The Azim Premji-promoted firm also flagged up concerns on likelihood of increasing pressure on its cash flow position in the wake of the pandemic.
“Macroeconomic conditions caused by Covid-19 could also result in financial difficulties for our clients, including limited access to the credit markets, insolvency or bankruptcy. Such conditions could cause clients to delay payment, request modifications of their payment terms, or default on their payment obligations to us, all of which could negatively impact our liquidity and cash generated from operations,” the IT firm said.
Wipro, which last week announced Capgemini’s top executive Thierry Delaporte as its next chief executive officer, is lagging peers in revenue growth rates in recent years. In just ended FY20, it posted 1.7 per cent growth in its revenues from IT segment at $8.256 billion as compared to 9.8 per cent for Infosys and 7.1 per cent for Tata Consultancy Services (TCS).
On the impact of the pandemic on gross profit margin, Wipro
said, it could see adverse impact in the ongoing financial year. “In the short term, there may be a decrease in gross margins due to any decrease in technology spending, lower demand for IT products, lower rate of customer spending, delay in customers’ purchasing decisions owing to the pandemic,” it said.
In order to conserve cash to tide over the crisis, Wipro is pursuing various cost optimisation moves such as rationalising costs relating to travel, facilities and other discretionary spends like marketing events apart from deferment of annual increases in salary. “We are deploying workforce from our existing pool of talent, and new hiring will be done only for business-critical reasons,” it said.
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