Wipro flags coronavirus hit, challenges ahead

 Indian software services firm Wipro on Wednesday said it would not forecast revenue for the next quarter because of the uncertain market conditions caused by the coronavirus pandemic.

“We already see budget reductions, cuts in discretionary spend, pricing pressures in terms of discounts or payment term extensions and restructuring requests for existing spends,” CEO Abidali Neemuchwala told reporters via a webcast.

“Given the uncertainty in the environment and inability to predict the course of this health crisis, we have decided to temporarily suspend our practice of providing quarterly guidance.”

Wipro, based in the Indian tech hub of Bengaluru, has been giving quarterly guidance since it was listed in New York in 2000.

Aviation and hospitality have been badly affected by the pandemic, and banking and media to “some extent”, Chief Operating Officer Bhanumurthy B.M. said.

He said healthcare was also likely to suffer in the near term, but to pick up pace in the longer term.

“All our key geographies – the U.S., the UK, continental Europe, India, Middle East – these are all impacted very heavily and we do believe it will take longer for these geographies to recover,” said Bhanumurthy.

North America is the biggest market for India’s top IT firms such as Tata Consultancy Services and Infosys and Wipro, followed by Europe.

Wipro reported a net profit of 23.26 billion rupees ($ 304 million) for its fourth quarter to end-March, below analysts’ estimates of 24.47 billion rupees, as costs rose 5.2% to 133.76 billion rupees.

India has extended a nationwide lockdown until May 3, hoping to head off a major outbreak of the virus, which has claimed over 100,000 lives around the world.

That has forced Wipro and other companies to find ways to enable working from home. Wipro said over 90% of its staff were working from home.

It estimated that revenue in its key IT services segment had been reduced by $ 14-$ 16 million for the quarter by the pandemic.

Still, Wipro’s IT services revenue rose 5.9% to 152.96 billion rupees, taking overall revenue to 157.11 billion rupees.

Wipro warned of “huge pressure” on margins in the fiscal first quarter to end-June and said it would have to make tradeoffs in hiring, salary increases, discretionary spending and other costs.

Chief financial officer Jatin Dalal told Reuters Wipro was not contemplating any layoffs.

The company’s shares closed down 1.4% on Wednesday, while the broader market ended 0.76% lower.