Wipro Ltd has secured a major information technology (IT) outsourcing contract from London-based Standard Chartered Plc., according to two people familiar with the matter.
“The deal would include Wipro handling Standard Chartered’s data transformation work and IT infrastructure.
However, it couldn't be immediately ascertained whether this contract between Wipro and Standard Chartered is a new deal, or part of an existing agreement.
“Wipro already had a certain number of people working with Standard Chartered.
Banks are the largest clients for Indian IT services companies, accounting for 25-30% of their revenues.
Wipro Ltd has secured a major information technology (IT) outsourcing contract from London-based Standard Chartered Plc., according to two people familiar with the matter. This is the second contract win under new chief executive officer (CEO) Srinivas Pallia.
The three-year contract is expected to generate over $50 million in annual revenue for Wipro. However, Mint could not independently verify the value of the contract.
“The deal would include Wipro handling Standard Chartered’s data transformation work and IT infrastructure. There will be a digital aspect to it as well," said one of the two people, seeking anonymity.
However, it couldn't be immediately ascertained whether this contract between Wipro and Standard Chartered is a new deal, or part of an existing agreement. “Wipro already had a certain number of people working with Standard Chartered. Now, that number may have gone up," said the second executive privy to the development, also seeking anonymity.
If India’s fourth largest IT services company were to get at least $50 million annually from the Standard Chartered account, it would translate into revenues of $150 million by 2027, the second person added.
Emailed queries to a Wipro spokesperson remained unanswered till press time.
In an emailed reply to Mint’s queries, a Standard Chartered spokesperson said: “We would like to state that as an international bank, we work with several partners who support us in our transformation journey. With regards to the information cited in your mail, we would like to categorically state that the information mentioned is inaccurate."
According to a stock exchange filing on 6 June, Wipro won a five-year deal from an American communications service provider, valued at $500 million, or $100 million annually, until 2029. This deal would contribute to 0.9% growth for Wipro. However, the IT services firm did not disclose the name of the client.
Analysts attributed some of these recent contract wins to a more aggressive sales approach by the IT major. “We are most definitely seeing a more aggressive and focused sales approach from Wipro’s client leads," said Phil Fersht, chief analyst of outsourcing research firm HFS Research.
Srinivas Pallia, who has been with Wipro for over three decades, took over as the CEO on 6 April, replacing Thierry Delaporte, who had held the position since July 2020.
The two major contracts under Pallia's leadership will provide a significant revenue boost to Wipro, the only one among India’s top four IT services companies to report a revenue decline in the year ended 31 March 2024. The company posted revenue of $10.8 billion for the year, down 3.8% from the year ended 31 March 2023.
In line with industry trends, the lender has been outsourcing its work to fewer IT services companies. “Standard Chartered has been outsourcing its work to about three dozen IT services companies, including Wipro, but it is now looking to reduce this number to less than half-a-dozen IT services vendors," the second executive said.
Banks are the largest clients for Indian IT services companies, accounting for 25-30% of their revenues. However, over the past two years, they have significantly reduced their technology spending, leading to the weakest growth in software services companies in 25 years.
According to the National Association of Software and Service Companies (Nasscom), India's IT sector was estimated to grow by 3.8% to $254 billion in FY24, marking its slowest growth rate in 25 years.
“IT services companies’ customers expanded the number of vendors during covid and are now reducing the number to allow for better management. Customers are looking to role back some of the pricing increases that were pushed through during covid and, hence, are looking to cut costs," said Peter Bendor Samuel, CEO, Everest Group, a Dallas-based IT research firm.
Banking, financial services and insurance (BFSI), which contributes more than one-third to Wipro’s revenues, reported an annual revenue decline of 8.2% in FY24 to $3.6 billion.
In its March quarter commentary, Wipro indicated it might face a revenue decline in the next three months, suggesting that challenges to growth persist , despite two significant contract wins.
