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Premji and Pallia write a reassuring letter to shareholders

Wipro Ltd had one of its most challenging years in FY24 but the IT services company is committed to investing in the future, aiming to be at the forefront of the transformation being brought about by artificial intelligence, chairman Rishad Premji said.

“FY24 has undoubtedly been one of the most challenging years in our company’s history. The global economic climate has been quite volatile, affecting the technology spends of our clients,” Premji said in a letter to shareholders in Wipro’s annual report for the year ended March 2024. “We remain committed to innovation and are dedicated to investing in our future.”

The past year for Wipro was marked by a change of its chief executive officer and a churn in the senior leadership that was a drag on the company’s performance in terms of both revenue and profitability.

Srinivas Pallia, who took over as Wipro’s chief executive officer on 7 April, replacing Frenchman Thierry Delaporte, acknowledged FY24 as a year fraught with challenges.

“The past year presented significant challenges across our industry, impacting our performance as well. We were tested by a tough and volatile macroeconomic environment,” said Pallia in his letter to stakeholders.

Wipro was the only one among the top four Indian IT outsourcing companies to report an annual revenue decline in a year of slow growth. It ended FY24 with revenue declining 4.4% to $10.8 billion while rivals Tata Consultancy Services Ltd, Infosys Ltd, and HCL Technologies Ltd reported revenue of $29.1 billion, 18.6 billion, and $13.3 billion, respectively.

Its profitability for FY24 at 16.1 percent, up 50 basis points, was also the lowest. TCS, Infosys and HCLTech reported operating margins of 24.6%, 20.7%, and 18.2%, respectively.

AI adoption
Premji said Wipro aims to be at the forefront of the AI transformation and that the company had already deployed Gen AI internally.

“We have actively deployed Gen AI across internal processes driving hundreds of use cases. For example, WiNow, our AI-powered enterprise chatbot for self-service, is currently being used by nearly all our employees and has served about 6.5 million queries,” Premji said in the letter.

He said Wipro had trained 225,000 of its employees in Gen AI basics and equipped 30,000 of its employees in advanced training required for their specific roles.

Wipro ended FY24 with 234,054 employees, which was 23,564 less than in the previous year.

“Widespread AI adoption demands strong change management. Equipping our workforce to collaborate with AI through training and clear communication is crucial,” said Premji.

Premji’s comments on AI had been echoed by his peers as well.

Natarajan Chandrasekaran, executive chairman of Tata Sons Ltd, told shareholders at TCS’s 29th annual general meeting on Friday that Gen AI will have a significant impact on every industry, but will also lead to uncertainty.

Infosys’s non-executive chairman Nandan Nilekani had said Gen AI could simplify human life and make individuals productive, while adding that fears about the rise of AI causing human extinction have come down, as there was greater clarity on the technology now than 18 months ago.

Pallia said Wipro would focus on five strategic areas – accelerating the momentum of large deals, strengthening relationships with large clients, AI-powered offerings, building talent with an AI-first approach, and driving client centricity to spur the company towards growth.

Analysts said execution would be the key to growth for the company.

“Srini Pallia is a well-regarded leader in Wipro and is deal-driven. Strengthening execution is the key priority. Other key priorities are developing AI-integrated solutions,” Kotak analysts Kawaljeet Saluja, Sathishkumar S, and Vamshi Krishna said in a note dated 18 June.

Wipro is expected to end the June 2024 quarter with $2.62-$2.67 billion in constant currency terms, according to its revenue forecast. That compares with $2.66 billion in revenue in the fourth quarter of FY24.

“Continuous investments in talent and strategic acquisitions will fuel our growth,” said Pallia. Livemint

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