Wipro announced Q1 2020 financial results and surprised everyone with a profitable quarter despite the business slowdown from the Covid-19 pandemic.
Wipro reported 0.11 percent profit(YoY): Wipro reported a net profit of Rs 2,390.40 crore in Q1-2020 compared to Rs 2,387.60 crore profit in Q1-2019 (yeah it’s a small difference)
Consolidated Revenue of Wipro increased by 1.33 percent:
Wipro revenue is Rs 14,913.10 crore in Q1-FY21 compared to 14,716.10 crores in the same period last year.
Some Key highlights from Wipro Q1 2020 results:
- Hired 7,000 employees in the quarter
- 69.8% of it’s US workforce is local
- Wipro Added five customers in $20Mn+ revenue bucket
- Employee Attrition has reduced to 13.0%
- Committed ₹100 crores towards efforts on COVID-19 crisis, of which ₹25 crores contributed to the prime minister’s relief fund
Key Factors: Why Wipro had a profitable quarter despite a Business slowdown from Covid-19 pandemic
1. Wipro significantly reduced the Operational Cost
- Reduction in Operational Cost was the primary driver for Wipro. As the lockdown started, Wipro focussed on saving the operational cost.
- While many IT companies had to put a lot of work on ‘work from home’ model. Wipro had a proven model (Thanks to its child company Topcoder that Wipro acquired. Topcoder is home to the largest talent network and crowdsourcing platform.)
- While TCS announced that TCS Work from home was expensive, Wipro’s quarterly report clearly shows some savings when it comes to working from home.
- As per the Official Wipro report, employee expenses for Wipro declined 6.1% sequentially to Rs 8,026 crore.
2. Wipro did good and earned in Business Segments where even TCS saw the slowdown
- Pandemic badly hit Banking and Financial Sector ‘BFS’ and Manufacturing Sector hard.
- Despite Business slowdown, Wipro had marginal growth in the Manufacturing segment.
- Wipro saw terrific growth in Tech Segment as well.
3. Continuous Rupee depreciation
- It is a simple concept that when rupee value goes down against the US dollar, importing from US goods is expensive, and exporting something to them(US), such as the Software Service Export, brings more revenue.
- Wipro’s 63% revenue came in the US dollars.
- As mentioned by Wipro, CFO, Rupee depreciation played a key role.
With a combination of other drivers, Wipro was able to beat everyone’s expectations.
Wipro is behind HCL for the last few years; however, Wipro always had the utmost respect due to its core values created by Mr. Azim Premji.
Recently Rishad Premji, Chairman of Wipro, announced that Wipro would not layoff anyone due to the COVID-19 pandemic that shows the genuine commitment towards its employees.
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