Wipro Ltd.'s margins fell by roughly 130 basis points sequentially to 15.6% from 17.2% in the first quarter of fiscal 2027, despite 13 large deal wins, according to the IT giant's earnings report.
CEO Srini Pallia elucidated on the margin bruise during the post-earnings conference call and said that part of the reason why they were impacted was investments in artificial intelligence.
The IT giant aims to go back to the narrow 17% to 17.5% Ebitda margin band, Pallia emphasised, while refusing to give a timeframe to this hopeful recovery amid heightened volatility and a uncertain "revenue situation".
Notably, the CEO left no ambiguity in establishing that even though AI investments led to a drag in margins, they will continue to invest in their new AI-native business.
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"However, I want to clearly articulate that we want to invest in our new AI-native business. We want to -- because when you are doing an AI-native business, you also need to have the right talent," Pallia said.
Merit Salary Increases (MSI) and certain acquisitions that India's fourth largest IT services company carried out in the quarter were the other reasons why margins took a hit in Q1.
Pallia identified certain levers to boost margins such as reducing overhead costs, higher bench utilisation, and "taking costs out through automation, AI and productivity".
He reiterated the company's AI-powered future and said, "the message I wanted to give you is that despite all this, we will also want to continue to invest in our future, which is very, very critical because the world is pivoting to AI and we have already pivoted to AI and we will continue our journey around consulting-led and AI-powered and we will stay focused on that."
Despite its positive take on AI growth, Wipro did mention their AI turnover or revenue for the first quarter of the current fiscal during the conference call or in the earnings report; unlike its peer TCS, whose AI business has now reached an annualised revenue run rate of $2.6 billion.
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