This means that Wipro is expected to get $65 million in revenue from the company annually. The company would be handling Phoenix’s policy administration, claims processing, customer support, data management and compliance support, Wipro announced on Wednesday.
This deal comes amid a draught in big-ticket deals for India’s largest IT outsourcing companies. Wipro, which ended last fiscal with $10.8 billion in revenue, signed a five-year deal valued at $500 million with an unnamed US-based communication service provider in June last year.
“This strategic engagement with Phoenix Group reflects our commitment to leveraging our deep transformation expertise around process and technology–including cloud, data, and AI to drive increased operational agility for clients in the financial services sector,” said Nagendra Bandaru, global head of technology services for Wipro.
Wipro will also establish tech centres in the UK for Phoenix. Employees from the insurance company will transition to Wipro as part of this.
At least one analyst cheered this move.
“Even before Pallia took over as CEO, some of the large deals that Wipro won came from his portfolio. Now, those deals are coming from other verticals and this means that he is implementing his success formula across the organisation,” said Abhishek Kumar, research analyst at JM Financial. “Such consistent deal wins should help them bridge the growth rate gap with larger peers.”
Pallia’s leadership strategy takes shape
For Srini Pallia, who was tasked with reviving the fortunes of the company, which ended last year with a revenue decline, the deal comes as a silver lining. Pallia’s two large deals in quick succession came after his predecessor Theirry Delaporte failed to bag such large deals later in his stint as Wipro CEO.
Pallia, who took over as Wipro’s chief executive on 6 April 2024, was tasked with steering the company to growth. For now, Pallia is looking to keep things simple. The company is not looking to sign or renew deals below its operating margins of 16%, and expensive team offsites are being shifted to virtual mode.
The company underwent a reorganisation under Pallia’s watch last week, creating four business units including Technology Services, Business Process Services, Consulting Services, and Engineering.
As part of the rejig, Jo Debecker, who headed the IT outsourcer’s cloud business, left the company after a three-year stint. His departure marks the tenth top-level change at Wipro since Pallia took over as CEO. In seven of the 10 exits, internal candidates have replaced the outgoing executives, in line with Pallia’s strategy of entrusting business verticals to long-timers.
Challenges remain despite deal momentum
Yet, while the deal might please shareholders, concerns linger. For one, this is not a mega deal, which is a deal valued at over $1 billion.
More importantly, Wipro is still expected to post a second consecutive year of full-year revenue decline, albeit not as much as in FY24.
In the nine months ended December 2024, Wipro’s revenue declined 4.2% on a yearly basis to $7.78 billion.
The company is expected to end the fourth quarter of this fiscal with IT services revenue of $2.6-2.66 billion. This implies that even if Wipro reports the upper end of its estimate for the fourth quarter, it will likely end FY25 with a second consecutive full-year revenue decline.
Wipro’s Europe business is expected to get a push from the deal. The company got $3.1 billion from clients stationed out of Europe at the end of March 2024, which is 4.4% lower compared with the previous year. Wipro does not individually disclose revenue from the UK but clubs it under Europe.
Wipro’s deal is the second such big-ticket announcement in a month.
Coforge Ltd on Tuesday said it struck a 13-year deal worth $1.56 billion with Sabre Corp., a Southlake, Texas-based travel technology company. As part of the deal, Coforge is expected to handle the software product delivery for Sabre.
