By VarunVyas Hebbalalu
BENGALURU (Reuters) -India’s Wipro on Wednesday reported a surprise dip in second-quarter revenue and warned a fall in its key IT services business would worsen in the current quarter as clients cut spending amid ongoing global economic uncertainties.
U.S.-listed shares of India’s fourth largest IT services provider dropped 3.7% in pre-market trading in New York.
The $245 billion Indian IT sector has been contending with soft demand for the last three quarters as clients delayed deal-making decisions.
A revival of demand would not come even in the back half of this financial year with the challenging macro environment expected to persist, said Anmol Garg, an analyst at brokerage DAM Capital.
Wipro forecast third-quarter IT services revenue, nearly all of its business, would drop 3.5% to 1.5% sequentially on a constant currency basis.
That is steeper than the 0.5% sequential drop in the second quarter. In year-over-year terms, the implied drop of 5.3% lower is steeper than the 1.6% drop in the second quarter.
Wipro’s total revenue fell 0.1% to 225.16 billion rupees ($2.70 billion) in the second quarter that ended on Sept. 30., while analysts were expecting a rise of 1.2% as per LSEG data.
Last week, industry leader TCS also blamed an uncertain macro environment for its revenue miss.
Net profit at Wipro fell 0.5% to 26.46 billion rupees, missing the analysts’ average estimate of 31.02 billion rupees.
Wipro, which has been facing accusations by an employee union of trying to cut costs by deferring joining dates and slashing starting salaries, said it would opt for campus hiring only after “onboarding” the candidates it had made offers to.
Larger rival Infosys had also recently revealed plans to avoid near-term campus recruitments.
Wipro’s closing employee count fell to 244,707 during the quarter, from 249,758 at the end of last quarter.
(Reporting by Varun Vyas and Indranil Sarkar in Bengaluru; Editing by Sonia Cheema and Nivedita Bhattacharjee)