Wipro grew as much as 29.5%, to $2.6 billion. In constant currency, it was 28.8%. But a part of that growth came from its acquisitions of UK-based Capco and Australia-based Ampion earlier this calendar year. Wipro’s share on NYSE was up almost 8%. Infosys’s was up 3.4%. Both companies did much better than TCS, which grew by 16.8% in dollar terms, and 15.5% in constant currency. But TCS, which announced results last week, is also a much bigger company.
Indian IT services companies are benefiting from the surging demand for digital transformation from enterprises globally. Organisations around the world see digitisation as key to sustainability, a trend that the pandemic sharply accelerated.
Infosys’s strong performance and future visibility around its order book encouraged the company to raise its revenue guidance for the second consecutive quarter. For the full year, it now expects revenue to be up 16.5%-17.5%. Three months ago, it had forecast 14%-16%, and at the beginning of the financial year, it had guided for 12-14%, indicating that the business outlook has improved sharply.
Salil Parekh, CEO of Infosys, said the company has increased market share and has demonstrated more and more trust with its clients.
Wipro CEO Thierry Delaporte said the demand environment is very strong “and the pipeline, which is the highest in recent quarters, is a reflection of that.” The company has been witnessing a smart turnaround since Delaporte’s arrival around the middle of last year.
Sequentially, the growth this quarter was 8.1%, blowing past its guidance of 5-7%. This was rarely the case in the past few years.
Based on the strong demand, Wipro expects to grow between 2% and 4% sequentially in the third quarter, which translates to 27-30% in constant currency when compared to last year. Its annual revenue run-rate surpassed the $10 billion mark.
Banking, financial services and insurance (BFSI) was the top performer for both companies. For Wipro, it grew 43% on constant currency, while the consumer business was up 38%.
Wipro’s operating margin was down 100 basis points YoY to 17.8%, mainly due to salary hikes the company gave in September. It also spent more to hire external talent.
Infosys’s operating margin declined 1.6% YoY. Infosys CFO Nilanjan Roy said the margin was impacted by compensation increase and because of higher subcontracting expense. “We are working on an aggressive cost optimisation programme to negate some of the headwinds. We are comfortable with our margin guidance of 22-24%,” he said.
Infosys’s signed large deals worth $2.1 billion in the last quarter. Parekh said it is a reflection of its strategic focus and the strength of its digital offerings “Our digital business grew 42%, and is now 56% of our overall revenue. Within digital, cloud is growing very fast,” he said.