Wipro Limited

Ladies and gentlemen, good day and welcome to Wipro Limited Q3 F525 earnings conference 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Deepak Bohda, Senior Vice President, Corporate Treasurer and Investor Relations. Thank you and over to you, sir.

Thank you, Yashashwari. Warm welcome to our quarter three financial year 25 earnings call. We will begin the call with business highlights and overview by Srinivas Balya, our Chief Executive Officer and Managing Director, followed by updates on financial overview by our CFO, Aparna Iyer, We also have our CHRO, Saurav Govind, on this call. Afterwards, the operator will open the bridge for Q&A with our management team. Before CME starts, let me draw your attention to the fact that during this call, we may make certain forward-looking statements within the meaning of private securities litigation reform Act 1995. These statements are based on management current expectations and are associated with uncertainties and risk. which may cause the actual results to differ materially from those expected. The uncertainties and risk factors are explained in our detailed filings with 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 hand over the call to Srini. Thank you, Deepak.

Hello, everyone. Thank you for joining us today. Our best wishes for the new year. 2024 was marked by macroeconomic challenges. 2025 looks more hopeful and resilient. Our clients are cautiously optimistic and discretionary spending is slowly coming back. While cost optimization remains key, we expect significant growth in AI spending. We are committed to driving innovation for our clients by leveraging the transformative power of AI. Let me now turn to the financial highlights of the quarter. All the growth numbers I share will be in constant currency. Our IT services revenue for quarter three was $2.63 billion, reflecting a sequential growth of 0.1% and degrowth of 0.7% on a year-on-year basis. This takes us slightly above the upper end of our guidance. We ended the quarter with a TCV of $3.5 billion in bookings. Our operating margins came in at 17.5%, an expansion of 0.7% quarter on quarter, and 1.5% year on year. This is a 12-quarter high, and I want to take this opportunity to thank our delivery teams for driving execution rigour. Our Capco business continued to see improved demand. Order book grew by 9% year-on-year and revenue grew 11% year-on-year. In our strategic market unit performance, we saw steady growth in demand across Americas while Europe and apnea remained soft for us. Americas 1 grew 3.9% sequentially and 3.7% on a year-on-year basis. Growth was primarily led by health and technology and communication sectors. Americas 2 de-grew 0.6% sequentially and grew 1.2% on a year-on-year basis led by BSI sector. Europe Degrew 2.7% sequentially and 4.6% on a year-on-year basis. Apnea Degrew 2.1% sequentially and 8% on a year-on-year basis. Moving on, Three of our five industry sectors recorded year-on-year growth, reflecting the progress across key areas. Health maintained its momentum, growing 6.7% sequentially and 4.5% year-on-year. While BFSI de-grew by 1.9% quarter-on-quarter, the sector grew 3.4% year-on-year. Consumer de-grew by 0.9% quarter-on-quarter and grew 0.4% year-on-year. Energy, manufacturing, and resources grew 0.4% quarter-on-quarter and declined 8.7% year-on-year. Technology and communications de-grew 0.6% quarter-on-quarter and 5.3% year on year. I would now like to share some updates on our strategic priorities that we had called out. In quarter three, we closed 17 large deals with a total value of $1 billion across markets and sectors. I would like to give you two examples in this context. we won a vendor consolidation deal with a leading American retail and distribution company. As a strategic partner, we will transform their merchandising, sales, and supply chain functions. In fact, our AI-led approach across engineering, digital, infrastructure, and application services was crucial in helping us win this deal. My second example is a leading airline in the Middle East that has partnered with us for end-to-end technology modernization. As part of a long-term contract, they will design and implement a customized cloud-based solution to improve operational agility, and resource utilization. Again, using AI-powered industry solutions, we will enhance employee productivity and customer experience for them. We continue to focus on our large accounts in our core markets and priority sectors. In quarter three, we achieved a sequential growth of 7.3% in our top account, top 5 and top 10 accounts grew 3.7% and 1.8% respectively. We remain committed to investing and scaling our large accounts, demonstrating client-centricity by driving greater value, increasing wallet share, and expanding into new lines of business. I would like to give an example of this. A global technology company has selected us to create and scale a cutting-edge silicon platform for its mixed reality products. We will work with the client to develop a silicon chip to deliver high performance at low power consumption. We will integrate advanced features like AI, sensor fusion, and stunning graphics to enhance end-user experience. This is one of Wipro's largest core silicon engineering events. We have made good progress in our consulting-led, AI-powered industry and cross-industry solutions. This quarter, we had several successes across our industry solutions, including tear-in-a-box, wealth AI, and software-defined vehicle. Additionally, we also secured multiple cross-industry wins with our next-gen manual services and cyber-shared offering. At Wipro, we continue to invest in AI education. 50,000 of our employees now hold advanced AI certifications. Beyond scaling, we are also investing in AI tools and platforms across the software development cycle and our own internal processes. At Wipro, We are early adopters of agentic AI, which will be delivering impactful results for our clients. This technology goes beyond traditional productivity assistance. While many of these applications are still experimental, we see use cases emerging in areas like customer service and supply chain management. Building talent at scale is a key strategic priority for us. We remain focused in building a globally diverse team with a high-performance culture. While we are promoting strong internal talent, we are also bringing in top external talent. We are investing significantly in leadership development. In FY25, Wipro Leadership Institute would have trained over 600 leaders through a combination of in-house leadership sessions and programs curated with leading global institutes. Finally, I want to recognize the dedication of our employees during the holiday season in delivering business-critical programs, especially for our clients. Now a note on guidance before I wrap up. For the next quarter, we are guiding for a sequential growth of minus 1% to plus 1% in constant currency terms. 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, everybody, and wish you all a terrific new year. Let me cover the financial highlights for the quarter in a few key points. One, as a result of the strong in-quarter execution, we deliver above the top end of our revenue guidance range, growing 0.1% quarter-on-quarter in constant currency terms. Two, our operating margins are at a 12-quarter high of 17.5%. This marks an expansion of 0.7% quarter on quarter and 1.5% year on year. Let me also add that this was achieved after absorbing two months of incremental wage revision. With this, the wage revision impact that we did as of September 24 is fully behind us. As we move into Q4, we are confident of staying in the narrow band. Three, our EPS and net income grew significantly 24% year-on-year, and 5% sequentially. This was led on the back of the margin expansion and therefore the EBIT growth, better treasury returns, and a stable ETR of 24%. Fourth, I'm pleased to share with you that the Board of Directors have approved increasing the payout percentage to 70% or above of the net income cumulatively on a block of three-year period. This is effective FY26. Along with this, the board has also declared an interim dividend of Rs. 6 per share. You would note that this is substantially higher in terms of the quantum of dividend payout compared to what we have done in the previous year. Finally, in terms of guidance, I want to reiterate the guidance stated by Srini. Our guidance for Q4 is minus 1% to plus 1%. And therefore, in dollar terms, it will be $2.602 billion to $2.655 billion. This is in constant currency terms. With that, we can open it up for Q&A.

Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take our first question from the line of Vibhor Singhal from Nuam Equities. Please go ahead.

Yeah, hi. Thanks for taking my question. And congrats on a solid performance, especially in the margins from Shiri, my question was on the deal wins. The deal wins were definitely up on a Y-on-Y basis, close to $1 billion in terms of large deal wins, and TCV has consistently stayed above the $3.5 billion mark. How do you see this trajectory helping us achieve higher Y-on-Y growth rate? Our execution on the past few quarters has been super solid. But, I mean, at the end of the day, I mean, when do you think or what is the number that you believe is what can take us to a closer to a mid-single-digit kind of a buy-on-buy growth rate or maybe higher than that? And do you see the pipeline for us to be able to achieve that in coming quarters? And how soon or how early can we reach this?

Thank you, Vipul. Let me reflect on your question. Our current large steel pipeline is robust, and we are seeing good traction across geographies. Now, if you have to put an industry lens to this, our strongest traction in large deals remain in BFSI and EMR segment. BFSI is strong in America, Europe, and India, whereas if you look at EMR, Manufacturing is strong in Europe compared to U.S., and our ENU is robust in America, including U.S. and Canada, followed by our ANZ and Europe. In terms of healthcare, consumer, and tech incomes, we are seeing more traction in the medium to large size, around 50 to 100 million. If you look at our quarter three, our large-scale TCV has been at 1 billion, which is still up 6% year-on-year by value and up by three deals by term. So I wouldn't read too much into it. Large deals, as you know, are lumpy, and there's also seasonal element to them. If you recollect, we had a record quarter to 25, and we now have a good foreclosure, so we don't see it as a cause for concern.

Got it, got it. In terms of discretionary spend, outside of Capco also, are we seeing tailwinds in terms of clients willing to put the spend back on the unwind? Or do you believe there is still some time to be able to reach that stage?

If you look at from a discretionary lens perspective alone, we did talk about Capco where both the bookings and revenue, we had a good year-on-year growth in quarter three. Having said that, the discretionary spend in America is definitely we see a positive sign in basis segment, which is good news for us. We also see some level of digging coming up in certain sectors, but it's not secular at this point in time. Also, this is the month where many of our customers are in the process of budgeting, and we are, you know, working with them to understand where the spend is going to be. But if you, if I were to actually extend your question to the overall demand environment, you know, we see America's very strong and the demand continues to pick up, while, you know, if you look at our bookings into 1 to 5 and, you know, 5 to 10 million range has been very strong. However, in Europe, while the economies are challenged, whether we all know what's happening in Germany, UK or France, actually this has put some pressure on some of our clients and some of the companies out there to trim their costs and become more efficient. And we see this as an opportunity going forward. And just to conclude, overall pipeline is healthy and has remained at the same level over the last year.

Got it, got it. Thanks for that retail explanation. Just one question for Aparna. So, Aparna, I think margins in this quarter were rock solid. We were able to expand margins despite two-month wage hike. So could you basically test upon or reflect upon some of the levers which we managed to use this because our gross margins have also expanded in this quarter, on a quarter-on-quarter basis, despite the range height. And related to the question, what would now be our, let's say, target band of margins, given that we're already in the 17.5% range? In the near to medium term, where do we expect these margins to be, let's say, in the next three to four quarters?

So with more, yes, you know, the margin expansion has come. If you look at what were the factors in Q3, we started the quarter with two incremental months of salary wage hike to absorb. We also had a seasonally weak quarter in terms of the furloughs, right? A lot of the improvements have been in action consistently over the last few to four quarters. Some of that played out. a lot of the improvement that we did to offset the increase and also expand the margins came on the back of improved execution rigor, both in our core and in the consulting business. If you look at Rising, Capco, and the core business, all of that has done very well. Now, we had a set of levers which are traditional in terms of the utilization, offshoring, and the fixed-price productivity that played out. We also did a very conscious reduction in terms of our overheads, including G&E, right? So despite the wage hike and everything, you will see those numbers coming down. Now, these are conscious reductions as we drove, and they have also yielded into the margin improvement. Where do I look at? Is there a revised aspirational bank? Nothing that we would like to share. At the moment, we've got to 17.5% that we had shared, and it's a 12-quarter high. So in some sense, you know, we are very conscious that we should sustain it. And therefore, for Q4, we are saying that we will be confident of holding it in a narrow band, and we'll take it from there.

So 17.5% plus minus could be the aspirational time now?

Yeah, yeah, at least for now.

Got it, got it. Thank you so much for taking my questions and wish you all the best.

Thank you so much, Vibhav.

Thank you. We'll take our next question from the line of Abhishek Kumar from JM Financial. Please go ahead.

Good evening. Thanks for taking my question. Congratulations on a very good performance. My first question is on growth and related to that is on guidance. Last two quarters, we have now been coming back closer to the top end of our guidance, which is not happening in quarters prior to that. We just wanted to understand, you know, what has changed, are the mid-quarter negative surprises kind of abating and that is helping us hit the top end or, you know, the demand environment has been improving. So that is, you know, on the performance and related to that on guidance, Next quarter, despite the fact that furloughs will be absent, et cetera, at the midpoint, we are still looking at a flattish growth similar to 3Q. So some of the puts and takes, you know, for our 4Q guidance. Thank you.

Yeah, sure. So, Abhishek, if you look at our guidance, there's no change to the philosophy of guidance. We guide based on the visibility we have. closer to the midpoint and then we guide and arrange. The fact that in the last two quarters we are able to come above the midpoint is because of both a stronger execution in quarter to also the demand environment is improving. It does show that the stability that we are able to draw at the start of the quarter to when we finish is better. So it is a reflection of that. It's reflected in the fact that some of our consulting businesses are doing well. Capco, like we highlighted, has grown 11% year-on-year. Bookings are up 9% year-on-year. So that's a good sign, and it's also a reflection of that. But otherwise, there's no change. As we look at Q4, it is a better guidance if you have to compare it to the guidance we gave for Q3. And that's what we have the present visibility for, Abhishek.

Sure. Okay. Maybe one question on margin. Aparna, you know, there was a sharp decline in depreciation this quarter. So is that now a more normalized level as far as depreciation is concerned, or was there any one-off there that we should be aware of? Thank you.

I don't think there are any one-offs. you know, it's likely to sustain. You can model it at the same level.

All right. Thank you and all the best.

Thank you. We'll take our next question from the line of Abhishek Bhandari from Nomura. Please go ahead.

Thank you and good evening to the management. I had, you know, a question on growth and the guidance again. Shini, if I look at your growth for this quarter, it was broadly led by healthcare, partly by manufacturing. But in banking, we had a negative number. Is it because of the furlough? And if you could talk about your outlook specifically for banking and healthcare businesses, given that some of your peers are talking about increased caution amongst healthcare clients given uncertainty around policy viewers and optimism in banking given that there could be delay and other stuff happening which could increase the business.

Hi Abhishek. Let me give you some color to this. If you look at BFSI, it was impacted by furloughs in quarter 3. However, the sector has grown 3.4% year on year. This is clearly a combination of discretionary spend led by Capco which Aparna just talked about it, which is the consulting work, and also non-discretionary piece, you know, some of the large and mid-sized teams, which are more on the themes of, you know, vendor consolidation, cost takeout. If you look at the AFSF budgets going forward, we think, we feel there will be an uptick on the budget, whereas healthcare budgets will continue to grow, albeit maybe slower than what it was in the past. So that's my take on both healthcare and BFSI.

Got it. And, you know, Shreed, second and last question is again on, you know, guidance part. Given that, you know, we had a great execution this quarter. We executed more than the top end. We are talking about some return of the stationary demand. Follow would be absent as, you know, Abhishek also asked. And, you know, there may be some tailwind coming from the execution of near, you know, the projects in the near past. So I'm still curious, you know, why I have a negative number from a, you know, guidance perspective when most of the things are actually positive for you.

So like Aparna said, we're given the quarter four guidance based on the visibility, current visibility we have. Having said that, we are seeing a gradual recovery happening. And the sectors that I talked to you about just now, BFSA and healthcare, clearly are doing well. And some of the sectors for us, both EMR, which is energy manufacturing resources, and consumer still need to recover. However, if you look at it on the geo side, we see momentum building up in America, while Europe and academia remain soft for us.

Got it. And last question, Parna, to you. Now that we have raised the return of capital to shareholders to around 70%, how should we think the mode of return? And you mentioned blocks of three years. So could it again be lumpy if you decide to use the buyback route or do you want to base it more like an annual setup? Thank you.

You know, in terms of mode of return, we continue to prefer both dividends and buybacks. and or even special dividend as appropriate, the board will make a decision. We want this to be more consistent, but we've continued given that one cannot rule out by that. We've said that you should continue to measure this over a block of three years. We will assess and if at some point in time we wanna make this annual, we will, but for now, we will continue to measure this as a block of three years. And we prefer both buyback and dividends.

Thank you and all the best for calendar 2025.

Thanks. Thanks, Abhishek.

Thank you. Next question is from the line of Rishi Jhunjhunwala from IIFL Institutional Equities. Please go ahead.

Yeah, thank you. Just one question around, you know, mining that you know, the non-top 10 clients better or basically even looking for hunting opportunities. If you look at, you know, we have done reasonably well when it comes to, you know, growth in top 10 clients. It's up 15% year on year. Whereas except that where our revenues are still declining at a 5% rate. So just wanted to understand, you know, outside of the top 10 client mining, you know, Given that if the overall environment were to become better, how are we preparing ourselves to ensure that when some of those opportunities come, we are able to hunt better as the decline in non-top 10 seems to be a lot higher than what we generally see in industry peers. Thank you.

Rishi, there's no change to the philosophy. We would like to continue to hunt and mine, right? We do look at mining our top 10 clients or top 25 or top 50 as a show of strength, and that's something that we've focused on. The reduction that you're seeing in our active client portfolio, you know, we report that number on a trailing 12 months. So if there is a weaker revenue environment, that also shows up in the number of active clients. is also the furloughs and, you know, the cross-currency impact that's also playing out a little bit this quarter. But there is certainly, in terms of the strategic priorities that Srini has spoken about, hunting remains a very, very key lever for us, and we are very, very focused on winning the must-have accounts. So there's absolutely no deprioritization on that account, Rishi.

Okay. Thank you so much.

Yeah.

Thank you. Next question is from the line of Ravi Menon from Macquarie. Please go ahead.

Hi, thank you for the opportunity. I don't know, you know, this quarter, even without any aid, the margins have been incredible. So actually a bit surprised that you talked about keeping it in the mail.

Mr. Menon, can you use your handset mode, please? Your audio is not very clear.

Hello. Yeah. You know, the margins have been pretty good. So, surprised that you're talking about keeping it in a narrow range. Are there any headwinds in the coming quarter that you're thinking about? Because it looks like, you know, at least the rupee seems to be depreciating. So, how should we think about margins for, you know, what the headwinds and tailwinds mix for?

Yeah, the rupee has been depreciating. We'll have to keep a watch on it. It has remained volatile in the last few weeks. We will A lot has to play in. There are also certain hedge books. There's also a certain amount of hedges that we carry. So it will be a function of that. I don't think there are any particular headwinds as we start Q4 in, you know, a lot like, you know, the salary increase and everything is behind us. It is going to be a lot of business as usual. And so, you know, there are not particularly headwinds that I'd like to call out.

Thank you. So the healthcare, you know, this is actually normally a good quarter for health plan services. So is that what helped you or are there any other segments within healthcare that you're seeing good traction in?

If you look at healthcare for us, it's a combination of payers, providers, pharma and medical devices companies. So the growth that we see has been across these, for sub-industries, Ravi.

So extremely broad-based, you can say. Thanks so much. Best of luck.

Thanks, Ravi.

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

Hey, hi, congrats on great execution on margins. My first question is on the large deals. Have you seen any change in the average and tenor of these deals and hence the conversion of these deals into revenues?

You know, in some sense, part of our large deal bookings are down sequentially, but our TCV bookings are not as down, right? So the quantum of small and medium-sized deals has picked up this quarter, which also means the ACV growth was particularly good after several quarters. But it's still one quarter. We'll wait and watch to see if this is a deterministic trend that plays out. But as far as the overall texture of deals, when we see in the pipeline, I think there are quite a few large deals as well. both in terms of cost takeout, vendor consolidation, efficiency-led. So in some sense, the large deal pipeline continues to remain robust. If I look at the pipeline, it seems to be very similar to what it has been in the last few quarters, but bookings in Q3 are definitely the deal tenor has come down.

Got it. The second question is, what are the portfolio interventions you have done in some of the areas where growth has not been so great, like EMR vertical, APMA geography, and where are we in terms of these interventions? Are we likely to see any changes in the outcomes? Thank you.

Sure, Gaurav. Let me just... talk about both of them, Apnea and Europe, where we have been very soft. As far as Apnea is concerned, we have a new CEO there, and he's building a next level of leadership, and we continue to invest in this market across the broad geography that Apnea covers. We also re-looked at our go-to-market approach with a very defined approach both account teams as well as teams that can go after new logos. In fact, specifically in Appian, specifically in each of the countries, we have identified a set of accounts and we are also differentiating ourselves with consulting data and AI, which is definitely a different value prop to this market. Python is being rebuilt and we see the Python growing. And I think if we continue to execute we should see momentum coming back in Patnia. In Europe, again, very similar. We have created a new leadership at SMU level. We are also making sure we continue to focus on certain sectors and double down on them. While Europe has shown degrowth in quarter three, I can definitely tell you pipeline is strong. All we need to do is focus on deal conversion. And I think, you know, with our consulting teams and the local delivery capabilities that we have, you know, I feel we have all the ingredients in place. Now it's all about execution.

Thank you so much.

Thank you. We have our next question from the line of Sudhir Guntupalli from Kotak Mahindra AMC. Please go ahead.

Hi, Sunil. Congrats on a good quarter. So a couple of questions. Firstly, your top account continues to see very good traction. So any specific reason behind this? I think for the last several quarters, last few quarters, we had seen that this is steadily increasing in terms of its revenue share.

You know, I'll just give you one fact and then maybe, you know, Srini can speak about it. In terms of just the top 10 growth, right, the top, top 5, top 10, they've been doing well. Even if you had to take in top 25, the growth is pretty good. What's driving this growth? Seven out of our 10 accounts are growing on a euro and euro in constant currency terms. So that's something that's, you know, quite broad-based. Certainly, you know, sectors that are doing well are adding to it in terms of BFSI, health. So they are adding those clients in the top 10 are doing really well. And, yeah, you know, if you would like to add anything.

Sure. So, you know, the context of the deals that I talked about when Gaurav asked that question, Similarly, both in Europe and APMIA, like I said, we have reinforced our teams, both on account management as well as delivery, and that should actually help us mine these accounts more, especially in this patch of the markets that we are in. And as far as the top 10 accounts that have grown that Aparna has talked about can be the role models for the rest of the account teams as well in terms of what are possible opportunities In fact, it's the top 25 accounts, I would say. Also, some of these accounts are a little bit sector-specific too for us. You know, if you look at, like we talked about demand environment strengthening in BFSI and health, whereas in certain sectors, especially energy and, you know, and manufacturing for us have been weak. But I see, you know, at least based on the quarter three, we have seen an uptick in manufacturing that will actually result into the accounts that we are focusing on.

Sure, sir. And second question is in terms of headcount. So in the last 10 quarters, if I look at it, I think net addition is negative in seven of them, including the current quarter. Now that we're talking about an improvement in demand and our guidance also sort of reflects some amount of growth in the coming quarter, I just said for Carlos, we are operating at 86 to 88% kind of utilization. So when should we think that the hiring engine should start picking again?

The hiring engine has actually kicked off. It's not that it's not there. We have called out that for the next fiscal, we will be going every quarter to campus and hiring about 10,000 to 12,000 people. Over and above that, we'll have lateral hiring happening. And we also see attrition coming down in the coming quarter because our net realignations have been coming down. So we will look at overall supply chain in terms of utilization, demand, attrition, and look at hiring. But I see that we will be robust in hiring as we move forward. Thank you, sir.

All the very best.

Thank you. Next in line is Mr. Sandeep Shah from Equirus Securities. Please go ahead.

Yeah, thanks for the opportunity and congrats on a good execution. The first question, I think Sweeney, you meant that the portfolio specific issue in energy manufacturing resources and consumer is not behind. So when do you expect that to get behind? Because we have also heard in the earlier calls, it may be more WIPRO specific rather than industry specific. And why I'm asking this is this contributes almost 36, 38% of the top line. And that may provide a hurdle in terms of consistently growing quarter after quarter.

Thanks, Sandeep. Sandeep, if you look at the way we have the four strategic market units, clearly, Sandeep, you know, Americas and Americas 2, we talked about our performance last few quarters. Having said that, you know, we did call out that Apnea and Europe has been soft for us. Now, if you embed the industries into those four markets, you know, clearly, you know, the industries that we have, you know, the sectors that we, you know, we are, we see growth and opportunities in the last three quarters talking about has been, you know, banking, financial services, and health care. Having said that, this quarter, we saw three or four sectors grow year on year, and I think that's another positive area. In terms of specifically energy manufacturing and resources, it has been soft for us, but within that, manufacturing is taking an uptick for us, and you see the numbers that we have talked about. In terms of technology and consumer, you know, it has been a good quarter, quarter three, and I know we have a very strong and robust pipeline around that. I see that, you know, we have to just execute into those, that segment. And finally, you know, if you look at the broad-based, the pipeline is very broad-based across these sectors and across these four SMUs. I think the focus will now be, Sandeep, you know, bringing some of them home.

Okay. Thanks. And Aparna, just if I'm not wrong, what you said on the capital allocation, we are more tilted on dividend versus buyback as a matter of choice or am I wrong in understanding this?

You know, we prefer both dividends and buyback. That said, you've seen that the dividend that we've declared is substantially higher compared to what we've done in the previous year. The capital allocation that we've committed is 70% and above of the net income over a block of three years with effective FI26. So you should look at the block starting FI26 for us to meet that number. And like I said, all modes, including dividend, buyback, special dividend, everything will be explored.

Okay. Thanks and all the best.

Thank you.

Before we take the next question, we'd like to remind participants to press star and 1 to ask a question. Next question is from the line of Ashwin Mehta from Ambit Capital. Please go ahead.

Hi, thanks for the opportunity and congrats on good results. I wanted to get a sense in terms of that despite the wage hikes, our employee cost number in absolute terms does not seem to have changed materially over the last two quarters. So what have been the offsets for that? And the second question is in terms of depreciation. We've seen almost 120 odd benefit on depreciation from a YOY perspective. So what is driving this substantial reduction in terms of depreciation?

Actually, Ashwin, on depreciation, in Q3 of the last fiscal, we actually had one-off. So that's not the right number to take, even if you have to look at it over the last two to three quarters of depreciation. Broadly, there is some optimization, but that's a result of the natural face-off of intangible amortizations that we do. So like I said, what you're seeing in Q3 is actually the word of any noise, and you can model that as going forward. Now, to the point on, you know, what's playing out in the employee cost, there are quite a few things. One, we've spoken about improved levels of utilization. The number print you're seeing is a reduction, but that's how we just define it because of the utilization looks lower, but You know, there is, if you look at the core utilization, even outside of this is very, very strong. Two, if you look at, you know, the FPP productivity that we've been driving, we're consistently improving. And what you're seeing as a flow through into Q3 is also a lot of the productivity initiatives that we had already initiated through Q2, right? Also, we've actually improved our quality of revenue. If you look at our third-party services costs, it's also something that we have reduced. So improved quality of revenue is also playing out into the margin expansion. And then again, you know, so those are some of the levers.

Sure. Thanks, Sabrina. Thanks for this clarification. All the best.

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

Thank you for all joining the call.

In case we could not take any questions due to time constraints, you can reach out to Investor Relations directly.

Have a nice day.

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.