Bengaluru: Country's third-largest software services firm, Wipro Thursday reported four percent rise in net profit at Rs 2,187.7 crore for the June quarter, broadly in line with street expectations.
The city-based firm, which had reported a net profit of Rs 2,103.2 crore in the year-ago period, said it expects the coming quarters to be better than the April-June, 2015 period.
Its total income rose 10.5 percent to Rs 12,894.8 crore for the said quarter from Rs 11,669.4 crore in the April-June, 2014 quarter.
The firm's IT services revenue, which constitutes a major share of the firm's total earnings, saw a sequential growth of 1.1 percent to USD 1.79 billion in the said quarter, meeting its revenue guidance of USD 1,765 million to USD 1,793 million.
"Over all while we are seeing a stable demand environment, large deals are competitive and there is pressure on pricing in new deals. There is significant churn around the nature of technology consumption across the run and change side of the business," Wipro CEO and Member of Board T K Kurien told reporters here.
Wipro expects to see pick-up in momentum in the second quarter as reflected in the guidance and it expects the second half to be better than the first half of the fiscal, he added.
Dipen Shah, Head of Private Client Group Research at Kotak Securities, said Wipro's revenue growth of 0.2 percent in constant currency terms was slightly lower than estimates.
"Growth was largely impacted by continuing softness in the Energy vertical. However, the Q2 guidance of 1.5-3.5 percent in slightly ahead of expectations," he said.
For the July-September 2015 quarter, Wipro expects its IT services revenues to be in the range of USD 1,821 million to USD 1,857 million.
"There are a couple of areas where this quarter performance has been muted. We see energy and utility is coming back in the next quarter... There is going to be growth, it is going to be broad-based across verticals and across service-lines," Kurien said.
Wipro's larger rivals TCS and Infosys posted good set of numbers. For the quarter ended June 30, Infosys reported a sequential revenue growth of 4.5 percent, while TCS posted 3.5 percent jump.
The IT services segment had a headcount of 1,61,789 as of June 30, 2015, up from 158,217 in March this year with an addition of 3,572 people.
Revenues from IT products segment stood at Rs 820 crore, up 7 percent year-on-year.
Responding to a query on attrition, Wipro Senior Vice President (Human Resources) Saurabh Govil said, "This quarter, there is a slight increase, but if you look at attrition over the last six or seven quarters it has been on a narrow band of one percent, so it is operating on a very very narrow band."
Seasonally, the first quarter has a high attrition on account of appraisal cycles and employees leaving for higher education.
Wipro offered salary hikes of about seven percent to offshore and about two percent to onsite employees.
The company added 36 new customers during the quarter.
"On the Run side, deals are getting increasingly competitive and we are focussed on increasing the levels of automation," Kurien said.
On the Change side, new stakeholders are influencing buying decisions in the digital space, he added.
Like its rivals TCS and Infosys, Wipro is also focussing heavily on digital services to shore up margins and revenues.
"We have consistently communicated our plans to make significant investments in Digital. Earlier this month, we actioned this and announced our intention to acquire Designit," he said.
Kurien said the industry is undergoing changes, requiring a different level of operational efficiency.
"We believe that process simplification, automation and artificial intelligence are key levers to achieve this," he added.
Talking about verticals, Kurien said there was growth in business from sectors like consumer goods, transportation and government, manufacturing and Hi-Tech.
"Healthcare and life sciences had a soft quarter in Q1, impacted by project completion, but we expect that business to pick up pace in Q2.
"Energy sector continues to be volatile. Considering our dominant position in the market, the sharp cutback in spends, driven by plunge in oil prices, has significantly impacted us in the last few quarters. However, we are gaining share from consolidation," he added.
