Wipro’s Q3 2026 Earnings Call: Deal Ramp Delays, Wage Hike Uncertainty, and Project Status Shifts Clash

Date of Call: Jan 16, 2026

Financials Results

• Revenue: IT Services revenue $2.64B, up 1.4% sequentially on a constant currency basis, up 0.6% excluding HARMAN DTS acquisition; year-on-year, revenue declined 1.2% in constant currency terms.
• EPS: Adjusted EPS INR 3.21, up 3.5% quarter-on-quarter and flat year-on-year.
• Operating Margin: Operating margin 17.6%, expanded 40 basis points sequentially and 10 basis points year-on-year, described as one of the best margin performances in recent quarters.

Guidance:

• Sequential IT services revenue growth for Q4 projected at 0% to 2.0% in constant currency.
• Guidance includes incremental revenue from HARMAN DTS acquisition.
• Expectation of margin pressure due to HARMAN DTS dilution, wage increases, and deal investments; endeavor to maintain margins in the 17% to 17.5% band.

Business Commentary:

Sequential Revenue Growth and Market Performance:

• Wipro Limited's IT Services sequential revenue at $2.64 billion grew 1.4% on a constant currency basis, with three of four markets and four of five sectors reporting sequential gains.
• Growth was broad-based, driven by strong performance in health care, consumer, and LatAm in the Americas, and led by a ramp-up of a mega deal in Europe.

Operating Margin Improvement:

• The company reported an operating margin of 17.6%, expanding 0.4% over adjusted quarter 2 margin and 0.1% year-on-year.
• This improvement is attributed to effective cost management and strategic investments in large deals.

Deal Pipeline and AI Transformation:

• Wipro closed $3.3 billion in total contract value and $871 million in large deal bookings, with a focus on AI-led transformation.
• The company emphasized the strategic pillars of industry platforms, delivery platforms, and the Wipro Innovation Network to drive AI adoption.

Challenges in Specific Sectors:

• The company's EMR (Energy, Manufacturing, Resources) sector saw a decline, with a 4.9% sequential and 5.8% year-on-year drop.
• This was due to macroeconomic uncertainties, tariff-related issues, and disrupted supply chains, although the pipeline remains strong for future deals.

Impact of Acquisitions and Future Outlook:

• The acquisition of HARMAN DTS contributed 0.8% to constant currency revenue growth, enhancing Wipro's engineering and AI capabilities.
• The integration is expected to open new markets and support larger transformation programs, with a focus on accelerating AI-driven product innovation.

Sentiment Analysis:

Overall Tone: Neutral

• Management highlights strong margin performance and AI-driven growth opportunities but acknowledges near-term headwinds: 'our endeavor, as always, will be to maintain the margins in a similar band...'; 'we will have to invest for growth...'; and 'some of the other deals...will take a few quarters to ramp up.'

Q&A:

• Question from Nitin Padmanabhan (Investec Bank plc): Concerns about revenue loss in Energy, Manufacturing, and Resources (EMR) vertical, timing of large deal ramp-ups impacting Q4 guidance, and outlook for wage hikes.
  Response: EMR decline due to macroeconomic uncertainty, tariffs, and supply chains, but pipeline remains strong in energy and manufacturing. Large deal ramp-ups vary by deal, with some taking several quarters; Q4 guidance reflects delayed ramp-ups and fewer working days. Wage hike decision pending in next few weeks.

• Question from Vibhor Singhal (Nuvama Wealth Management Limited): Outlook for the consumer vertical and specific project ramp-ups in tech and healthcare.
  Response: Consumer sector impacted by tariffs and a delayed SAP program; some wins are ramping up. Healthcare growth driven by open enrollment season and consistent performance. Tech growth reflects strong large technology player deals and HARMAN DTS contribution.

• Question from Ravi Menon (Macquarie Research): Reasons for slight decline in organic growth guidance for Q4 despite strong margins, and if sequential growth is possible looking at the pipeline.
  Response: Q4 guidance reflects softness from furloughs and fewer working days, despite a pipeline focused on cost optimization and vendor consolidation. Demand environment remains uncertain; customers are in 'wait and watch' mode, but strategic bets on AI and transformation are being made.

• Question from Sandeep Shah (Equirus Securities Private Limited): Impact of delayed deal ramp-ups on Q1 seasonality and margin guidance for Q4.
  Response: Delayed ramp-ups could help offset typical Q1 seasonality, but no Q1 guidance provided. Margin guidance aims to maintain band of 17% to 17.5%, but subject to investment for growth, HARMAN DTS dilution, and wage increases.

• Question from Kumar Rakesh (BNP Paribas): Strategy to align with industry average revenue growth, potentially through margin expansion or acquisitions.
  Response: Inorganic strategy focused on targeted acquisitions like HARMAN DTS to gain capabilities and new markets; cash provides opportunity for further investments to support growth and compete effectively.

• Question from Rishi Jhunjhunwala (IIFL Research): Drivers of headcount increase and nature of restructuring costs.
  Response: Headcount increase driven by HARMAN DTS acquisition and ramp-up of the Phoenix deal. Restructuring costs focused on obsolete skills in Europe and Capco, similar to prior quarter.

• Question from Kawaljeet Saluja (Kotak Securities): Plans for excess cash return via dividends or buybacks, and impact of delayed mega deal ramp-ups on Q4 guidance.
  Response: Buyback is an option for returning excess cash; statutory impediments like NCLT process are cleared. Delayed mega deal ramp-ups are due to client situations and deal complexity, with full ramp expected over coming quarters.

Contradiction Point 1

Deal Ramp-Up Timeline and Growth Impact

Conflicting statements on when large deal wins will contribute to revenue growth.

What caused the ~$24M EMR vertical revenue decline and when is a turnaround expected? What caused the large deal ramp-up delays in guidance? When is the next wage hike cycle expected? - Nitin Padmanabhan (Investec Bank plc)

2026Q3: Large deal ramp-up delays are due to the nature of recent wins, which take several quarters to ramp up. - Aparna Iyer(CFO)

With recent large deals, can you discuss execution risks in upcoming quarters and scaling these deals? - Rohit Chintapali (Businessworld)

2026Q2: Some deals will take more than a few quarters to ramp up, and this revenue will flow through in the coming quarters. - Aparna Iyer(CFO)

Contradiction Point 2

Wage Hike Decision Timeline

Contradiction on the timing and certainty of the next wage hike decision.

What were the reasons for the ~$24M revenue decline in the Energy, Manufacturing, and Resources (EMR) vertical, when might it turn around, what caused the large deal ramp-up delays in guidance, and when is the next wage hike cycle expected? - Nitin Padmanabhan (Investec Bank plc)

2026Q3: A decision on salary hikes will be made in the coming weeks. - Saurabh Govil(Chief Human Resources Officer)

What are the H2 hiring plans, especially for campus recruitment, and any updates on wage hikes? - Ayanti Bera (Financial Express)

2026Q2: Regarding wage hikes, the macro environment remains uncertain, and no decision has been made yet. - Saurabh Govil(Chief Human Resources Officer)

Contradiction Point 3

Large Deal Ramp-up Timeline and Financial Impact

Contradiction on when large deal ramps will contribute meaningfully to revenue.

What factors contributed to the ~$24M revenue decline in the Energy, Manufacturing, and Resources vertical, the delays in the large deal ramp-up, and the timing of the next wage hike cycle? - Nitin Padmanabhan (Investec Bank plc)

2026Q3: The Phoenix deal is fully ramped, but others will contribute over the next few quarters. - Aparna Iyer(CFO)

Could you clarify the mixed commentary on the Americas—optimism in the pipeline but weakness in manufacturing, retail, and CPG—and whether the European decline is temporary? - Ravi Menon (Macquarie Research)

2026Q1: The focus is on converting these deals to drive future growth. - Srinivas Pallia(CEO)

Contradiction Point 4

Status and Impact of Paused Large Projects

Contradiction on whether paused projects (e.g., SAP) are now moving or still on hold.

What is the outlook for the Consumer vertical amid ongoing tariff uncertainty, is a turnaround expected, and what drove growth in the Tech and Healthcare verticals this quarter, with sustainability? - Vibhor Singhal (Nuvama Wealth Management Limited)

2026Q3: Some earlier wins are ramping up to support growth. The pipeline shows

Have there been updates on paused large projects like SAP since last quarter, and are they now moving forward as part of the guidance? - Gaurav Rateria (Morgan Stanley)

2026Q1: Some projects in sectors like manufacturing (automotive, industrial) and retail/CPG remain on hold due to tariff and geopolitical uncertainties. Clients are waiting for clarity before resuming. - Srinivas Pallia(CEO)

Contradiction Point 5

Primary Driver of Revenue Weakness

Contradiction on whether macroeconomic factors or internal deal ramp issues are the main cause.

Why is organic growth at the lower end of Q4 guidance despite strong margins and a growth pipeline, and is sequential growth possible? - Ravi Menon (Macquarie Research)

2026Q3: The guidance reflects visibility at the quarter's start, with softness due to fewer working days offsetting returning furloughs. - Aparna Iyer(CFO)

Was macro weakness the cause of this quarter's lower growth, and is positive FY26 growth possible or another decline likely? - Vibhor Singhal (Nuvama Equities)

2025Q4: Macroeconomic weakness, especially tariff impacts, has influenced the last quarter's revenue. - Srinivas Pallia(CEO)