Wipro Limited’s 2026 Q3 Earnings Call: Discretionary Spending Timelines, AI Deal Growth, and H-1B Uncertainty Clash With Prior Outlook

Date of Call: Jan 16, 2026

Financials Results

• Revenue: $2.64B IT services revenue, up 1.4% sequentially (constant currency), up 0.2% year-on-year (reported currency). Includes 0.8% contribution from Harman DTS acquisition.
• EPS: Adjusted EPS INR 3.21, up 3.5% sequentially, flat year-on-year.
• Operating Margin: 17.6%, expanded 40 basis points sequentially over adjusted Q2 and 10 basis points year-on-year.

Guidance:

• Sequential IT services revenue growth of 0-2% in constant currency for Q4.
• Guidance includes incremental revenue from Harman DTS acquisition and is impacted by fewer working days and delays in ramping up large deals.

Business Commentary:

Revenue Growth and AI Integration:

• Wipro reported IT services sequential revenue of $2.64 billion, which grew 1.4% on a constant currency basis.
• Growth was driven by strong demand for AI solutions and a clear shift towards AI-led transformation across industries.

Operational Performance and Margins:

• The company's operating margins expanded to 17.6%, reflecting a 0.4% increase from the previous quarter and a 0.1% year-on-year increase.
• This improvement was attributed to operational rigor, cost takeout initiatives, and successful integration of acquisitions such as Harman DTS.

Deal Momentum and Bookings:

• Wipro closed $3.3 billion in total contract value and $871 million in large deal bookings, marking strong deal momentum.
• The increase was due to AI-driven transformations and vendor consolidation trends, with a focus on strategic pillars like industry platforms and delivery platforms.

Market and Sector Performance:

• Three of Wipro’s four market units and four of its five sectors reported sequential gains, with Americas 1 and APMEA showing significant growth.
• The growth was driven by strong performances in healthcare, consumer, and LATAM sectors, as well as ramp-ups in large deals.

Impact of Harman DTS Acquisition:

• The acquisition contributed 0.8% to Q3 revenue growth, adding to Wipro's engineering and AI capabilities.
• The integration of Harman DTS is expected to enhance Wipro's ability to accelerate AI-driven product innovation and enter new markets.

Sentiment Analysis:

Overall Tone: Positive

• CEO highlighted 'one of our best margin performances in the last few years' and strong pipeline with AI at the forefront. Management expressed confidence in maintaining margin band and noted 'very strong pipeline' across sectors and markets.

Q&A:

• Question from Rishabh (Firm not specified): What are you hearing from clients, and would FY 27 be better than FY 26? On the AI front, would you like to quantify...? And if not, would you like to comment on whether AI revenue is better than your traditional IT work?
  Response: Pipeline is very strong across markets and industries, with AI becoming front and center in all opportunities; no direct correlation between bookings trend and AI.

• Question from Shruti Achar (Economic Times): Could you give us a sense of why [TCV] declined... and also what your outlook is as far as client spending is concerned?... how much of the Harman acquisition was baked into the guidance?
  Response: TCV decline is due to lumpiness in large deals; year-to-date TCV is up 25% YOY. Harman revenue is fully included in Q4 guidance.

• Question from Omar Kannan (Deccan Herald): Given geopolitical uncertainties... are these uncertainties still affecting your clients’ decision-making?... what is happening in this energy sector?... will there be any change in your recruitment?...
  Response: Geopolitical uncertainties persist but are not a major situation; discretionary spend is a focus. On AI skills, creating campus centers of excellence and offering premiums for experienced talent.

• Question from Avi (Firm not specified): Can you talk a little more about the macro?... what are some of the verticals that you actually expect for you to fire?... how confident are you in terms of maintaining that margins?...
  Response: Focus is on execution and ramping up deals; pipeline is strong across five sectors. Margin improvement is sustained despite revenue challenges and will be the endeavor to maintain.

• Question from Sanjana (Firm not specified): Revisiting the guidance bit... apart from the contribution from the Harman DTS acquisition, are there any more factors driving this optimism?... Could you expand on [margin performance]?...
  Response: Margin improvement driven by sustained utilization, improved fixed price programs, SG&A optimization, synergy realization, and forex benefit. Labor Code has minimal ongoing impact.

• Question from Polomi (Reuters): Are we seeing an impact on pricing as deal structures evolve as it’s becoming more AI-focused?... how are you looking at the pay scale mix for [AI] specialized freshers?
  Response: AI is not compressing deal bookings; year-to-date large deal growth is over 50%. For AI talent, investing upstream in campuses and offering premiums as experience increases.

• Question from Padmini Gohar (Firm not specified): So, some of your peers said that they’re not looking at discretionary spending anymore. They’re more looking for different sectors like data centers and physical AI. So, are these sectors even under your radar?... Is [losing market share for GCCs] something you’re seeing also?
  Response: Strategy focuses on five key sectors and four markets; data center/physical AI is a horizontal opportunity focused on services/software. Partnering with client GCCs continues, leveraging Wipro Intelligence.

• Question from Trishi (Firm not specified): Some of your larger and smaller peers are getting more acquisitive as they go forward. So, do you also have such plans in this year?...
  Response: Acquisition strategy is based on own five strategic priorities; integration of Harman DTS is ongoing, and growth includes both organic and inorganic options.

Contradiction Point 1

Outlook on Client Spending and Discretionary Budgets

Contradiction on the timing and clarity of client budget decisions affecting spending.

Could you provide updates on macro conditions, large deal ramp-ups, interest rate hikes, hiring plans, and employee visa renewal delays? - Avi (Questioner)

2026Q3: Client spending outlook is tied to budgeting processes; discretionary spend is being watched closely. - Saurabh Govil(Chief Human Resources Officer)

How does this quarter's demand compare to past quarters, and what are U.S. clients' expectations for the rest of FY '26? Additionally, what's the outlook for discretionary spending recovery and any verticals showing improvement? - Rohit Chintapali (Businessworld)

2026Q2: U.S. clients are in budgeting processes; clarity expected by January. - Srinivas Pallia(CEO)

Contradiction Point 2

Impact of AI on Deal Bookings and Pricing

Contradiction on whether AI is causing deal compression or is a growth driver for bookings.

Does AI's influence on deal structures impact pricing and contribute to the drop in deal value? - Questioner (Reuters)

2026Q3: AI is not causing deal compression; TCV bookings are growing over 20% YoY, and large deals are up over 50% YoY. - Saurabh Govil(Chief Human Resources Officer)

Did the sequential drop in deal bookings signal sector-wide pricing cuts? - Unknown Attendee (Srishti, Economic Times)

2026Q2: The decline in bookings was not due to pricing pressure. Bookings grew significantly year-on-year... The decrease was partly due to Q1 having two large new deals, while Q2 had two mega deals that were renewals. - Aparna Iyer(CFO)

Contradiction Point 3

Impact of H-1B Visa Program Changes

Contradiction on the potential impact of H-1B visa policy changes on Wipro's operations and hiring.

Are geopolitical uncertainties affecting client decision-making, and how is the company adjusting recruitment for AI roles, particularly regarding hiring freshers with specialized skills and compensation packages? - Omar Kannan (Deccan Herald)

2026Q3: Immigration (H-1B) is under review. - Saurabh Govil(Chief Human Resources Officer)

Will the reduction in H-1B visas help Wipro reduce reliance on the program, and how will H2 be affected by furloughs and wage increases? - Unknown Attendee (Jyoti, BusinessLine)

2026Q2: Nearly 80% of U.S. employees are locals, so the impact of H-1B changes will be limited. The company has localized strategies and alternative avenues. - Saurabh Govil(Chief Human Resources Officer)

Contradiction Point 4

Outlook for Client Spending and Macroeconomic Environment

Contradiction on the stability and improvement of the discretionary spending environment.

What caused the second consecutive quarterly decline in TCV, and what is the outlook for client spending? - Shruti Achar (Economic Times)

2026Q3: Client spending outlook is tied to budgeting processes; discretionary spend is being watched closely. - Saurabh Govil(Chief Human Resources Officer)

Is the company confident that ~10% TCV growth will drive meaningful revenue acceleration, considering past instances where TCV growth did not translate proportionally to revenue, and what is the directional ACV growth? - Surendra Goyal (Citigroup Inc.)

2026Q1: Discretionary spend environment has stabilized (though not improved), which should help conversion. - Srinivas Pallia(Chief Operating Officer) & Aparna C. Iyer(CFO)

Contradiction Point 5

Nature of Deal Value and TCV Growth Trends

Contradiction on whether deal values are being compressed or if TCV growth is robust and healthy.

Is the shift to AI-focused deal structures affecting pricing and contributing to the decline in deal value? - Questioner (Reuters)

2026Q3: Pricing environment remains competitive... AI is not causing deal compression; TCV bookings are growing over 20% YoY, and large deals are up over 50% YoY. - Saurabh Govil(Chief Human Resources Officer)

With LTM TCV up 10% but smaller deals down 8% YoY, has deal duration increased materially, and how should ACV growth be modeled going forward? - Abhishek Kumar (JM Financial Institutional Securities Limited)

2026Q1: Large deals now dominate the pipeline... Weak discretionary spending and client focus on cost takeout also influence this trend. - Aparna C. Iyer(CFO)