Wipro Ltd Q2 FY2025 Earnings Call

Ladies and gentlemen, good day and welcome to Wipro Limited Q2 FY '25 Earnings Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Deepak Bora, Senior Vice President, Corporate Treasurer, and Investor Relations. Thank you and over to you, sir.

Yes. Thank you, Yashashri. A warm welcome to our quarter two financial year ’25 earnings call. We'll begin the call with the business highlights and overview by Srinivas Pallia, our Chief Executive Officer and Managing Director, followed by updates on financial overview by our CFO, Aparna Iyer. We also have our CHRO, Saurabh Govil, on this call. Afterwards, the operator will open the bridge for Q&A with our management team. Before Srini starts, let me draw your attention to the fact that during this call, we may make certain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are associated with uncertainties and risks, which may cause the actual results to differ materially from those expected. The uncertainties and risk factors are explained in our detailed filings with the SEC. Wipro does not undertake any obligation to update the forward-looking statements to reflect events and circumstances after the date of filing. The conference call will be archived and a transcript will be available on our website. With that, I would like to turn over the call to Srini. Thank you.

Thanks, Dipak. Hello, everyone. Thank you for joining me and my leadership team for our second quarter results for the financial year 2024-25. In Q2, we met our expectations for revenue, bookings, and margins. The long-term potential of our business is strong and we are prepared to handle the current economic uncertainties. We continue to focus on our five strategic priorities and building a strong talent pool to capture AI opportunities. Now let me go over the financial highlights for the quarter and share some specific insights on our markets and industry sectors. All the revenue growth numbers I share will be in constant currency. Our IT services revenue for quarter two was $2.66 billion reflecting a sequential growth of 0.6%. This brings us closer to the upper end of our guidance. Operating margins came in at 16.8% which is an expansion of 35 basis points quarter-on-quarter and 71 basis points year-on-year. In terms of total bookings, we ended the quarter at $3.6 billion which is an 8.4% increase quarter-on-quarter. Our Capco business continued to see traction and grew 3.2% quarter-on-quarter and 6.9% year-on-year. Coming to our strategic market unit performances, we saw sequential growth in three of the four markets in quarter two. Americas 1 achieved sequential growth of 1.2% driven by good performance in healthcare, technology, and communication sectors. Americas 2 also recorded sequential growth of 0.8% supported by robust demand and strong execution in the BFSI sector. APMEA grew by 0.3% driven by traction in Capco. We are seeing early signs of our business stabilizing in this region. Europe registered a sequential decline of 0.1% due to overall weak demand and client-specific issues in a few accounts. Among industry sectors, we experienced varied performance. With strong account mining and traction in Capco business, BFSI continued to accelerate delivering 2.7% sequential growth. This growth was led by Americas. Additionally, we are seeing momentum in both APMEA and Europe. This marks the third consecutive quarter of growth in BFSI. Technology and communications grew by 1.6% sequentially driven by the ramp up of a recent large deal and momentum in existing relationships. However, manufacturing remained soft for us with a sequential decline of 2%. We are seeing good progress with our consulting led industry solutions in the automotive manufacturing segment. In addition, there are also signs of an uptick in demand in the industrial segment. We will focus on converting this into wins to revive growth in manufacturing. Energy and utilities also remained weak with a sequential decline of 3.7%. However, we see opportunities for vendor consolidation and cost takeout particularly in the energy sector. As you may remember from the last two quarters, we identified five strategic priority areas of growth. We have advanced in all five areas. During the quarter, we booked 19 large deals with a TCV of $1,489 million. This translates to a growth of 29% sequentially, and 16.8% on a year-on-year basis. It is encouraging to see the diversity in our large wins across sectors. The deals we won cover a variety of themes from cost reduction and vendor consolidation to application modernization and cloud operations. In fact, we are leading these deals with industry and cross-industry solutions which are consulting led and AI powered. Let me briefly talk about the two largest deals we won in quarter two. A leading transportation and logistics company has selected Wipro to drive a business-critical SAP S/4HANA transformation program. This win involved collaboration between all our consulting arms, Rizing, Designit and Capco. It also highlights our industry knowledge and ability to deliver customized solutions to clients. In the second example, a software technology company has selected us to support its product development and IT operations end to end. This is a total outsourcing deal where Wipro will consolidate vendors and take over engineering, application, infrastructure and operations for the client. Additionally, we will implement Gen AI powered solutions to solve business challenges and deliver operational efficiency. I hope to harness this momentum and continue moving forward together. Now on to guidance. Our Q3 revenue is expected to be affected by seasonal furloughs and fewer working days in this quarter. As a result, we are guiding for a sequential revenue growth of -2% to 0% in constant currency. Despite softness in revenue in quarter three, we are confident of maintaining our margin in a narrow band. With that, let me turn it over to Aparna for a detailed overview of our financials. Thank you. Aparna, over to you.

Thank you, Srini. Good evening, ladies and gentlemen. I'll share a quick update after which we'll open up for Q&A. On the IT Services revenue for Q2, we delivered a sequential growth of 1.3% quarter-on-quarter in reported currency and a growth of 0.6% in constant currency. This is closer to the upper end of our guidance range that we had laid out last quarter. We are pleased to share that our operating margin for the quarter was at 16.8%, an expansion of 35 basis points quarter on quarter and 71 basis points year-on-year. This expansion in margins was achieved on the back of operational improvements and after absorbing one month of salary increments that we've rolled out for our associates effective for September. We begin Q3 with headwinds of furlough and incremental impact of salary increases, yet we remain confident of staying in a narrow band of margins. At the end of Q2, our investments and cash balances on our balance sheet now stands at $6.2 billion. In other key matrices, our other income net of the finance expenses grew 34.2% sequentially. Our accounting yield for the average investments held in India was at 7.9%. Finally, before I move to guidance, I'd like to share that in our recently concluded board meeting, the board of directors have recommended the issue of bonus shares to our shareholders in the ratio of 1:1 subject to the approval of shareholders. In terms of our guidance, to reiterate what was stated by Srini, we expect the revenues from our IT Services business segment to be in the range of $2.607 billion to $2.660 billion. This translates to a sequential guidance of -2% to 0% in constant currency terms.

Yes. Thank you very much. We will now begin the question-and-answer. We'll take our first question from the line of Abhishek Kumar from JM Financial. Please go ahead.

Hi. Good evening and congratulations on the very good dealings. My first question is on the guidance, is this just the furloughs or are we also seeing flow through of all the client-specific challenges that you mentioned which kind of inform somewhat mute-ish guidance next quarter?

Thanks, Abhishek. As far as quarter three guidance is concerned, clearly follows like when I called out, as one and also the number of working days obviously is much lower. We also have some slowdown in Europe, thanks to client-specific reasons. Having said that, we see good momentum in our deal pipeline across Americas 1 and Americas 2 and also APMEA. We do have good pipeline in Europe too. The focus for us is to actually win some of those and maximize our deal bookings for this quarter.

Okay. Next question is on energy and utility. You had mentioned last quarter also there are certain client-specific challenges here. Are these now behind us or are they still there in front of us? How should we think about E&U as a continuous headwind to our overall growth? Thank you.

So like Srini shared in his speech as well, it is work in progress. There is a good pipeline. There is a demand across vendor consolidation, cost takeout. And there are very, very good deals in the pipeline. We have to focus on conversion for us to improve our overall performance in E&U. And that's all that we have to say. It's all down to execution.

Just to add a little bit more color to what Aparna said Abhishek, specifically in the energy sector, we are seeing opportunities around cost optimization and vendor consolidation as well, which is good news.

Okay. Maybe just what I wanted to understand here is, are there any ramp downs that are continuing in few clients that is impacting us and if that is so, when do we expect those ramp downs to be behind us?

Yes. Our guidance for quarter three has all several puts and takes. It has furloughs. It does have fewer working days. It also factors in certain impact of certain client-specific challenges that we've alluded to in Europe. All of this is factored into the guidance as we start Q3. And given the momentum that we are building up, if you would see that our performance across market units and sectors, it has improved. And it is becoming a little bit more secular than what it was maybe three or four quarters back. So, we are hopeful that we will build on that momentum once we are behind the seasonality of Q3.

Great. That's encouraging. Thank you and all the best.

Thank you.

Thank you. We have our next question from the line of Nitin Padmanabhan from Investec. Please go ahead.

Yes, hi. Good evening. Aparna, I wanted your thoughts on the drivers that are helping margins, the initiatives that are sort of offsetting the wage increase impact and the revenue headwinds that you're seeing?

So, we have a set of traditional levers that have been at play. We have been improving our utilization consistently over the last few quarters. I do think the levels at which we are, we have to continue to sustain that. In Q2, we've dipped our utilization slightly. But we are well above the benchmark that we would like to be at. Secondly, offshoring is also a lever that we have flexed. Going forward, what are the levers that we will use? There are the traditional set of levers, fixed price projects, pyramid improvements. The other lever that's very topical to us is around G&A optimization. We have spoken about that. We have done some work on it over the last few quarters. Some of it is paying off as we get into Q3. Also, some of the acquired entities, as they are getting integrated into the organization, there are certain synergy benefits that we are realizing around overheads and G&A. Those are some of the levers. If you look at our SMU wise profitability metrics that we shared, I think Europe and APMEA have improved profitability. And Americas 2 has improved profitability year-on-year. So, there is a good orientation towards profitable growth, which is leading to operational improvements, Nitin.

Thank you for that, Aparna. The second question was around, I think a lot of work has gone behind building the momentum and sort of looking at the cost and all of those things over the last couple of quarters. In that context, do you think that a return to growth could happen sooner rather than later overall? Are you happy with the way things are moving or do you see there are further areas that require fixes before we are able to really move back to growth?

Nitin, we have grown in Q2. I think the key for us is to really build sustainable growth that we can deliver consistently, right? And that is still a work in progress. There are parts of the business which are performing much better. We've alluded to Capco. I think BFSI as an overall sector is doing very well. Americas 1 has momentum that's secular, right? And Americas 2, outside of EMR, Energy and Manufacturing, is doing well. So, there is more secular return in some sense of momentum at least in Americas. For us to bounce back to growth deterministically, Europe and APMEA also have to chip in.

Sure. So, Nitin, let me give you in the context of the pipeline that deal pipeline that we have built. All I can say at this point in time is healthy. There is momentum around the deal pipeline and it's also secular across the four markets and across the six sectors that we operate in, which is for me good news. I think the focus for me and my team right now is how do we secure those wins quickly within quarter three and move forward in quarter four. The advantage in quarter four is that the furloughs and number of working days would change that itself is one of the positives and the deal momentum and the wins could actually add to that.

That's very helpful. Just one last one, if I may. Are you seeing an increase in smaller deals within the pipeline that could convert faster? Your peer had mentioned that in the recent call. Some of your peers have been suggesting that they're also seeing heightened smaller deals within their closures as well. So, just curious to know your thoughts on what you are seeing on this aspect?

So, Nitin, while we talk about the pipeline, it's a combination of both large deals, mid-sized deals, and smaller deals. That's number one. Number two, if you look at our own bookings for quarter two of the $3.6 billion, $1.5 billion came in from large deals. But if you remove that $1.5 billion, the balance is a combination of both mid-sized deals and smaller deals. Second, if you look at the kind of opportunities that we get especially when doing discretionary spend around Capco, BFSI, some of them tend to be much smaller, they need not be large deals. Overall, I think the way I see it is, we do have smaller deals, mid-sized deals and large deals and we continue to remain optimistic on that pipeline.

Thank you so much and all the very best.

Thank you.

Thank you. We'll take our next question from the line of Sudheer Guntupalli from Kotak Mahindra AMC. Please go ahead.

Yes. Thanks for the opportunity. Srini, congrats on a good quarter. So, just your internals are looking very good. Deal wins are looking good. You seem to sound more confident on a broad-based set of segments this time versus last quarter. However, the guidance seems to be a bit counterintuitive. So, in that backdrop, couple of questions. So, when you say furloughs, so this time around, most of the other companies are actually indicating that furloughs are just in line with normal seasonality, with some of them actually saying the furlough impact will be lower than the previous year. And historically, we had a relatively slightly better H2 compared to H1. So, why is furlough such a game changer for Q3 guidance? That is number one. And number two, when you say client-specific issues in Europe, is it some part of the business that you want to rationalize as a new CEO and you have taken a strategic call to kind of cut that business? Or is this something where we have a certain client because of whatsoever their specific reasons have been hurting us? Again, I'm asking the Europe question because surprisingly this quarter, Europe has been good for most of the companies which reported so far.

Aparna answered the question on furloughs. I think for us relative to what you heard from other companies that seems to be constant. Well, what happened last year at this time, maybe it could be very specific to the clients we are engaged with and the decisions that they take because some of the sectors have a lot more furloughs than the rest. So, maybe that's one reason why we have some impact. So we continue to have the same level of impact on furloughs. Now coming to specific to Europe and client-specific needs, I would say a couple of clients where we have been working with them have actually changed direction because of which there has been some ramp downs. So it's very, very specific to the combination of some of the industries and Europe, which is actually contributing to that slowdown for us and a weak growth both in this quarter that you've seen through there. But having said that, I want to reiterate that the countries and the specific industries that we are focusing on in those countries, that pipeline has built up and right now myself and my team we are focused on winning those.

Fair enough, Srini. So, is it fair to expect that possibly when we look through this furlough and specific impacted time period of December quarter? Subsequently, we'll be able to build that secular growth momentum part of which we had seen in this quarter as well?

So, there as a process we just guide for the next quarter which is quarter three. So, you are right, I know in quarter three we got impacted for the reasons that we stated. Having said that some of them will not be there in quarter four and also with the deal pipeline and momentum that we have that should also help us going into quarter four.

Fair enough, sir. All the very best. Thank you so much.

Thank you. We’ll take our next question from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.

Hi, congrats on good deal execution and solid margin execution in the quarter. My first question is with respect to the large deal momentum. If you look at the rolling 12-month data, for a while you were stuck at $4.5 billion and now you have crossed that and gone to $4.7 billion, $4.8 billion. Just trying to understand what has driven this change? Is it more specific to Wipro in terms of the initiatives around large is put in place which is triggering this increase and increase in the win ratio or something has changed around the pipeline or our approach to the overall large deal win?

So, Gaurav, if you look at in the context of large deal, what's very important for us is to be proactive with our clients. Second, we have to lead with consulting and within AI or AI powered solutions. The industry and cross-industry solutions that we have, it also helps us to solution it right for the client and customize it right for the client. So, the deal win that I talked to you about in the transportation industry very clearly demonstrates that wherein we brought in our consulting arms and we brought in our industry-specific domain solutions to win that particular aspect. Second, Gaurav, it's also discipline, right, how you build the pipeline both proactively, how do you qualify that pipeline and then go for the win and the whole process and the nine yards that you do. So picking the right deal that you want to go after also makes a big difference, Gaurav. So, there are very small changes, but sometimes these changes can impact. Now going back to your question on sustainability, like any large deal at the end of the day it's a binary, right. So, I will not be able to predict how it is going to go. But if you have noticed, we are consistently being above $1 billion every quarter in terms of the large deals.

Got it. Thank you for the detailed answer. The second question is for Aparna. You did allude to a couple of factors which were specific initiatives of Wipro and topical to the company on margins. So, have those initiatives already played out in the form of resulting in margin tailwind in the last two quarters? Or do you think that there are some more that will be flowing into the margins over the next two quarters?

Certainly, there is still a lot of effort underway to make improvements. We still need to account for two months of salary increases. And it's also seasonally weak quarter in terms of furloughs. So, all hands on deck. I think what will be very key is to execute Q3 win and the topical levers are also at play. We still feel that there are optimizations that we can still do and achieve.

Thank you. We have our next question from the line of Sandeep Shah from Equirus Securities. Please go ahead.

Thanks for the opportunity and congrats on the good numbers. Just wanted to understand, Srini, post you took control, what in your assessment, which are the internal factors outside the macro factors, which is affecting the demand, we have to correct or we have to rectify for us to go into a sustainable consistent growth path?

So, thanks, Sandeep. Now Sandeep, if you look at it, what's very important is we've laid out our five strategic priorities and we have to consistently stay focused on that. So, if you look at the focus on large accounts in our priority sectors and prioritize the markets, I think that is helping us. If you look at the growth that we got in the top account, top five accounts, top 10 accounts reflect some of the focus that we have brought in. And we have to stay focused, we have to be consistent around that going forward. Second is the large deals that I just talked, the question that Gaurav asked about, right. We have to be proactive, we have to shape the demand and we have to understand the client both the business and the technology needs. Third one is the industry solution itself that I talked about right, consistently stay focused on that which are consulting led and AI powered. They've had some good successes in the last two quarters. And few of this gets into implementation then becomes more referenceable. I think you can actually more and more depend on those solutions. And the last point Sandeep is customer centricity, client centricity. We have defined five pillars of client centricity. We got to deliver, accelerate our delivery as the technology landscape changes. So if we stay focused on these five top priorities that we called out quarter after quarter, year on year, year after, I'm sure we'll continue to get better.

Thanks for the detailed answer. But despite these top five priorities, every quarter we have somewhere or the other portfolio related issue which keeps our growth rate marginally positive, negative or flattish. So, any timeline when you expect whatever rectification we wanted to do would be over and we can come back on a consistent growth path?

Very fair comment, Sandeep. If you look at it, right, if you look at from a markets perspective, this quarter has been a little different from the last quarter where three out of four kind of showed us some sequential growth, which I think is a positive right step. As far as the sectors are concerned, I think we continue to lag both in manufacturing and energy and utilities. Having said that, I think we have got a good momentum going in other sectors, be it BFSI which I talked about, healthcare, technology and communications and also consumer. I think we will continue to stay focused on those four bringing accelerate momentum in those four sectors while we do the correction in both manufacturing and E&U which is more specific to Wipro than what you see in the industry.

And when do you expect those correction to start yield result in manufacturing and E&U?

So, Sandeep, like I don't give a guidance beyond quarter three. But having said that, I did tell you that specifically if you look at in manufacturing sector, I called out automotive segment, I called industrial segment. We are seeing pipeline and traction out there for us. Now the question is, do we win those deals, if and when we win the deal that will show up on the revenue side sooner than later. On the Energy & Utilities segment, I did talk about specific deals in the Energy sector which is around cost optimization and vendor consolidation. Some of those deals we are in the process, but I think you have to win. So, if we do this, if we execute to this pipeline and deals that we have in these two sectors, Sandeep, things should get better. But at this point in time, I can't give you a specific timeline.

Okay. And your earlier commentary suggests 4Q could be better than 3Q?

Well, Sandeep, what I said was the headwinds we have when it comes to number of working days and furloughs, some of them may not be there in quarter four.

Okay. And just the last thing, post the budget, there is a tax ruling change on the buyback. So any view will we consider buyback as a continued option to cash return to the shareholders or we may move to dividend because the tax treatment of both being neutral going forward?

So, you've said it, Sandeep. We do think that there are benefits of buyback compared to dividend even after the proposed after the budget that has been announced. But that said, I think we are drawing up our revised capital allocation policy in line with the strat plan that we are putting together for the next two to three years. And I think we will be in a position to share a more detailed and informed answer to your question in terms of what is going to be our approach. I think that's work in progress and we'll do that.

Okay. And just related question as we have indicated earlier, we now look for spring of pearls kind of M&A rather than a big-ticket M&A.

Sandeep, the way I see M&A is a strategic advantage for us going forward. We do continue to look for opportunities in the marketplace whether it's in specific white spaces, markets or sectors. So, in that context, Sandeep, it's the first thing is look at what are the opportunities that you have in market and then take a decision. So, I'm not calling out anything like a spring of pearls, but all I am trying to do is I want to be very deliberate and very focused in terms of what we want to do with M&A, but M&A is a big part of our strategy.

Okay. Thanks and all the best.

Thank you. We have our next question from the line of Sumeet Jain from CLSA. Please go ahead.

Yes. Hi. Thanks for the opportunity. So firstly, Srini Aparna, I wanted to know from you in this guidance of -2% to 0%. What are you building for BFSI next quarter?

So, our BFSI business also has a component of Capco, which has higher furloughs compared to the rest of the work, consulting in general. And of course, Capco is far more susceptible to furloughs. It is factored into our guidance. But other than that, I think the momentum in BFSI has been fairly strong. It is we have done well. If you look at our quarter two growth, it has done well across all market units. It has done across various service offerings. So, we do think that the momentum in the BFSI sector from a volume trajectory is good.

Got it. And regarding further rationalization you mentioned in Energy Utility and Manufacturing verticals. So, it has been like a slow pain for the company for the last several quarters now. So rather isn't it better to have an instant death rather than a slow pain, which with certainty we don't know when we'll get over?

Sorry, Sumeet, I did not understand your question. What do you mean by that?

I understand how long decline in manufacturing and E&U or the Energy Utility verticals will continue given that for the last seven, eight quarters now it has been declining. So, the ramp down in the client-specific areas should have been over by now. So, is it like a structural problem we are facing in these two verticals?

So, Sumeet, first and foremost, these are very two important sectors for Wipro. We have been in Energy & Utilities and Manufacturing sectors for a very long time. I've personally driven this business in the past. Having said that, your observation is right that we have been slow relative to the peer group in terms of our growth and our rather lack of growth. However, like I mentioned in manufacturing for example there are specific segments we’ve continued to focus on. For example, automotive right there are opportunities for example in software-defined vehicles which is our Cloud Car. It's more on the engineering side of it for example. Second, you yourself mentioned SAP S/4HANA. Thanks to our acquisition of Rizing and we can lead with consulting in SAP S/4HANA. So, to me manufacturing and Energy & Utilities are very important sectors. We are staying focused on and we also have the pipeline. Now the question is, do we win those deals, if and when we win the deal that will show up on the revenue side sooner than later. On the Energy & Utilities segment, I did talk about specific deals in the Energy sector which is around cost optimization and vendor consolidation. Some of those deals we are in the process, but I think you have to win. So, if we do this, if we execute to this pipeline and deals that we have in these two sectors, Sandeep, things should get better.

Got it. Look forward to that revival maybe in a few quarters. And secondly on the deal side, I mean we can see your reported deal wins have been good, but the conversion to revenues have been a bit slow. So, is it like there is a delayed conversion of deals to revenue or is it like the duration of these deals is much longer, so the ACV is lower, leading to a lower revenue conversion?

So, large deals typically have a cycle for ramping up, right? One of the large deals that we had earlier alluded to that we'd won, it will take several quarters to ramp up. On the contrary, there is another large deal that we won in Q2 that is instantly ramped up and is giving us revenues. So, I think it depends on deal to deal. Overall, we are not concerned about the deal conversion being slower. We are happy with our large deal bookings. In fact, while we don't give out a number, the net new in these bookings is fairly good especially in Q2. I think we just need to focus on winning more and the conversion will happen. Yes, it takes two to three quarters for it to fully ramp up and deliver. But that will happen, Sumeet.

Right. Are you seeing any sort of delay in deal closures because of U.S. election related uncertainty in the U.S. geography?

So, Sumeet, I know you know it, you've been tracking U.S. politics irrespective of which party comes in, which leader comes in. Traditionally U.S. economy continues to grow and U.S. is the dominant economy if you look at it post-COVID as well in terms of growth. So, I would say the impact of politics will not be that significant at least from my vantage point, Sumeet.

Got it. And just lastly, I mean when I look at your number of active customers, it has been consistently coming down for the last seven to eight quarters. So, any particular strategy we are following out there?

No, not really, Sumeet. I think we had referred to exit of certain tail accounts in context of one of our market units, which is APMEA. APMEA, I think this was several quarters back. Other than that, we've also said that this number typically gets impacted because of the discretionary spend environment being weaker. And as a result, it also impacts a number of clients especially at the bottom end of the pyramid. What I think you should also take heart with is that our top client, our top five, our top ten, in fact, our top 25 clients are doing really well. So, I'm not going to read too much into that number. I think we need to focus on driving differentiated growth in our metal accounts, in our future metal accounts. And, that's what we are focusing on.

No, thank you. That’s very helpful. All the best. Thank you.

Thank you. We have our last question from the line of Ankur Rudra from J.P. Morgan. Please go ahead.

Hi, thank you. Maybe the first question, Srini, if you can elaborate a bit more on the U.S. BFS, strong credit exchange and also how that leads into discretionary spending? Your business, Capco was very high exposure to the Capital Markets segment, a segment which is seeing very strong growth recovery over the recent results season. Many of your peers have commented about how they expect that to help them. If you could elaborate how you expect to see that opportunity? Thank you.

Sure, Rudra. If you look at, since the question is very specific to U.S. and BFS, the strategy for us in the U.S. market is to combine Wipro's strength of execution with Capco's consulting capabilities. So, if you look at the banking financial services, capital markets, insurance, I think our go-to-market strategy is to combine the expertise of both these companies and take it forward. Now, specific to discretionary spend comment that you made, obviously if Capco is growing for us that means there is a discretionary spend because their dependence is completely on discretionary spend, which to me is good news in the context of what's coming in the future for us because some of this discretionary spend could be also transferred to the downstream revenue as well, Rudra.

Thank you. As you know, just to read a bit more into your previous comment, you said that how the U.S. has been a dominant economy and financial services if I might add is a dominant vertical. At what point does U.S. BFS strength overcome all the small pocket challenges you are seeing in all of your other verticals where the sort of smaller challenges you see is overwhelmed by this and overall growth momentum begins to look a bit stronger?

So Ankur, for us to really grow well at an overall org level, I think we need to have nearly all cylinders firing, right? And, I think that's the endeavor. Yes, we are happy with the momentum that we have in BFSI. I think not just U.S., but across we have a good momentum in BFSI and we are happy about that. But, I do think we need to have, we need to at least arrest the decline and stabilize, E&U and Manufacturing, which Srini spoke of and I think that's very, very key. We need to have more and more sectors joining in. I think health is doing well. BFSI has done well. We're seeing the deals that we had won ramping up giving us growth in technology and communications. So three sectors good, consumers has also done well.

Thank you. Just one question maybe on AI and generative AI, overall deal wins have been relatively strong. How are you seeing the adoption of Gen AI in particular eat into your deal construct to an extent? Are there any early conversations about potential productivity pass-throughs or gain share as a result of those constructs in the deal win?

So Ankur, specific to Gen AI, the way I see it is, there's definitely excitement and opportunity for a company like Wipro. We want to be AI-powered Wipro and clearly we are investing big into Gen AI. In terms of the engagements, now I would put it in three buckets. Number 1 is, we have AI-led projects, whether it's in a software development cycle or a product engineering, that's one stream. Second one is infusing AI into the managed services, right, which is could be for existing or for the new ones where the point that you made it's also operational efficiency, customer experience that you can improve. And, the third is AI-powered solutions that I talked about, which is you're conceptualizing a solution for a process into with AI being the core. So to me, this will continue to grow and there will be productivity benefits in each of these areas. At this point in time, the way I see it is that there are specific projects in AI, Gen AI which are going to help the clients in terms of improving some of their back office operations if you will. So, how do you, those are the projects that you get, but it's not necessarily specific SDLC lifecycle, but it is an opportunity for the client to improve their processes or operations and so on and so forth.

Thank you. Appreciate the color. Best of luck.

Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to Mr. Dipak Bohra for closing comments. Over to you, sir.

Yes. Thank you all for joining the call. In case we could not take any questions due to time constraints, please feel free to reach out to Investor Relations team. Have a nice evening. Thank you once again.

Thank you, members of the management team. On behalf of Wipro Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.