MUMBAI (NewsRise) -- Wipro reported a 2.2% dip in third-quarter net profit, weighed by higher employee costs, and forecast yet another quarter of weak revenue growth as the Indian software exporter continued to totter on the path to stability.
Bengaluru-based Wipro predicted its dollar-denominated revenue will sequentially grow 2% at best or not grow at worst. Analysts were expecting the company to predict at best a 2.5% growth or a lack of growth at worst. The dollar revenue grew 2.2% in the quarter ended in December.
"The overall demand environment has not changed -- it has neither improved nor deteriorated from last quarter," Abidali Z. Neemuchwala, Wipro's chief executive, told reporters. "We see the same level of uncertainty due to macro and geopolitical issues."
Wipro, backed by billionaire Azim Premji, has been struggling to snap out of the low-growth mode over the past few years as customers curtailed spending on core information technology services. Weak execution of orders also cast a shadow over the company's financial performance. Wipro's revenue in constant currency terms barely grew 5.4% in the last fiscal year, even as larger rivals such as Tata Consultancy Services and Infosys saw their revenue expand more than 11% and 9%, respectively.
For the quarter ended in December, Wipro's net profit stood at 24.6 billion rupees ($347 million), compared with 25.1 billion rupees a year ago. Analysts were expecting a net income of 24.4 billion rupees, according to Refinitiv data. Revenue grew 2.7% to 154.7 billion rupees.
The latest quarter saw the company completing the acquisition of International TechneGroup, a digital engineering and manufacturing solutions company, as well as winning a $300 million contract from top Indian lender ICICI Bank.
Wipro's crosstown rival Infosys last week raised its dollar revenue growth outlook on the back of large deals worth $1.8 billion. Infosys said it expects its constant currency revenue to grow 10% to 10.5% in the fiscal year ending March 31, compared with 9% to 10% it had forecast in September.
India's largest outsourcing company Tata Consultancy Services is set to report its earnings on Friday.
Analysts have been wary of client spending on technology in 2020 as the U.S., the largest outsourcing market in the world, braces for an election year. A prolonged trade row between the U.S. and China, and fears of Britain exiting from the European Union without a trade deal have stirred fears of a global slowdown that will cap technology spending by companies.
Wipro's revenue from its largest vertical financial service business barely grew 0.7% as banks and capital markets continued to curb technology spending. Digital business, which accounts for about 40% of its revenue, grew 23% in constant currency terms, the company said.
Ahead of the results, Wipro shares gained 0.9% in Mumbai trading, while the benchmark S&P BSE Sensex rose 0.2%.
--Dhanya Ann Thoppil