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In the second quarter ending on September 30, Wipro reported lower-than-expected net profit, marking the third consecutive quarter of declining revenues. This decrease can be attributed to a challenging economic environment characterized by reduced client discretionary spending due to global factors such as high inflation and elevated interest rates.

During this period, Wipro’s consolidated net profit was Rs 2,667.3 crore, slightly below the Rs 2,649 crore achieved in the same quarter the previous year. Financial analysts had predicted a net profit closer to Rs 2,900 crore. Furthermore, the company’s revenues dropped to Rs 22,516 crore from nearly Rs 22,540 crore a year ago, falling short of the anticipated Rs 22,800 crore.

In addition to these financial challenges, Wipro also announced the merger of five subsidiary companies into its core operations. These companies include Wipro HR Services India Private Ltd, Wipro Overseas IT Services Pvt Ltd, Wipro Technology Product Services Pvt Ltd (formerly known as Encore Theme Technologies Pvt Ltd), Wipro Trademarks Holding Ltd, and Wipro VLSI Design Services India Pvt Ltd.

Wipro’s competitors, such as TCS and Infosys, have also faced disappointing financial results despite securing substantial business deals. The CEO and MD of Wipro, Thierry Delaporte, acknowledged the uncertainties in the current business environment, as well as the impact of high inflation and interest rates. Clients are increasingly focused on efficiency, optimizing their existing investments, and achieving faster returns on new investments. Discretionary spending has decreased, and the pace of transformation programs has slowed down.

Delaporte emphasized the importance of making the right investments and operating efficiently for future success, stating that Wipro is preparing for a turnaround. Notably, the company reported an increase in large accounts, with 22 accounts exceeding $100 million, double the number compared to the previous year. The total contract value for large deals reached $1.3 billion, the highest in the last nine quarters.

However, the guidance for IT services revenue remains weak, with second-quarter earnings at $2.71 billion. Wipro expects revenue to be in the range of $2.61-2.6 billion, indicating a sequential guidance decline of -3.5% to -1.5% in constant currency terms.

Another point of concern is the decrease in employee count, dropping from 2.29 lakh in the preceding quarter to 2.44 lakh.

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