-on-year. In terms of total bookings, we ended the quarter at $3.6 billion. , which is an 8.4% increased quarter and quarter. Our capital business continued to see traction and grew 3.2% quarter-on-quarter and 6.9% year-on-year. Coming to our strategic market unit performances, we saw sequential growth in three of the four markets in quarter two.
Srinivas Presiden: Our IT services revenue for what it was.
Srinivas Presiden: 2.66 billion dollars, reflecting a sequential growth of 0.6%.
Srinivas Presiden: This brings us closer to the upper end of our guidance.
Srinivas Presiden: Operating margins, came in at 16.8 percent.
Srinivas Presiden: which is an expansion of 35 basis points quarter on quarter.
Srinivas Presiden: and 71 basis points.
Srinivas Presiden: yet on you
Srinivas Presiden: In terms of total bookings, we ended the quarter at 3.6 billion dollars.
Srinivas Presiden: which is an 8.4% increase quarter and quarter.
Srinivas Presiden: Our Capcom business continued to see traction and grew 3.2% quarter on quarter and 6.9% Aeronia.
Srinivas Presiden: Coming to a strategic market unit performance?
Srinivas Presiden: We saw sequential growth in three of the four markets in quarter two.
Srinivas Pallia: America's one achieved sequential growth of 1.2% driven by good performance in health care, technology, and communication sectors. America's two also recorded sequential growth of 0.8%, supported by robust demand and strong execution in pay for size sector. Apnea grew by 0.3% driven by traction in Capco. We are seeing early signs of a business stabilizing in this region. Europe registered a sequential decline of 0.1% due to overall weak demand and client-specific issues in few accounts. Among industry sectors, we experienced varied performance. With strong account mining and traction in Capco business, BFSI continued to accelerate, delivering 2.7% sequential growth.
Srinivas Presiden: America's one achieved sequential growth of 1.2% driven by good performance in health care, technology and communication sectors.
Srinivas Presiden: America's two also recorded sequential growth of 0.8% supported by robust demand and strong executions in vapor size sector.
Srinivas Presiden: Tap Meha, Group I 0.3% driven by traction in Capco.
Srinivas Presiden: We are seeing early signs of a business stabilizing in this region.
Srinivas Presiden: i
Srinivas Presiden: Among Industry Sectors.
Srinivas Presiden: We experienced varied performance.
Srinivas Presiden: With strong account mining and traction in Capcom business.
Srinivas Presiden: BFSIC, Continued Taxulrate Deloved Delivering 2.7% sequential growth.
Srinivas Pallia: This growth was led by America's. Additionally, we are seeing momentum in both apnea and Europe. This marks the third consecutive quarter of growth in BFSI. Technology and communications grew by 1.6% sequentially, driven by the ramp up of a recent large deal and momentum in existing relationships. However, manufacturing remained soft for us, with a sequential decline of 2%. We are seeing good progress with a consulting-led industry solution in the automotive manufacturing segment. In addition, there are also signs of uptick in demand in the industrial segment. We will focus on converting this into wins to revive growth in manufacturing.
Srinivas Presiden: This growth was led by Amit Choudhary.
Srinivas Presiden: Arishnali, VR seeing momentum in both Atmya and Europe.
Srinivas Presiden: This marks the third consecutive growth, quarter of growth in the FSI.
Srinivas Presiden: Technology and Communications grew by 1.6% sequentially driven by the ramp-up of a recent large deal and momentum in existing relationships.
Srinivas Presiden: Palabar!
Srinivas Presiden: Manufacturing remained soft for us with a sequential decline of 2%.
Srinivas Presiden: We are seeing good progress with a consulting lead industry solution in the automotive manufacturing segment.
Srinivas Presiden: In addition, there are also signs of optic in demand in the industrial segment.
Srinivas Presiden: We will focus on converting this into wins to revive growth in manufacturing.
Srinivas Pallia: Energy and utilities also remain weak, with a sequential decline of 3.7%. However, we see opportunities for vendor consolidation and cost takeout, particularly in the energy sector.
Srinivas Presiden: Energy and Uttis did also remain weak with a sequential decline of 3.7%.
Srinivas Pallia: As you may remember, from the last 2 quarters, we identified 5 strategic priority areas of growth. We have advanced in all 5 areas, and I would like to take this opportunity to share some indicators of our progress in quarter 2. One, we stayed focused on growing our large accounts in our 4th profitable and six priority sector and we will continue to invest in them for expansion and growth. In quarter two, our top account grew 4% sequentially, top five accounts grew 6.2% sequentially, and top ten accounts grew 3.7% sequentially, reflecting our focus on expanding our footprint and scaling our large accounts.
Srinivas Presiden: As you may remember, from the last two quarters, we identified five strategic priority areas of growth.
Srinivas Presiden: We have advanced in all five areas.
Srinivas Presiden: And I would like to take this opportunity to share some indicators of our progress.
Srinivas Presiden: in Quarter 2.
Srinivas Presiden: 1. We stayed focused on growing our larger counts in our four profitable markets.
Srinivas Presiden: and 6 private sectors.
Srinivas Presiden: and we will continue to invest in them for expansion and growth.
Srinivas Presiden: In quarter two, our top account grew 4% sequentially.
Srinivas Presiden: Top 4 Accounts Group, 6.2% sequentially and Top 10 Accounts Group, 3.7% sequentially.
Srinivas Presiden: Reflecting our focus.
Srinivas Pallia: Of course, large deals are crucial for our growth. During the quarter, we booked 19 large deals with TTCV of $1,489 million. This translates to a growth of 29% sequentially and 16.8% on a year-on-year basis. It is encouraging to see the diversity in our large wins across sectors. The deals we want cover a variety of themes from cost of cost reduction and vendor consolidation to application modernization and cloud operations. In fact, we are leading these deals with industry and cross-industry solutions, which are consulting-led and AI-powered.
Srinivas Presiden: Of course, large deals are crucial for a growth.
Srinivas Presiden: During the quarter.
Srinivas Presiden: We booked 19 large deals with a tea series of...
Srinivas Presiden: 1,489 million dollars.
Srinivas Presiden: This Translate.
Srinivas Presiden: To a growth of 29% sequentially and 16.8% on a year or near basis.
Srinivas Presiden: It is encouraging to see the diversity in our large winds across sectors.
Srinivas Presiden: The deals we want cover a variety of themes from cost-up cost reduction and vendor consolidation.
Srinivas Presiden: Diplication Modernization and Cloud Operations.
Srinivas Presiden: In fact, we are leading these deals with industry and cross industry solutions which are consulting and air forward.
Srinivas Pallia: Let me briefly talk about the two largest deals we want in quarter two. A leading transportation and logistics company has selected Wipro to drive a business-critical SAP S4 HANA transformation program. This win involved collaboration within all our consulting arms, Rising, Designing and Capco. It also highlights our industry knowledge and ability to deliver customized solutions to clients. In the second example, a software technology company has selected us to support its product development and IT operations into end. This is a total outsourcing deal where Wipro will consolidate vendors and take over engineering, application, infrastructure, and operations for the client.
Srinivas Presiden: Let me briefly talk about the two largest deals we won in quarter two.
Srinivas Presiden: A leading transportation and logistics company has selected Vipro to drive a business critical SAP S4 Anna Transformation Program.
Srinivas Presiden: this ring
Srinivas Presiden: Involved collaboration within all of our consulting arms, rising, designate and cap co.
Srinivas Presiden: It also highlights our industry knowledge and ability to deliver customized solutions to clients.
Srinivas Presiden: The Second Example.
Srinivas Presiden: is a perfect technology company as selected as.
Srinivas Presiden: to support its product development and IT operations into end.
Srinivas Presiden: This is a total also sing deal where withdrawal will consolidate vendors.
Srinivas Presiden: and Take Over.
Srinivas Presiden: Engineering, Application, Infrastructure and Operations.
Srinivas Pallia: Additionally, we will implement Gen app-powered solutions to solve business challenges and deliver operational efficiency. It's important to highlight that one of these deals involves a new client, while the other marks our transition from having a minimal presence to becoming a strategic partner.
Srinivas Presiden: for the client.
Srinivas Presiden: Adishnily.
Srinivas Presiden: Be Will Implement, Generate Our Solutions to Solve Business Challenges.
Srinivas Presiden: and Deliver Operation Exciency.
Speaker Change: It's important to highlight that one of these deals involves a new client.
Speaker Change: Walsh Adamach, or Transition.
Srinivas Pallia: Let me now talk about another strategic priority, which is building talent at scale. We believe all our employees should adopt an AI mindset, other right skill set, and use the right tool set in their work for our clients. In previous quarters, I have discussed our investments in rescuing our workforce for AI opportunities. We have now trained and certified over 44,000 employees on advanced AI, and we have a significant number of employees actively using AI developer tools across the company. In addition, we are developing talent closely aligned with our client's business needs. For this, we have established account-specific economies to upskill employees, providing a clear roadmap for building capabilities relevant to both the industry and the technology context.
Speaker Change: Let me now talk about another strategic priority which is building talent at scale.
Speaker Change: Vibili.
Speaker Change: All Or Employees Shoot Adopt and Iyer Minds it.
Speaker Change: Other right skillset and use the right toolset in their work for our clients.
Speaker Change: In previous quarters, I have discussed our investments in risk killing our workforce for AI opportunities.
Speaker Change: We have now trained and certified over 44,000 employees on Adron's AI.
Speaker Change: And we have a significant number of employees actively using AI Tolopatools across the company.
Speaker Change: In addition, we are developing talent, closely aligned with our client's business needs.
Speaker Change: For this?
Speaker Change: We have established account specific academies to upskill employees.
Srinivas Pallia: Before I share our guidance for the next quarter, I want to thank all my colleagues for their amazing support. As an organization, we grow by actively listening to feedback. In August, we conducted our annual employee engagement survey, and in addition, I have made it a priority to connect with employees wherever I go. We have taken specific actions based on their feedback. As you are aware, we implemented a merit salary increase effective September 1, just nine months after the last cycle, demonstrating our ongoing commitment to our employees. Last month, we hosted a leadership summit where our top three leaders from across the globe gathered right here in Bangalore to reflect on our business and chart our future direction.
Speaker Change: 4. I share our guidance for the next quarter.
Speaker Change: I want to thank all my colleagues for their amazing support.
Speaker Change: As an organization, we grow by actively listening to feedback.
Speaker Change: In August, we conducted our annual employee engagement survey, and in addition.
Speaker Change: I have made it a priority to connect with employees.
Speaker Change: Veriburai Cool.
Speaker Change: We have taken specific actions based on their feedback.
Speaker Change: As you are aware, we implemented merit salary increase, effective September 1, just 9 months after the last cycle.
Speaker Change: Demonstrating are ongoing commitment to our employees.
Speaker Change: Last month!
Speaker Change: We hosted a leadership summit where our top three interleaders from across the globe gathered right here in Bangalore.
Speaker Change: to reflect on our business.
Srinivas Pallia: It was encouraging to see that we have come together as Team Vipro, and there's a strong commitment to driving client success. I hope to harness this momentum and continue moving forward together.
Speaker Change: and Shark of Future Direction.
Speaker Change: It was encouraging.
Speaker Change: To see that we have come together as Team Vipro and there is a strong commitment to driving client success.
Srinivas Pallia: Now on to guidance. Our Q3 revenue is expected to be affected by seasonal furloughs and fewer working days in this quarter. As a result, we are guiding for a sequential revenue growth of minus 2% to 0% in constant currency. Dispikes ofness in revenue in quarter three, we are confident of maintaining our margin in a narrow band.
Speaker Change: i
Speaker Change: No one to get it.
Speaker Change: Art Q3 revenue is expected to be affected by seasonal furloughs and fewer working days in this quarter.
Speaker Change: As a result.
Speaker Change: We are guiding for a sequential revenue growth of minus 2% to 0% in constant currency.
Speaker Change: Dispikes ofness in the venue in 43, VR, Confident of maintaining our margin in a narrow bank.
Srinivas Pallia: With that, let me turn it out up for now for a detailed overview of our financial financials.
Speaker Change: Vidak.
Speaker Change: Let me turn it out, Aparna for a detailed overview of a financial financial. Thank you. Aparna out to you. Thank you, Shreemi. Good evening, ladies and gentlemen.
Srinivas Pallia: Thank you, up and out to you.
Aparna Iyer: Thank you, Shraini.
Aparna Iyer: Good evening, ladies and gentlemen. I'll share a quick update, after which we will open up for Q&A. On the IT services revenue for Q2, we deliver a sequential growth of 1.3% quarter-on-quarter and reported currency, and a growth of 0.6% in constant currency. This is closer to the upper end of a guidance rate that we laid out last quarter. We are pleased to share that our operating margins for the quarter was at 16.8%. An expansion of 35 basis points quarter on quarter and 71 basis points here on here. This brings us one step closer to our earlier conveyed target band of 17 to 17 and a half.
Aparna: I'll share a quick update after which we'll open up for Q&A.
Aparna: On the IT services revenue for Q2, we deliver a sequential growth of 1.3% quarter-on-quarter in the border currency and a growth of 0.6% in constant currency. This is closer to the upper end of our identity that we laid out last quarter.
Aparna: The pleased to share that our operating margin for the quarter was a 16.8 percent, an expansion of 35 basis points, quarter and 71 basis points here on you. This brings us one step closer to our earlier conveyed started band of 17 to 17.5.
Aparna Iyer: This expansion in margins was achieved on the back of operational improvements and after absorbing one month of salary increments that we rolled out for our associates, effective for September. We begin Q3 with headwinds of furlough and incremental impact of salary increases. Yet we remain confident of staying in an arrow band of margins. Our net income grew 21.3% year on year. This was on the back of higher operating profits, which grew at 11.4% year on year. Our EPS was at INR 6.14, which grew 6.8% sequentially. Quarter Two was yet another quarter of strong cash flows. Our operating cash flows of $510 million in Q2 is at 132.3% of our net income.
Aparna: This expansion in margins was achieved on the back of operation improvements and after absorbing one month of silvery increments that we rolled out for our associates effective for September.
Aparna: We begin Q3 with headwinds of follow and mental impact of salary increases, yet we remain confident of staying in a narrow band of margins.
Speaker Change: Arnethin Kam, Group 21.3% Your Onion, This is on the back of higher operating profits, which grew at 11.4% Your Onion
Speaker Change: R-E-P-S was at I-N-R 6.14, which grew 6.8% sequentially.
Speaker Change: 2, Wattheet Another Quarter Of Strong Cash Flows, Our Operating Cash Flows of $510 million, in Q2 is at 1,32.3% of our net income. With this we are accumulatively for H1 generated nearly a billion dollars in operating cash flows.
Aparna Iyer: With this, we have accumulatively for H1 generated nearly a billion dollars in operating cash flows. At the end of Q2, our investments and cash balances on our balance sheet now stands at 6.2 billion dollars. In other key matrices, our other income net of the finance expenses grew 34.2% sequentially. Our accounting yield for the average investments held in India was at 7.9%. ETR is at 24.6% in Q2. Our hedges continue to be in line with our policy. We are about 2.8 billion dollars for its derivative contracts as hedges at the end of Q2.
Speaker Change: A Dend of Q2 are investments and cash balances on a balance sheet now stands at $6.2 billion.
Speaker Change: In other key measures, a rather income, net of the finance expenses, grew 34.2% sequentially.
Speaker Change: I am counting you for the average investment held in India was a 7.9% ETR is a 24.6% in Q2.
Speaker Change: I just continue to be in line with a policy, we are about 2.8 billion dollars for executive contracts average of the end of Q2.
Aparna Iyer: Finally, before I move to guidance, I would like to share that in our recently concluded board meeting, the board of directors have recommended the issue of bonus shares to our shareholders in the ratio of 1 to 1, subject to the approval of shareholders. Originally, we are working through our revised capital allocation in line with our strategy, and hopefully we will be able to share the details of that after our January board meeting.
Speaker Change: Finally, before I move to guidance, I'd like to share that in our recently concluded board meeting, the Board of Directors have recommended issue of bonus shares to our shareholders in the nation of 1st to 1, subject to the approval of shareholders.
Speaker Change: Initially, we are working through our revised capital allocation in line with our strategy and hopefully we will be able to share the details of that after a January board meeting.
Aparna Iyer: In terms of our guidance to rate rate, what was stated by Shrini, we expect the revenues from our IT services business segment to be in the range of 2.607 billion dollars to 2.66 billion dollars. This translates to a sequential guidance of minus 2% to 0% in constant currency terms. With that, we can open up for questions, operator.
Speaker Change: In terms of our guidance to reiterate what was stated by Shini, we expect deliver news from our IT services business segment to be in the range of 2.6, 0,7 million, billion dollars to 2.6, 0, billion dollars. There are translates to a sequential guidance of minus 2% to 0% in constant currency terms. With that?
Unknown Executive: Yes, thank you very much.
Speaker Change: We can open up for questions, operator.
Unknown Executive: We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on that a stone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use answers while asking a question.
Speaker Change: Yes. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on that as soon telephone.
Speaker Change: If you wish to remove yourself from the question queue, you may press star and do. Participants are requested to use handsets while asking a question.
Unknown Executive: Ladies and gentlemen, we will wait for a moment while the question queue assembles.
Speaker Change: Ladies and gentlemen, we will wait for a moment while the question to assemble.
Abhishek Kumar: We will take a first question from the line of Abhishek Kumar from James Financial. Please go ahead. Hi, good evening, and congratulations on very good deal length.
Speaker Change: We'll take a first question from the line of Abhishek Kumar from James Ananshin. Please.
Abhishek Kumar: Please go ahead. Yeah, hi, good evening and congratulations on very good dealings. My first question is on the guidance. You know, is this just the furloughs or are we also seeing close to off one of the client specific challenges that you mentioned which kind of is informing
Abhishek Kumar: My first question is on the guidance. You know, is this just the furloughs or are we also seeing close to of one of the client's specific challenges that you mentioned, which kind of is informing slightly new dish guidance for next morning.
Srinivas Pallia: Thanks, Abhishek.
Abhishek Kumar: and then in the next one.
Srinivas Pallia: As for us, quarter three of guidance is concerned, clearly, furloughs like up on a called out as one, and also the number of working days obviously is much lower. We also have some slowdown in Europe thanks to client-specific reasons. Having said that, we see good momentum in our private deal pipeline across America's One and America's Two and also at Mia. We do have a good pipeline in Europe too.
Speaker Change: Thanks Abhishek, as far as a quarter three guidance is concerned, clearly for those like open a call-out as one and also the number of working days obviously is much lower. We also have some slow down in Europe thanks to Planes Pacific reasons.
Speaker Change: Having said that, we see good momentum in our pipe deal pipeline across America's one in America's two and also at Mia. We do have good pipeline in Europe too. The focus for us is to actually win and some of those and maximize our deal booking for this quarter.
Srinivas Pallia: The focus for us is to actually win in some of those and maximize our deal booking for this quarter.
Abhishek Kumar: Okay, next question is on an utility.
Abhishek Kumar: You had mentioned last quarter also there are certain nine specific challenges here. Are these now behind us or, you know, are they still there in front of us? How should we think about, you know, E and U as a continuous or headwind to our overall growth?
Speaker Change: Okay, next question is on inner utility, you had mentioned last quarter also, there are certain specific challenges here. Are these now behind us, or, you know, are they still there in front of us? How should we think about, you know, E&U as a continuous advent to our overall growth? Thank you.
Srinivas Pallia: Thank you. So, we like Shini shared in his speech as well. It is work in progress. There is a good pipeline. There is a demand across vendor consolidation, cost takeout, and there are very, very good deals in the pipeline. We have to focus on conversion for us to improve our overall performance in A&U, and that's all that we have to say. There's, you know, it's all down to execution. Just to add a little bit more color to what Aparna said, Abhishek, specifically in the energy sector, we are seeing opportunities around cost optimization and vendor consolidation as well, which is good news.
Speaker Change: So, Amit Eek!
Speaker Change: We like Srinivas Shade in his speech as well, it is work in progress, there is a good pipeline, there is a demand, a cross vendor consolidation, cost takeout and there are very good deals in the pipeline, we have to focus on conversion for us to improve our overall performance in A new and that is all that we have to say, you know, it is all down to execution. Just to add a little bit more color to what Abhana said Abhishek, specifically in the energy sector, we are seeing opportunities around cost optimization and vendor consolidation as well, which is good news.
Srinivas Pallia: Okay, maybe just what I wanted to understand here is, are there any ramp downs that are continuing in few clients that is impacting us, and if that is so, when do we expect those ramp downs to be behind us? Yes, you know, our guidance for quarterly has all several puts and takes. It has for lose. It does have fewer working days. It also factors in certain impact of certain client specific challenges that we will use it to in Europe. All of this is factored into the guidance as we start Q3 and, you know, given the momentum that we are building up, if you would see there are performance across market units and sectors, you know, it has improved and it is becoming a little bit more secular than what it was maybe, you know, three or four quarters back.
Speaker Change: Okay, maybe just what I wanted to understand here is, are there any ramdowns that are continuing in few clients that is impacting us and if that is so, and do we expect those ramdowns to be behind us?
Speaker Change: Yes, you know, our guidance for quality has all several percent takes. It has for loose, it does have fewer working days. It also factors in certain impact of certain kinds of specific challenges that we will use it to in Europe.
Speaker Change: All of this is factored into the guidance as we start Q3.
Speaker Change: I'm the...
Speaker Change: You know, given the momentum that we are building up, if you would see that a performance across market units and sectors, you know, it has improved.
Speaker Change: and it is becoming a little bit more secular than what it was maybe three or four quarters back. So, we are hopeful that we will build on that momentum once we are behind the seasonality of Q3.
Srinivas Pallia: So we are hopeful that we will build on a momentum once we are behind the seasonality of Q3.
Abhishek Kumar: Great, that's encouraging.
Abhishek Kumar: Thank you, and all the best.
Unknown Executive: Thank you.
Speaker Change: Thank you and all the best.
Nitin Padmanabhan: We have a next question from the line of Nitin Padmanaban from Investik. Please go ahead. Yeah, hi. Good evening.
Speaker Change: Thank you. Thank you.
Speaker Change: We have an excursion from the line of Nithin Padmanabhan from Investict. Please go ahead.
Aparna Iyer: Now, Apurva wanted your thoughts on the drivers that are helping march in the initiatives that are sort of offsetting the weight increase in fact, and the revenue had been special. So, we have a set of traditional levers that have been at play. We have been improving our utilization consistently over the last few quarters. I do think the levels at which we are, we have to continue to sustain that in queue. We've dipped our utilization slightly, but we are well above the benchmark that we would like to be at. Secondly, offshoring is also a lever that we have flexed.
Speaker Change: Yeah, hi, we did it. Now, I don't know if I want to give you the torch song.
Speaker Change: The drivers that are helping march in the initiative that are sort of offsetting the Beijing prison fact and the review headwind special thing.
Speaker Change: So, we have a set of traditional levers that have been atlead.
Speaker Change: We have been improving our utilization consistently over the last few quarters. I do think the levels at which we are, we have to continue to sustain that. In Q, Q, we've dipped our utilization slightly, but we are well about the benchmark that we would like to be at. Secondly, offshoring is also a lever that we have flexed. Going forward, what are the levers that we will use? There are the traditional set of levers, fixed price projects, pyramid improvements.
Aparna Iyer: Going forward, what are the levers that we will use? There are the traditional set of levers, fixed price projects, pyramid improvements. The other lever that's very topical to us is around DNA optimization. We have spoken about that. We have done some work on it over the last few quarters. Some of it is paying off as we get into Q3. Also, some of the acquired entities, you know, as they are getting integrated into the organization, there are certain synergy benefits that we are realizing around overheads and DNA.
Speaker Change: The other lever that is very topical to us is around DNA optimization. We are spoken about that. We have done some work on it over the last few quarters. Some of it is paying off as we get into Q3.
Speaker Change: Also, some of the acquired entities, you know, are getting integrated into the organization. There are certain synergy benefits that we are realizing around overheads and DNA. Those are some of the levers. If you look at our SMU wise profitability metrics that we share, I think Europe and App Mia have improved profitability. And, you know, America's two are improved profitability here on your. So, that is a good, again, you know, orientation towards profitable growth, which is leading to operational improvements.
Aparna Iyer: Those are some of the levers. If you look at our SMU-wise profitability metrics that we share, I think Europe and APMEA have improved profitability. And, you know, America is too improved profitability here on Europe. So, there is a good, again, you know, orientation towards profitable growth, which is leading to operational improvements.
Nitin Padmanabhan: Thank you for that.
Nitin Padmanabhan: The second question was around I think a lot of work has gone behind building the momentum and sort of looking at the cost and all of those things over the last couple of quarters. In that context, do you think that return to growth could happen sooner rather than later overall? Are you happy with the way things are moving? Or do you see there are further areas that require fixes before we are able to move back to growth? We have grown in Q2. I think the key for us is to really build, you know, sustainable growth that we can deliver consistently.
Speaker Change: Thank you for that, Aparna. The second question was around, I think a lot of work has gone behind building the momentum and sort of looking at the cost and all of those things over the last couple of quarters. In that context do you think that return to growth could happen sooner rather than later over on, are you happy with the way things are moving or do you see there are further areas that require fixes before we are able to really move back to growth?
Speaker Change: It is nothing we have grown in Q2, I think the key.
Speaker Change: Farah is to really build sustainable growth that we can deliver consistently.
Srinivas Pallia: And that is still a work in progress. There are parts of the business which are performing much better. We have alluded to Capco; I think BFF as an overall sector doing very well. America's one has momentum that's secular, right? And America's two, a set of EMR, you know, energy and manufacturing, is doing well. So there is more secular return in some sense of momentum, at least in America, for us to bounce back to growth deterministically. Europe and Atmea also have to chip in. Atmea, we've seen some early signs of stabilization.
Speaker Change: Right, and that is still working progress.
Speaker Change: There are parts of the business.
Speaker Change: which are performing much better. We alluded to Capco, I think BFF is a ruburous sector doing very well. America's one has momentum that's secular, right, and America's two set of EMRs, you know energy and manufacturing is doing well. So, there is more secular return in some sense of momentum, at least in America. For R2 bounce back to growth deterministically, Europe and at me also have to chip it.
Srinivas Pallia: Europe is still a work in progress, and that's something that we will have to look at before we are able to give you a better color.
Speaker Change: Atmea we are seeing some holy signs of stabilization.
Speaker Change: Europe is still working progress and that's something that we will have to look at before we are able to give you a better color.
Srinivas Pallia: Shree, if you want to add something. So, Nitin, let me give you, in the context of the pipeline that deal pipeline that we have built. All I can say at this point in time is healthy; there is momentum around the deal pipeline, and it is also secular across the four markets and across the six sectors that we operate in, which is, for me, good news. I think the focus for me and my team right now is how do we secure those winds as quickly within quarter three and move forward in quarter four. The advantage in quarter four is that the follows and the number of working days would change; that itself is one of the positives, and the deal momentum and the winds could actually add to that.
Speaker Change: Shady if you want to add something else.
Speaker Change: So, Nithinna, let me give you in the context of the pipeline that deal pipeline that we have built.
Speaker Change: All I can say at this point in time is healthy, there is momentum around the deal pipeline.
Speaker Change: and it is also secular across the four markets.
Speaker Change: and across the six sectors that we operate in.
Speaker Change: which is for me good news.
Speaker Change: I think the focus for me and my team.
Speaker Change: Right now is how do we secure those winds quickly within quarter three and move forward and quarter four? The advantage in quarter four is that the follows and the number of working days would change that itself is one of the positives and the deal momentum and the winds could actually add to that. So net net, Nitin, I think I continue to state that we have good momentum. We need to execute to that.
Srinivas Pallia: So, net net Nitin, I think you know I continue to state that we have good momentum. We need to execute to that.
Nitin Padmanabhan: So, that is very helpful.
Nitin Padmanabhan: Just one last one if I may. Are you seeing an increase in smaller deals within the pipeline that could convert faster? Your peer had mentioned that in the incident call. Some of your peers have been suggesting that they have also seen heightened smaller deals within their closures as well. So, just curious to know your thoughts on what you are doing on the last six. So, Nitin, while we talk about the pipeline, it is a combination of both large deals, midsize deals, and smaller deals. That is number one. Number two, if you look at our own bookings for quarter two of the 3.6 billion, 1.5 came in from large deals, but if you remove that 1.5, the balance is a combination of both midsize deals and smaller deals.
Speaker Change: So, that's very helpful. This one last one, if I may. Are you seeing an increasing smaller deals within the pipeline that could convert faster? Your peer had mentioned that in the incident call. Some of your peers have been suggesting that they have also seen heightened smaller deals within their closures as well. So, just curious to know your thoughts on what
Speaker Change: So, in it and in a while we talk about the pipeline, it's a combination of both large deals, mid-sized deals and smaller deals.
Speaker Change: That's number one. Number two, if you look at our own bookings of the 3.6 billion, 1.5 came in from large deals, but if you remove that 1.5, the balance is a combination of both mid-sized deals and smaller deals. Second, if you look at the kind of opportunities that we get especially during the discretionary spend around Capco BFSA, some of them tend to be much smaller, they need not be large deals. Overall, I think the way I see it is, we do have smaller deals, mid-sized deals and large deals and we continue to remain optimistic on those pipeline.
Nitin Padmanabhan: Second, if you look at the kind of opportunities that we get, especially during a discretionary spend around CAPCO-BFSI, some of them tend to be much smaller; they need not be large deals. Overall, I see the way I see it is, we do have smaller deals, midsize deals, and large deals, and we continue to remain optimistic on those pipeline.
Nitin Padmanabhan: Thank you so much, and all the very best.
Unknown Executive: Thank you.
Speaker Change: So thank you so much and on to very good.
Sudheer Guntupalli: We will take our next question from the line of Sudeer Guntapalli from Kotak Mahindra AMC. Please go ahead. Yeah, thanks for the opportunity. See, we can grab some good quarter. So, just your intervals are looking very good. Dealings are looking good. You seem to sound more confident on a broad base set of segments this time, versus last quarter. However, the guidance seems to be a bit counter-intuitive. So, in that backdrop, couple of questions. So, when you say furloughs, this time around most of the other companies are actually indicating that furloughs are just in line with normal seasonality, with some of them actually seeing the furlough impact will be lower than the previous year.
Speaker Change: Thank you. Thank you.
Speaker Change: will take a next question from the line of Sudhir Guntupali from Kotak Mahindra AMC.
Speaker Change: Please go ahead.
Speaker Change: Yeah, thanks for the opportunity. See me congrats on a good quarter. So just your internals are looking very good. Dealings are looking good. You seem to sound more confident on a broad base set of segments this time, versus last quarter. However, the guidance seems to be a bit counterintuitive. So in that backdrop couple of questions. So when you say furloughs, so this time around most of the other companies are actually indicating that furloughs are just in line with normal seasonality with some of them actually seeing the furlough impact will be lower than the previous year.
Sudheer Guntupalli: And historically, we had a relatively slightly better H2 compared to H1.
Speaker Change: Historically, we had relatively slightly better H2 compared to H1.
Sudheer Guntupalli: So, why are furloughs such a game changer for Q3 guidance? That is number one.
Speaker Change: So, why is Farlo Sacha again changing for Q3 guidance? That is number one. And number two, when you say client specific issues in Europe, is it some part of the business that you want to rationalize as a new CEO and you have taken a strategic call to kind of cut that business?
Sudheer Guntupalli: And number two, when you say client specific issues in Europe, is it some part of the business that you want to rationalize as a new CEO, and you have taken a strategic call to kind of cut that business? Or is this something where we have a certain client because of whatsoever their specific reasons has been hurting us? Again, I am asking the Europe question because, surprisingly, this quarter, Europe has been good for most of the companies which reported so far. And we have been having very localized teams in Europe.
Speaker Change: Or is this something where we have a certain client because of whatsoever their specific reasons has been hurting us? Again, I am asking the Europe question because surprisingly this quarter Europe has been good for most of the companies which reported so far. And we have been having very localized teams in Europe so it's surprising why we are facing those challenges while others are not.
Srinivas Pallia: So, it's surprising why we are facing those challenges. So, just those couple of questions: first one for our low, second on Europe. So, Nitin, sorry, so these, you know, in terms of furlough, we are, our furlough, the visibility that we have is very similar to what we experienced last year, and that's the assumption that we are factoring in. Obviously, during the quarter we will have to work through it with our clients. As far as low working days is concerned, that's also something that is very seasonal for Q3 compared to Q2, both of which are factored.
Speaker Change: So, just those couple of questions, first one, by the way, second on Europe.
Speaker Change: Nithin, Suri Sudhir, you know, in terms of for low we are, are for low, the visibility that we have is very similar to what we experienced last year. And that's the assumption that we are fact-training, obviously during the quarter we will have to work through it with our clients.
Speaker Change: As far as low working days is concerned, that's also something that is very seasonal for Q3 compared to Q2, both of which are factored. Additionally, we've called out for us, which is factored into our guidance, is the softness that we have in Europe. And I will ask Shini to respond to the questions that you post on Europe.
Srinivas Pallia: Additionally, we've called out for us, which is factored into our guidance, is the softness that we have in Europe.
Srinivas Pallia: And I will ask Shaini to respond to, you know, the questions that you posed in Europe. Thanks up on our highs today. So, I think, up on our answer, the question on furloughs, I think for us, relative to what you heard from other companies that seems to be constant. Well, what happened last year at this time? Maybe it could be very specific to the clients, you know, we are engaged with, and the decisions that they take, because some of the sectors have a lot more furloughs than the rest. So, maybe that's one reason why we have some impact for; we continue to have the same level of impact on furloughs.
Speaker Change: Uh, Pink.
Speaker Change: Thanks Aparna, Hi Sudev, so I think Aparna answered the question on for those, I think for us relative to what you heard from other companies that seems to be constant, well what happened last year at this time maybe it could be very specific to the clients that we are engaged with and the decisions that they take because some of the sectors have a lot more for those than the rest.
Speaker Change: So maybe that's one reason why we have some impact for we continue to have the same level of impact on furloughs.
Srinivas Pallia: Now, coming to specific to Europe and client-specific needs, I would say a couple of clients where we have been working with them have actually changed the direction, because of which there has been some round downs. So, it's very, very specific to the combination of some of the industry and Europe, which is actually contributing to that, you know, slowdown for us, and a weak growth both in this quarter that you know, you've seen so there. But having said that, I want to reiterate that the countries and the specific industries that we are focusing on in those countries, the pipeline has built up, and right now, myself and my team, we are focused on, you know, winning those.
Speaker Change: Now coming to a specific to Europe and a client specific needs, I would say a couple of clients where we have been working with them, I have actually changed the direction because of which there has been some round downs. So it's very very specific to the combination of some of the industries and Europe , which is actually contributing to that slowdown for us. And a week growth both in this quarter that you've seen so there. But having said that, I want to reiterate that the countries and the specific industries that we are focusing in those countries, the pipeline has built up. And right now, myself and my team, we are focused on winning those.
Sudheer Guntupalli: Fair enough, Shini. So, is it fair to expect that possibly when we look through this furlough and, you know, specific impacted time period of December quarter, subsequently, we'll be able to build that secular growth momentum, part of which we had seen in this quarter as well. So, as a process, we just guide for the next quarter, which is Quarter three. So, you know, you're right; you know, in quarter three, we got impacted for the reasons that we stated. Having said that, some of them will not be there in quarter four, and also with the deal pipeline and momentum that we have, that should also help us going into quarter four.
Speaker Change: Fair enough Srinivas. So, is it fair to expect that possibly when we look through this for low and specific impact rate time period of December quarter? Subsequently, we will be able to build that circular growth momentum part of which we had Srinivas quarter as
Srinivas Presiden: So, there as a process we just guide for the next quarter which is quarter three. So, you know, you are right, you know, in quarter three we got impacted for the reasons that we stated. Having said that some of them will not be there in quarter four. And also with the deal pipeline and momentum that we have, that should also help us going into quarter four. But I will not be able to predict how the quarter four is going to be at this point in time.
Sudheer Guntupalli: But I will not be able to predict how the quarter four is going to be at this point in time. Fair enough, sir. All the very best. Thank you so much. Thank you.
Speaker Change: cur all the very best thank you so much
Gaurav Rathalia: We'll take our next question from the line of Gaurav Rathalia from Morgan Stanley. Please go ahead. Hi, congrats on good deal execution and solid margin execution in the quarter. My first question is with respect to the large deal momentum. If you look at the rolling 12-month data for a while, you were stuck at 4.5 billion dollars. And now we have crossed that and gone to 4.7, 4.8 billion dollars. Just trying to understand what has driven this change. Is it more specific to withdraw in terms of the initiatives around largest put in place, which is triggering this increase and increasing the wind ratio or something has changed around the pipeline or our approach to, you know, the overall large deal.
Speaker Change: Thank you.
Speaker Change: Will take an ex-question from the line of Gaurav Ratarya from Morgan Stanley. Please go ahead.
Gaurav Ratarya: Hey, Hi, Congrats on Good Deal Execution and Solid Margin Execution in the quarter. My first question is with respect to the large deal momentum. If you look at the rolling 12-month data for a while, you were stuck at
Gaurav Ratarya: 4.5 billion dollars and now you have crossed that and you know gone to 4.74.8 billion dollars.
Gaurav Ratarya: Just trying to understand what has driven this change is it
Gaurav Ratarya: More specific to Vipro, in terms of the initiatives around Lages, Putain Place, which is triggering this increase and increase in the wind ratio, or something has changed around the pipeline or our approach to the overall large dealwind. So just try to understand how sustainable is this improvement that we are seeing here.
Gaurav Rathalia: So, just trying to understand how sustainable is this improvement that we are seeing. Thank you.
Srinivas Pallia: So, Gaurav, if you look at in the context of a large deal, what's very important for us is to be proactive with our clients. Second, we have to lead with consulting and with the infuse AI or AI-powered solutions. So, the industry and cross-industry solutions that we have, it also helps us, you know, to solution it right for the client and customize it right for the client. So, the deal that I talked to you about in the transportation industry very clearly demonstrates that wherein we brought in our consulting arms and we brought in our industry specific domain solutions to win that particular aspect.
Speaker Change: So, Baurava, if you look at in the context of a large deal.
Speaker Change: What's very important for us is to be proactive with our clients.
Speaker Change: Second, we have to lead with consulting and within few CI or AI board solutions.
Speaker Change: So, the industry and cost industry solutions that we have and it also helps us, I know, you know, solution it right for the client.
Speaker Change: and Customize it right for the client. So, the deal, deal with that I talked to you about in the transportation industry, very clearly demonstrates that, wherein we brought in our consulting arms and we brought in our industry specific domain solutions to win that particular aspect.
Srinivas Pallia: Second, you know, Gaurav, you know, it's also discipline, right, you know, how you build a pipeline, both proactively, how do you qualify that pipeline and then go for the win and the whole process and the nine yards that you do. So, picking the right deal that you want to go after also makes a big difference, Gaurav. So, there are very small changes, but, you know, sometimes these changes can impact. Now, come back, going back to question on sustainability, like, you know, any large deal, you know, at the end of the day, it's a binary, right?
Speaker Change: Second, you know, Europe, it's also disciplined.
Speaker Change: right how you build the pipeline both proactily how qualify that pipeline and then go for the go for the winind and the whole process in the ninety s such you do so picking the right idede that you want togo after also makes a big difference so there are are very small changes but you know sometimes these changes can imp now come back going back to a question on sustainability like you know any large end of the dates of binary right so and so i will not be able to predict how it is going to go but if you are not of consistently been ove billion dollars every quarterin terms of the large
Srinivas Pallia: So, you know, I will not be able to predict how it is going to go, but if you have noticed, you know, we are consistently being above a billion dollars every quarter in terms of the large deals.
Gaurav Rathalia: Gaurav, thank you for the detailed answer.
Aparna Iyer: The second question is for Apparna. You did a few couple of factors which were specific initiatives of the pro and topical to the company on margins. So, have those initiatives already played out in the form of resulting in margin tailwind in the last two quarters, or do you think that there are some more that will be flowing into the margins over the next two quarters? Thank you. Certainly, there is a lot of effort that is still under, you know, still in process in order to improve Gaurav. If you notice that, you know, we still have to absorb two months of salary increases, and it's also seasonally, you know, we quarter in terms of furloughs.
Speaker Change: Thank you for the detailed answer. The second question is for Aparna. You did a few couple of factors which were specific initiatives of a pro or an optical to the company on margin. So, have those initiatives already played out in the form of resulting in margin tailwind in the last two quarters or you think that there are some more that will be flowing into the margins over the next two quarters. Thank you.
Speaker Change: Certainly there is a lot of effort that is still in process in order to improve Gaurav if you notice that we still have to absorb 2 months of salary increases and it's also seasonally weak water in terms of furloughs. So all hands on the deck, I think what will be very key is to execute Q3 and the topical levers are also at play. We still feel that there are optimizations that we can still do and achieve.
Aparna Iyer: So, all hands on the deck, I think what will be very key is to execute Q3 when and the topical levers are also at play. We still feel that there are optimizations that we can still do and achieve. Thank you.
Sandeep Shah: We have a next question from the line of Sandeep Shah from Iquira Securities. Please go ahead. Yeah, thanks. Thanks for the opportunity, and congrats on the good numbers.
Speaker Change: Thank you.
Speaker Change: Thank you.
Speaker Change: We have our next question from the line of Sandeep Shah from Equra Securities. Please go ahead.
Speaker Change: Yeah, thanks, thanks for the opportunity and congrats on your good numbers. Just wanted to understand, Srinivas, you took the control what in your assessment, which are the internal factors outside the macro factors, which is affecting the demand. We have to correct all, we have to rectify for us to go into a sustainable consistent growth path.
Sandeep Shah: Just wanted to understand, Srini, post you took the control, what in your assessment, which are the internal factors outside the macro factors, which is affecting the demand. We have to correct all; we have to rectify for us to go into a sustainable, consistent growth path. So, thanks, Sandeep.
Srinivas Pallia: Now, Sandeep, if you look at it, what's very important is we've laid out our five strategic projects. and we have to consistently stay focused on that. So, if you look at the focus on large accounts in our priority industries and priority sectors and the prioritized markets, I think that is helping us. If you look at the growth that we got in the top account, top five accounts, top 10 accounts reflect some of the focus that we are brought in. And we have to stay focused; we have to be consistent around that for going forward. Second is the large deals that I just talked about. The question that Gaurav asked about, we have to be proactive, we have to shape the demand, and we have to understand the client, both the business and the technology needs, and bring in the right industry and cost industry solutions upfront for the client to feel comfortable about Wipro. And how the third one is the industry solution itself that I talked about.
Speaker Change: So, thanks from the, from the people who look at it, what's very important is, we've laid out our five star project priorities.
Speaker Change: and we have to consistently stay focused on that.
Speaker Change: So, if you look at...
Speaker Change: The focus on larger counts in our private industry.
Speaker Change: Sectors and the prioritized markets, I think that is helping us, if you look at the growth that we got in the top account, top fire counts, top ten accounts, reflect some of the focus that we have brought in.
Speaker Change: And we have to stay focused, we have to be consistent around that for, you know, going forward. Second is the large steels that I just talked to the question that the Gaurav asked about. Right, you know, we have to be proactive, we have to shape the demand and we have to understand the client, both the business and the technology needs. And bring in the right industry and cross industry, a solution, sub front for the client to feel comfortable about, you know, about we're pro and how we can execute for them.
Srinivas Pallia: Consultantly stay focused on that, which are consulting it and AI forward. We have had some good successes in the last two quarters, and few of this gets into implementation, then becomes more referenceable. I think you can actually more and more depend on those solutions. Fourth one is building talented scale. I did talk about the fact that we have the right mindset, skill set, and tool set across our employee base. After the initial 230,000 people who got trained on the basics of Gen AI, now we have got 44,000 employees doing that. So how do you lead with AI in the projects, whether it's in software development cycle or engineering, how do you infuse AI into projects which are more on the managed services, beat application infrastructure or process, and then how do you actually build AI forward solution, which is a conceptualization itself start with AI.
Speaker Change: Third one is the industry solution itself that I talked about, right? You know, consistently stay focused on that, which are consulting lead and AI forward. We have had some good successes in the last two quarters. And you know, few of this, you know, of this gets into implementation, then becomes more referenceable. I think, you know, you can actually, you know, more and more deep, you know, depend on those, those solutions. [inaudible]
Speaker Change: 4th one is building talent at scale, I did talk about the fact that we have to have the right mindset, skill set and tool set across our employee base. After the initial 230,000 people who got trained on the basics of JNAI, now we have got 44,000 employees doing that. So how do you lead with AI in the projects, whether it's in software development cycle or engineering, how do you infuse AI into projects which are more on the manage services, beat application infrastructure or process, and then how do you go after, how do you actually build AI power solution, which is a conceptualization itself starts with the AI. And so those things, we need to stay focused on building that talent.
Srinivas Pallia: And so those things we need to stay focused on building that talent also for the specific customers and the clients that I talked about on the academies. Sometimes it's important to understand the industry that client is in, the specific technology landscape that they are in, so it becomes much more easier for it to execute. And the last point, Sunday pays the customer centricity, client centricity. We have defined five pillars of client centricity; we got to deliver, we got to innovate our delivery as the technology landscape changes. So if we stay focused on these five top priorities that we called out, quarter after quarter, year after year, I'm sure we will continue to get better.
Speaker Change: also for the specific customers and the clients that I talked about on our academies, right. Sometimes it's important to understand the industry that client is in the specific technology landscape that they are in. So, it becomes much more easier for it to execute.
Speaker Change: And the last point, Sundip is, you know, customer centricity, client centricity, we have defined five pillars of client centricity, we got to deliver, we got to innovate our delivery as the technology landscape changes. So, if we stay focused on these five top priorities that we called out, quarter after quarter, year after year after, I am sure we will continue to get better.
Sandeep Shah: Thanks, thanks for the detailed answer, but despite these top five priorities, we quarter we have somewhere or the other portfolio related issue, which keeps our growth rate marginally positive, negative or flatish. So, any timeline when you expect whatever rectification you wanted to move over, and we can come back on a consistent growth path. Fair comments Sunday, very fair comment, and if you look at it right, if you look at it from a market perspective, this quarter has been a little different from the last quarter where three out of the four kind of showed us some sequential growth, which I think is a positive right step.
Speaker Change: Thanks for the detail answer, but despite this top 5 priority is like the quarter we have somewhere or the other portfolio related issue which keeps our growth rate, March will need policy negative or flat edge. So any timeline when you expect whatever rectification we wanted to move the over and we can come back or a consistent growth path?
Speaker Change: Fair comments on the very fair comment.
Speaker Change: and if you look at it, if you look at my market perspective.
Speaker Change: This quarter has been a little different from the last quarter, where 3 out of the 4, kind of showed some sequential growth.
Srinivas Pallia: As far as the sectors are concerned, I think we continue to lag both in manufacturing and energy and utilities. Having said that, I think we have got a good momentum going in other sectors: the BFSI, which I talked about, health care, technology and communications, and also consumer. I think we will continue to stay focused on those four, bring in actually the momentum in those four sectors, while we do the correction in both manufacturing, and you are new, which is more specific to VIPRO than what you've seen. in the industry.
Speaker Change: which I think is a positive right step. As far as the sectors are concerned, I think we continue to lag both in manufacturing and energy and utilities. Having said that, I think we have got a good momentum going in other sectors, the BFSI which I talked about, healthcare, technology and communications and also consumer. I think we will continue to stay focused on those four, bringing accelerate the momentum in those four sectors while we do the correction in both manufacturing and you and you which is more specific to Wipro than you know what you see in the industry.
Sandeep Shah: And when do you expect those corrections to start yield results in manufacturing and yield? So, Sandeep, you know, like, you know, I don't give guidance beyond quarter three, but having said that, I did tell you that specifically if you look at in manufacturing sector, you know, I called out automotive segment, I called industrial segment; we are seeing pipeline interaction out there for us. Now, the question is, you know, do we win those deals? You know, if and when we win the gold deal, that will show up on the revenue side sooner than later. On the energy and utility segment, I did talk about specific deals in the energy sector, which is around cost optimization and vendor consolidation.
Speaker Change: And when do I expect those corrections to start a year result in manufacturing and year?
Speaker Change: So, Sandeep, you know, like, you know, I don't give a guidance beyond quarter three, but having said that, I did tell you that specifically if you look at in manufacturing sector, you know, I called out automotive segment, I called industrial segment. We are seeing pipeline interaction out there for us. Now, the question is, you know, do we win those deals, you know, if and when we win the gold deal, that will show up on the revenue side sooner than later. On the energy and utility segment, I did talk about specific deals in the energy sector. Which has around cost optimization and vendor consolidation, some of those deals, we are in the process, but I think, you know, you have to win. So, if we do this, if we execute to this pipeline and deals that we have in these two sectors, Sandeep, you know.
Sandeep Shah: Some of those deals, we are in the process, but I think, you know, you have to win. So, if we do these, if we execute to this pipeline and deals that we have in these two sectors, Sandeep, you know, things should get better. But at this point of time, I can't give you a specific timeline. Okay. And your earlier commentaries are there four, two, could be better than three, two? Sandeep, what I said was the headwinds we have when it comes to number of working days, and for those, you know, some of them may not be there in quarter four.
Speaker Change: You know, things should get better, but at this point of time, I can't give you a specific time, mine.
Speaker Change: Okay, can you Ayer commentaries against 4Q company better than 3Q?
Speaker Change: So Sunday what I said was the headwinds we have when it comes to number of working days and for those you know some of them may not be there in quarter four that is a comment I made
Sandeep Shah: That's the comment I made. Okay.
Sandeep Shah: And just the last thing, for the budget, there is a tax pooling change on the buyback. So, any view will be considered buyback as a continual option to cash returns to the shareholders or we may move to dividend because the tax treatment of both being neutral going forward in buyback is to get a benefit of it if you share it out. So, you've said it, Sandeep. You know, we do think that there are benefits of buyback compared to the dividend, even after the, you know, proposed, after the budget, there has been announced. But that said, I think we are drawing up our revised capital allocation policy in line with the Strattland that we are putting together for the next two to three years.
Speaker Change: Okay, and there's the last thing for the budget, there is a tax wheeling change on the buyback. So, if you will be consider buyback as a continue option to cash return to the chair holder or maybe move to dividend because the tax treatment of both the neutral going forward in buyback is still together when if we talk about it use share count.
Speaker Change: So, you've said it Sunday, you know, we do think that there are benefits of my back compared to the dividend, even after the, you know, proposed, after the budget, there has been announced. But that said, I think we are drawing up our revised capital allocation policy in line with the Strathland that we are putting together for the next two to three years. And I think we will be in a position to share a more detailed and informed, you know, answer to your question in terms of, you know, what is going to be an approach. I think that's work in progress
Sandeep Shah: And I think we will be in a position to share a more detailed and informed, you know, answer to your question in terms of, you know, what is going to be our approach? I think that's work in progress. And we'll do that. Okay.
Sandeep Shah: And just related question, as we have indicated earlier, we now look for finger pearls kind of an everyday rather than a big ticket everyday. Sandeep, you know, the way I see M&A is a strategy advantage for us going forward. We do have, we do continue to look for opportunities in the marketplace, whether it's in specific white spaces, markets or sectors, or sectors. So, in that context, Sandeep, you know, it's the first thing is look at what are the opportunities that you have in market and then take a decision. So, I'm not calling out anything like a spring of pearls, but all I'm trying to do is I want to be very deliberate and, you know, very focused in terms of what we want to do with M&A. But M&A is a big part of our strategy.
Speaker Change: Okay, and just related questions as we have indicated earlier, we now look for Srinivas Pallia kind of an FNA rather than a big ticket MNA.
Speaker Change: The way I see M&A is a strategy advantage for us going forward. We do have, we do continue to look for opportunities in the marketplace whether it's in specific white spaces, markets or sectors or sectors. So in that context, the first thing is look at what are the opportunities that you have in market and then take a decision. So I'm not calling out anything like a spring of pearls, but all I'm trying to do is I want to be very deliberate and very focused in terms of what we want to do with M&A, but M&A is a big part of our strategy.
Sandeep Shah: Okay. Thanks, and all the best.
Sumit Jain: We have a next question from the line of Sumit Jain from CLSA. Please go ahead. Yeah, hi, thanks for the opportunity. So firstly, Srinivas Pallia wanted to know from you in this guidance of minus 2 to 0 percent. What are you building for BFFI next quarter? Are you still building in growth momentum to continue? But given it as high for those, but you are seeing a strong momentum. So, you know, our BFFI business also has a component of Capco, which has higher furloughs compared to the rest of the work, you know, consulting in general. And of course, Capco is far more susceptible to furloughs.
Speaker Change: Ok, thanks and all the best.
Speaker Change: Thank you.
Speaker Change: We have an next question from the line of Sumit Jain from CLSA. Please go ahead.
Speaker Change: Yeah, thanks for the opportunity. Firstly, Srinivas Pallia Iyer wanted to like know from you in this guidance of minus 2 to 0 percent. What are you building for BSSI next quarter? Are you still building in growth momentum to continue? But, you know, given it as high for lows, but you are in a strong momentum.
Speaker Change: So, you know, our BSSI, this is also has a component of Capco, which has higher furloughs compared to the rest of the work, you know, consulting in general, and of course, Capco is far more susceptible to furloughs. It is factored into our guidance, but other than that, I think the momentum in BSSI has been fairly strong. It is, you know, we have done well, if you look at our quarter two growth, it is done well across all market units.
Sumit Jain: It is factored into our guidance. But other than that, I think the momentum in BFFI has been fairly strong. It is, you know, we have done well. If you look at our quarter-to-growth, it is done well across all market units. It has done across various service offerings. So, we do think that the momentum in the BFFI sector from a volume trajectory is good. It is also impacted more deeply by furloughs, and that is factored as a part of our guidance.
Speaker Change: It has done across various service offerings. So, we do think that the momentum and the BFSI sector from a volume trajectory is good. It is also impacted more deeply by furloughs and that is factored as a part of our guidance.
Sumit Jain: Got it, and regarding, you know, further rationalization you mentioned in energy utility and manufacturing verticals. So, it has been like a slope pain for the company for the last several quarters now. So, rather, isn't it better to have an instant death rather than a slope lane, which, with certainty, we don't know. On certainty, we don't know when we will get over. Sorry, submit.
Speaker Change: Got it and regarding, you know, further rationalization you mentioned in energy utility and manufacturing verticals. So, it has been like a slope pain for the company for the last several quarters now. So, rather, it is better to have an instant death rather than a slope plane which with.
Speaker Change: Sartanati, we don't know, uncertainty, we don't know when we'll get over.
Sumit Jain: Did not understand your question. What do you want us to do? You know how long this decline in manufacturing and the energy utility verticals will continue. Given that for the last seven, eight quarters now, it has been declining. So, the ramp down in the client specific, you know, areas should have been over by now. So, is it like a structural problem we are facing in these two verticals? Because when I look at manufacturing, particularly, it has been a very strong growth for most of our peers. Plus, the SAP S4HANA transformation is a big opportunity, which you also mentioned is playing out in your logistics or client.
Speaker Change: Sorry Sumit, did not understand your question, what do you want to question? How long this decline in manufacturing and the energy utility verticals will continue? Given that for the last seven, eight, quarter, now it has been declining.
Sumit Jain: So, the ramp down in the client specific, you know, areas should have been over by now. So, is it like a structural problem we are facing in these two verticals because when I look at manufacturing particularly it has seen a very strong growth for most of our peers plus the SAP S4HANA transformation is a big opportunity which you also mentioned is playing out in your logistics or client. I would say over next six to twelve months for getting about just next quarter.
Srinivas Pallia: So, just want to understand, you know, how manufacturing you and you will play out, let's say, over next six to twelve months, forgetting about just next quarter. Submit the first ten foremost. These are very two important sectors of the growth. We have been in the energy and utility and manufacturing sectors for a very long time. I have personally driven this business in the past. Having said that, your observation is right that, you know, we have been slow relative to the peer group in terms of our growth and rather lack of growth. However, like I mentioned, you know, in manufacturing, for example, there are specific segments.
Speaker Change: The Sumitra first and foremost, these are very important sectors of a growth.
Speaker Change: We have been in the energy and manufacturing sectors for a very long time.
Speaker Change: I personally driven this business in the past. Having said that, your observation is right, that and we have been slow relative to the peer group in terms of our growth and our rather lack of growth.
Speaker Change: Halubar, Like and Mention.
Srinivas Pallia: We are continuing to focus on, for example, automotive, right? There are opportunities, for example, in software defined vehicles, which is our cloud card. That's more on the engineering side of it, for example. Second, you yourself mentioned SAP S/4HANA. Thanks to our acquisition of Rising. You know, we can lead with consulting in SAP S/4HANA. So, to me, manufacturing and energy and utilities are very important sectors. We are staying focused on, and we also have the pipeline. Like I mentioned, we were in energy. We do our pipeline and cost optimization and also in terms of cost transformation.
Speaker Change: I know in manufacturing for example there are specific segments, we are continue to focus on, for example, automotive, right there are opportunities for example, in software design we do it.
Speaker Change: Software Defined Vehicles, which is our Cloud Card, that's more on the engineering set of it, for example. Second, you yourself mentioned SAP S4 Ana.
Speaker Change: Thanks to our acquisition of rising and we can lead with consulting in SAPS-4HANA. So to me, manufacturing and energy and utilities are very important sectors. We are staying focused on and we also have the pipeline. Like I mentioned, we were in energy, we have we do our pipeline and cost optimization and also in terms of cost transformation. So what is important for us, what we need to do, Somit, is to double down and focus on these two sectors and bring growth back.
Srinivas Pallia: So, what is important for us, what we need to do, summit, is to double down and focus on these two sectors and bring growth back.
Srinivas Pallia: So, got it. Look forward to that revival maybe in few quarters, and secondly on the deal side, I mean we can we can see our reported dealings have been good, but the conversion to revenues have been a bit slow. So, is it like there is a delayed conversion of deals to revenue, or is it like the duration of these deals is much longer, so the ECB is lower, leading to a lower revenue conversion. So, you know large deals typically have a cycle for ramping up. Right, one of the large deals that we had earlier alluded to that we want, you know, it will take several quarters to ramp up. On the contrary, there is another large deal that we want in queue to, there is instantly ramped up and is giving us revenues. I think it depends on deal to deal.
Speaker Change: So, got it look forward to that revival maybe in few quarters and secondly on the deal side I mean we can we can see or our reported dealings have been good but the conversion to revenues have been a bit slow so is it like there is a delayed conversion of deals to revenue or is it like the duration of these deals is much longer so the ACV is lower leading to a lower revenue conversion
Speaker Change: So, you know, large deals typically have a cycle for ramping up, right? One of the large deals that be it earlier alluded to that we'd want, you know, it will take several quarters to ramp up. On the contrary, there is another large deal that we want in Q2, there is instantly ramped up and is giving us revenues. I think it depends on deal to deal.
Srinivas Pallia: Overall, we are not concerned about the deal conversion being slower; we are happy with our large deal bookings. In fact, while we don't give out a number, the net new in these bookings is fairly good, especially in queue. I think we just need to focus on winning more, and the conversion will happen. Yes, it takes two to three quarters for it to fully ramp up and deliver, but that will happen.
Speaker Change: Overall, we are not concerned about the deal conversion being slower. We are happy with our last deal bookings. In fact, while we don't give out a number, the net new in these bookings is fairly good, especially in Q2. I think we just need to focus on winning more and the conversion will happen. Yes, it takes two to three quarters for it to fully ramp up and
Sumit Jain: So, are you seeing any sort of delay in deal closure because of US election-related uncertainty in the US geography?
Speaker Change: But that will happen to me.
Speaker Change: But right, are you seen any sort of delay in delclosure because of US election related uncertainty?
Srinivas Pallia: So, submit you know you know what you have been tracking US politics in respect of which party comes in which which leader comes in. Traditionally, US economy continues to grow and you know the US is a dominant economy if you look at it post covid as well in terms of growth. So, I would say the impact of politics will not be that significant, at least from my vantage point.
Speaker Change: and the U.S.ography.
Speaker Change: So, Submit, you know, you know, you know, you've been tracking US politics in respect of which party comes in, which, which leader comes in traditionally, US economy continues to grow. And you know, there, US is a dominant economy, if you look at it, post-COVID as well in terms of growth. So, I would say the impact of politics will not be that significant, at least from my vantage point, Submit.
Sumit Jain: Got it, and just lastly, I mean when I look at your number of active customers, that has been consistently coming down for the last seven to eight quarters. So, any particular strategy we are falling out there. No, not really. So, I think we had referred to you know expect of certain tail accounts in contact of one of our market units which has been AP any. Atmia, you know I think this was several quarters back. Other than that, we also said that this number typically gets impacted because of, you know, the discretion is pending. The environment being weaker and, as a result, you know that there is also it also impacts a number of clients, especially at the bottom end of the pyramid.
Speaker Change: Got it and just lastly I mean when I look at your number of active customers that has been consistently coming down for last 7 to 8 quarters So any particular strategy we are following out there
Speaker Change: [inaudible] context of one of our market units, which has been APMEA, APMEA, you know, I think this was several quarters back. Other than that, we also said that this number typically gets impacted because of, you know, the discretion is spend environment being weaker and as a result, you know, there is also, it also impacts a number of clients, especially at the bottom end of the pyramid.
Srinivas Pallia: What I think you should also take heart with is that our top client, or top five, or top 10, in fact, our top 25 clients are doing really well. So, I'm not going to read too much into that number. I think we need to focus on driving differentiated growth, you know, in our metal accounts, in our future metal accounts, and that's what we are focusing on.
Speaker Change: What I think you should also take heart with is that a top client, a top fire, a top 10. In fact, a top 25 clients are doing really well. So, I'm not going to read too much into that number. I think we need to focus on driving differentiated growth, you know, in our metal accounts, you know, future metal accounts. And that's what we are focusing on.
Sumit Jain: No, thank you. That's very helpful. All the best, thank you. Thank you.
Speaker Change: Thank you. Thank you. Thank you.
Ankur Rutra: We have a next question from the line of Ankur Rutra from JP Morgan. Please go ahead. Hi, thank you. I mean the first question, should we elaborate a bit more on US, BFS, you know, strong 20th scene and also how that leads into discretionary spending. You know, your business cap goes very high exposure to the capital market segment and segment which is seeing very strong growth recovery over the recent results even. And many of your peers have commented about how they expect that to help them. But you could elaborate on how you expect to see that opportunity.
Speaker Change: We have an excursion from the line of Ankur Rudra from JP Morgan. Please go ahead.
Ankur Rudra: All right, thank you. Maybe the first question should be if you can elaborate a bit more on the US, BFS, you know strong current exchange, and also how that leads into discretionary spending. You know, your business cap cores are very high exposure to the capital market segment, and segment which is seeing very strong growth recovery over the recent results even. And many of your peers have commented about how they expect that to help them, which you could elaborate on how you expect to see their opportunity. Thank you.
Ankur Rutra: Thank you.
Srinivas Pallia: Sure, Rutra. If you look at the specifics, the question is very specific to the US and BFS. The strategy for us in the US market is to combine Wipro's strength of execution with Capco's consulting capabilities. So if you look at the banking, financial services, capital markets, insurance, I think our markets or go-to-market strategies to combine the, you know, the expertise of both these companies and take it forward. Now, specific to discretionary spend comment that you made. Obviously, Capco is growing for us. That means there is a discretionary spend because their dependence is completely on discretionary spend, which to me is good news in the context of what's coming in the future for us.
Speaker Change: Shor Dutra, if you look at a specific question is very specific to US and BFS.
Speaker Change: The strategy for us in the US market is to...
Speaker Change: Combined with Pros, Strength of Execution with Capcos, Consulting Capabilities.
Speaker Change: So, if you look at the banking financial services, capital markets, insurance, I think our market or go to market strategies to combine the expertise of both these companies and take it forward.
Speaker Change: Now specific tool.
Speaker Change: Descriptionist Pant, Comment that you made, or basically Capko is growing for us. That means there is a discretionary spend because their their independence is completely on discretionary spend which to me is good news in the context of what's coming in the future for us because some of this discretionary spend could be also transferred to the downstream revenue as well. So, I would say at this point in time I continue to be optimistic around the spending versus a segment especially in the U.S.
Ankur Rutra: Because some of this discretionary spend could be also transferred to the downstream revenue as well. So I would say at this point in time, I know I continue to be optimistic around the spend in BFS segment, especially in the US. Thank you. I'll just read a bit more into your previous comment. You said how the US has been a dominant economy.
Speaker Change: Thank you. I just will read a bit more into your previous comment. You said how the US has been a dominant economy and financial services have come out as a dominant vertical at what point does USBFS strength overcome all the small rocket challenges you see all of your other verticals where you know the sort of smaller challenges you see is overwhelmed by this and overall good momentum begins to look a bit stronger.
Srinivas Pallia: And financial services are my add is a dominant vertical. At what point does US BFS strength overcome all the small rocket challenges you see? All of your other verticals, where you know, the sort of smaller challenge you see is overwhelmed by this, and overall good momentum begins to look a bit stronger. So, encore, you know, for us to really grow well at an overall of all level, I think we need to have nearly all cylinders firing, right? And I think that's the end of all. Yes, we are happy with the momentum that we have in BFSI.
Speaker Change: So, Uncle, you know, for after really grow well at an overall log level I think.
Speaker Change: We need to have nearly all surrender firing.
Speaker Change: And I think that's the end of all, yes, we are happy with the momentum that we have in BFSI, I think not just U.S., but across we have a good momentum in BFSI, and we are happy about that, but I do think.
Srinivas Pallia: I think not just US, but across we have a good momentum in BFSI. And we are happy about that. But I do think we need to have, we need to at least arrest the decline and stabilize E&U and manufacturing, which is really spoke of. And I think that's very, very key. We need to have more and more sectors joining in. I think health is doing well. BFSI is done well. We're seeing, you know, deals that we had one ramping up, giving us growth in technology and communication. So, three sectors, good; consumers also done well.
Speaker Change: We need to have, we need to at least arrest the decline and stabilise.
Speaker Change: [inaudible] Delaporte, Revive and Wind on New Deal in Energy and Manufacturing, I think that will hold the key.
Ankur Rutra: So, if you're able to revive and win new deals in energy and manufacturing, I think that will hold the key. Thank you.
Ankur Rutra: This one question may be on AI and generative AI.
Ankur Rutra: You know, overall dealings have been relatively strong.
Speaker Change: Thank you. This one question, maybe Ayer and Genetive Ayer, you know, overall dealings have been relatively strong. How are you saying the adoption of Gen Ayer in particular, it into your, you know, deal construct one extent are there, only conversations about potential productivity pastures or gain share as a result of, you know, those constructs will be very good.
Ankur Rutra: How are you saying the adoption of Gen AI in particular? Heated to your real construct to an extent.
Srinivas Pallia: Are there any conversations about potential productivity pastures or gain share as a result of those constructions that we will begin? So, Ankur Ram, specific to Genie I, the way I see it is there is definitely excitement and opportunity for a company like Wipro. We want to be AI power Wiproh. And clearly we are investing big into Genie I.
Speaker Change: So, I'm going to stick to Chennai, the way I see it is there is definitely excitement and opportunity for a company like we prove. We want to be I-Port, we prove, and dearly we are investing big into Chennai.
Srinivas Pallia: In terms of the engagement, now I will put it in three buckets. Number one is we have AI lead projects where that's a software development cycle or a product engineering; that's one stream. Second one is, you know, infusing AI into the managed services, right, which is, you know, could be for existing or for the new ones where the point that you made, it's also operational efficiency, customer experience, that, you know, you can improve. And the third is AI power solutions that I talked about, which is, you know, you're conceptualizing a solution for a process into, you know, AI being the core.
Speaker Change: In terms of the engagement, I will put it in three buckets. Number one is we have AI-led projects that is in a software development cycle of product engineering that is one stream. Second one is, you know, infusing AI into the managed services, right, you know, which is, you know, could be for existing or for the new ones, where the point that you made is also operational efficiency, customer experience that, you know, you can improve. And the third is AI-powered solution that I talked about, which is, you know, you're conceptualizing a solution for a process into, you know, with, you know, AI being the core.
Srinivas Pallia: So, to me, this will continue to grow, and there will be productivity benefits in each of these areas. At this pointed time, the way I see it is that there are specific projects, you know, in the Genie I, which are going to help the clients in terms of improving some of their back-office operations, if you will, right. So, how do you, you know, those are the projects that you get, but it's not necessarily a specific, a DLC life cycle, but it is an opportunity for the client to improve their processes or operations and so on so forth.
Speaker Change: So, to me this will continue to grow and there will be productivity benefits in each of the areas at this point in time the way I say it is that there are specific projects.
Speaker Change: Jnai, Jnai which are going to help the clients in terms of improving some of their back-office operations if you will, right? So, how do you, you know, those are the projects that you get but it's not necessarily a specific, a DLC life cycle, but it is an opportunity for the client to improve their processes or operations and so on and so forth. So, those are the three buckets, Ankur, I would say Jnai and will continue to improve. Netnet I think Jnai will be positive for us and for the industry.
Srinivas Pallia: So, those are the three buckets, I would say, Genie AI and will continue to improve. Net net, I think, you know, Genie will be positive for us and for the industry.
Ankur Rutra: Thank you, Pishin.
Unknown Executive: Thank you.
Speaker Change: Thank you, appreciate it, I'm the best of luck.
Kawaljeet Saluja: We'll take a next question from the line of Kvaljeet Selvujah from Kotak Securities. Please go ahead. Hi. Thanks, Hissini. Come back on a fairly good quarter overall.
Speaker Change: Thank you. We'll take a next question from the line of Kaval Jitsal Ujya from Kotak's Security. Please go ahead.
Speaker Change: Hi, thanks, Hishini, come back on a fairly good quarter overall. The question I had for Hishini is that, when I looked at a performance in manufacturing, in EU, in maybe communication, though it has changed somewhat this quarter, it does indicate that, you know, it's not almost the environment, but you know, share losses in consolidation
Kawaljeet Saluja: The question I had for Hissini is that when I looked at the performance in manufacturing, in EU, in maybe communication, though it has changed somewhat this quarter, it does indicate that, you know, it's not so much the environment, but, you know, shared losses in consolidation exercise. So, at a broader level, I wanted to have your view that, you know, I was repulsing, as it said, there have been the consolidation exercises at an overall level, and then going into verticals, you know, there are nuances as such.
Speaker Change: So, to broader level, I wanted to have your view that, you know, I was looking for a position as it said that I have under consolidation.
Speaker Change: Rises at an overall level, and then going into verticals, you know there are nuances as such.
Srinivas Pallia: So, thanks, Kvaljeet. You know, something. One of the things that I'm really excited about is the opportunities and the vendor consolidation. One of the large deals that, you know, I did talk about today is a vendor consolidation, which is a very large deal where we are doing end-to-end operations for us across infrastructure, applications, and the process. To me, you know, there are multiple deal wins: our own vendor consolidation. We have our own opportunities. We have our own wins, where we have displaced the competition. And if I look at the current pipeline, there are opportunities. And Kvaljeet, you know, what happens sometimes is the combination of cost optimization and vendor consolidation comes together.
Speaker Change: So, thanks to all of it, you know something, one of the things that I am really excited is the opportunities and the vendor consolidation.
Speaker Change: One of the large deals that I did talk about today is a vendor consolidation, which is very large deal where we are doing intuit operations for us across infrastructure applications and process.
Speaker Change: To Me, and there are multiple dealings around vendor consolidation.
Speaker Change: We have our own opportunities, we have our own wins where we have displaced the competition. And if we look at the current pipeline, there are opportunities. And Kaval, you know, what happens sometimes is the combination of cost optimization and vendor consolidation comes together. Okay, in the broader context of cost, cost benefit to the clients. Sometimes the vendor consolidation happens purely because you are already dominant in one area. You can actually take care of the adjacent areas and bring in experience and operational efficiency as well. So, I am very excited about the opportunities for vendor consolidation for us, Kaval.
Srinivas Pallia: Okay, in the broader context of cost, cost benefit to the clients. Sometimes the vendor consolidation happens purely because you are already dominant in one area. You can actually, you know, take care of the adjacent areas and bring in experience and operational efficiency as well. So, I'm very excited about the opportunities for vendor consolidation for us, Kvaljeet. And we are winning.
Srinivas Pallia: And in this example that you gave on vendor consolidation, who did you consolidate out? Are you consolidating out other India heritage vendors, or are these legacy vendors who are on the last legs? I am sure a lot of people are listening to this conversation. All I can say is that it's a variety of vendors across the spectrum. That's all I can say. Okay, fair enough.
Speaker Change: And in this example that you gave on vendor consolidation, who did you consolidate out? Are you consolidating out other entire heritage vendors or are these legacy vendors who are on their last legs?
Speaker Change: I am sure a lot of people are listening to this conversation. All I can say is that it's a variety of vendors. I'll cross the spectrum, that's all I can say.
Aparna Iyer: The second question I had is, Aparna.
Aparna Iyer: Aparna, you know, when I go through your expenses in the IFRS financial statements, it appears to be quite busy with a number of notes. Was there any one-off benefit into the quarter because there seemed to be a number of line items in which there are some one-off charges, there are one-off gains, really just walking through. What's very happening in margins there? Yeah, so cover if you look at it, we did have a higher SNM and we have a lower GNA, and if you look at SGNA as a bucket, there is no change. If you look at our operating margin, improvement that's come through the graph margin improvement.
Speaker Change #100: Okay, fair enough. The second question I had is for Aparna. Aparna, you know, when I go through your expenses in the IFRF financial statements, it appears to be quite busy with a number of notes. Was there any one-off benefit into the quarter because there seemed to be a number of line items in which there are some one-off charges that are one-off gains?
Speaker Change #100: We're just walking through, what's really happening in Majin there.
Speaker Change #101: Yeah, so our left you look at it, we did have a higher SNM and we have a lower GNM and if you look at the GNM as a bucket there is no change.
Speaker Change #102: If you look at our operating margin improvement that's come through the gross margin improvement, the noise that you've referred to, yes we have had certain one of credit which are a part of our financials, but there are also its part and parcel of every quarter and what I will request is perhaps Abhishek or Deepak can take you through those items but if you if a broader, you know, direction that you can look at is SNM and GNA as a bucket have more or less remains flat and the improvement is coming in through the gross margins.
Aparna Iyer: The noise that you've referred to, yes, we have had certain one-off credits which are a part of our financials. But there are also, it's part and parcel of every quarter. And what I will recommend is perhaps, Abhishek or Deepak can take you through those items. But if you, if a broader, you know, direction that you can look at is SNM and GNA as a bucket have more or less remained flat and the improvement is coming in through the graph margins. You got that.
Aparna Iyer: And Abhan, I know what kind of environment do you require to get to your aspiration band of margin or aspiration margin number? Actually, it's not even aspiration; it's getting there almost, but you can just walk me through it. So are you asking me for levers? Sorry, I didn't get the question. The type of environment required to get to the habit margin that you aspire for. So, cover, you know, we've laid out, like you rightly said, we are one step closer to that 17 to 17 and a half percent target band that we'd laid out, you know, several quarters ago.
Speaker Change #102: And Parna, you know, what will happen? Why I am meant to do the required to get to your aspiration band of marginal, aspiration margin numbers?
Speaker Change #102: Actually it's not even after it's getting there almost but you're going to swap me to it
Speaker Change #103: So, are you asking me for levers? Sorry, I didn't get a question, any other questions? Why am I in the type of environment required to get to the EBIT margin that you aspire for?
Speaker Change #103: a coven
Speaker Change #103: You know...
Speaker Change #104: we've laid out like you rightly said we one step closer to that seventeen to seeen and half percent band that we laid out you know several quarters a happy with the performance that you've had in q two we have taken one big step towards that obviously in q three we will have to work through the headwindsthat we are starting the quarter with i think all hands on the day as far as quar three execution is concerned you know had the end of quarter three we will be in a better position to tell you you know how the margins look on
Aparna Iyer: We're happy with the performance that we've had in Q2. We have taken one big step towards that. Obviously, in Q3, we will have to work through the headwinds that we are starting the quarter with. I think all hands on the deck as far as Quarter three execution is concerned. You know, perhaps at the end of quarter three, we will be in a better position to tell you, you know, how the margins look beyond. I think over a long term, for it to like, you know, really, let's say patch and sustain beyond 17 percent operating margins.
Speaker Change #104: I think over a long term for it to like you know really let's say patch and 15 beyond 17% operating margins we've said that the revenue environment also needs to improve. A lot of the margin improvement that you've delivered is on the backdrop of revenue decline. So certainly the growth in revenues will help the trajectory both to surpass that 17% and also sustain.
Aparna Iyer: We've said that the revenue environment also needs to improve. A lot of the margin improvement that you've delivered is on the backdrop of revenue decline. So, certainly the growth in revenues will help the trajectory both to surpass that 17 percent and also sustain. Cover.
Speaker Change #104: Covered.
Speaker Change #105: Ok, thank you. That's all I had, I had to wish you the best, too.
Unknown Executive: Thank you, ladies and gentlemen; that was the last question for today.
Deepak Bohra: I would now like to hand the conference back to Mr. Deepak Bohra for closing comments. Over to you, sir. Thank you, members of the management team.
On behalf of Wipro Ltd, that concludes this conference. Thank you for joining us, and you may now disconnect.