Wipro's net profit dips 7% due to new labour code

Wipro, one of India's leading technology services companies, saw a 7% year-on-year drop in net profit for the third quarter of the current fiscal year impacted by the new labour code. However, the company is confident about its future growth prospects.

Net profit for the quarter was Rs 3,119 crore, compared to Rs 3,354 crore a year ago during the same quarter. Wipro had an impact of Rs 303 crore due to the implementation of the new labour code but the company does not expect a similar expenditure in the near future.

Revenue grew 5.5% year-on-year for the third quarter of the fiscal to Rs 23,556 crore from Rs 22,319 crore. According to the company, there was broad-based growth across various business verticals and geographies.

Wipro CEO Srini Pallia highlighted the importance of artificial intelligence (AI) in the company's business engagement, adding that this technology has become Wipro's topmost priority.

“As AI becomes a strategic imperative, Wipro Intelligence is emerging as a differentiator and has contributed to several wins this quarter. We saw greater adoption of our AI-enabled platforms and solutions, scaled AI-led delivery through WINGS and WEGA, and expanded our innovation network across global locations,” he said.

Wipro also saw an improvement in margins in the third quarter at 17.6%, a rise of 0.9% from the second quarter.

Wipro's CFO Aparna Iyer said, “Our IT services operating margins at 17.6% expanded both sequentially and on a year-on-year basis. This is our best margin performance in the last few years.”

Wipro had added 6,529 employees at the end of the second quarter, but this addition was largely due to the acquisition of Harman DTS ( Digital Transformation Solutions), which saw the induction of around 5,000 professionals into the company.

The company has given a guidance of 0-2% growth in revenue in US dollar terms for the fourth quarter of the fiscal, signalling growing optimism.

The company CEO said demand pipeline continues to remain strong and Wipro had a total order booking of $3.3 billion and total contract value of large deals of $900 million.

The third quarter has been relatively positive for Indian IT companies despite the decline in net profit largely due to the implementation of the new labour code, and companies remain optimistic about their future prospects.