Wipro's Paradox: If Deals are Soaring, Why the Flat Guidance? 

Wipro's latest quarterly results present a puzzle that should give investors pause. Here's a company that just posted its strongest large deal bookings in recent memory (₹124 billion, up 29% from the previous quarter) yet guided for flat to negative revenue growth in the coming quarter. Either management is being overly cautious, or something fundamental is broken in the conversion machinery.

On one hand, net income surged 21% year-over-year to ₹32.1 billion, operating margins expanded to a respectable 16.8%, and cash generation remained robust at 132% of net income. These are the metrics of a well-oiled operational machine. On the other hand, IT services revenue grew a meagre 0.6% sequentially and actually declined 2.3% year-over-year in constant currency terms. 

For a growth company, that's concerning.

Particularly troubling is the guidance. Projecting negative-to-flat growth for the third quarter suggests management sees headwinds that won't be easily resolved by seasonal recovery. The company blamed "seasonal furloughs" and "client-specific issues in Europe," but these sound like excuses rather than explanations. After all, seasonality affects everyone in the industry.

Execution Gap
The disconnect becomes starker when compared to peers. While Wipro was celebrating its large deal momentum, Infosys was posting 3.1% sequential revenue growth and confidently raising its full-year guidance.

The real issue may be structural. 

Wipro's manufacturing and energy verticals have been declining for seven to eight consecutive quarters, reflecting broader headwinds in these sectors. Manufacturing clients have been cutting discretionary IT spending amid supply chain disruptions and economic uncertainty, while energy companies have pulled back on technology investments as they navigate the transition to renewable sources and volatile commodity prices. 

While these macro factors affect the entire industry, Wipro seems less able than peers to offset vertical weakness with strength elsewhere.This points to deeper execution challenges that have long plagued the company. 

While Wipro excels at winning large transformation deals through competitive pricing and strong sales efforts, it struggles with what happens next. Deal conversion timelines have been slower than expected, with management acknowledging that large deal ramp-ups are taking longer to materialize into revenue. The company has faced persistent client ramp-downs and project delays that have dampened revenue growth despite strong bookings. 

This execution gap means that while competitors more effectively convert deal wins into sustained revenue growth, Wipro often finds itself winning deals but struggling to translate them quickly into top-line performance.

The voluntary attrition rate of 14.5% compounds these problems. Higher turnover than peers suggests difficulty retaining top talent, which directly impacts delivery quality and client relationships. When project teams constantly change, institutional knowledge walks out the door, and clients lose confidence in continuity.

Yet dismissing Wipro entirely would be premature. 

The ₹400 billion in large deals won over the past 12 months suggest real client confidence and successfully positioning  in vendor consolidation plays. The 28.8% quarterly jump in large deal bookings reflects genuine momentum in pursuing transformational projects that typically offer higher margins and longer duration.

Turnaround Test
Can Wipro convert this deal momentum into sustainable revenue growth? Large deals have long ramp-up periods, and management has acknowledged that "revenue conversion is still awaited on account of delayed ramp ups of existing deals as well delayed start for some of the new deal signing." Recent earnings calls reveal that a lot of these deals will ramp up over the next 4 to 6 quarters, suggesting conversion velocity remains sluggish.

Analysts have noted the divergence between deal intake and revenue conversion and the uncertainty of timelines for conversion into revenue. 

This raises questions about whether some deals might be conditional or subject to client approvals that could delay or derail implementation. The focus on "conversion" as management's top priority suggests this remains Wipro's Achilles' heel. But if these deals do materialize as projected, Wipro could see significant acceleration in revenue growth by mid-2025.

Needed is proof of concept. Can Wipro demonstrate that its recent large deal wins will translate to meaningful revenue growth in subsequent quarters? Can it stabilize its declining verticals while scaling its stronger segments like banking and financial services? Most importantly, can it narrow the operational gap with Infosys and TCS?

The upcoming quarters will be telling. If Wipro's bookings momentum translates to revenue acceleration, the current cautious guidance will look like conservative management setting low expectations. If revenue growth remains anaemic despite strong deal wins, it will confirm that the company's challenges run deeper than market conditions.

For now, the strong profitability metrics and deal momentum suggest underlying operational improvements, while the revenue struggles and cautious outlook provide a reality check. Investors betting on the company's transformation story should demand evidence that this time is truly different.

The Indian IT services sector has shown remarkable resilience and growth over decades, but individual companies' fortunes can diverge significantly based on execution capabilities. Wipro's next few quarters will determine whether it's a turnaround story in the making or a cautionary tale about competing in a struggling industry.