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As the attrition rate rises in Q2, Wipro is planning big-ticket hires; net profit is up 18.9% year over year.

In the current fiscal year, the corporation plans to hire approximately 12,000 new employees, up 33% from the previous year.

On the back of large deals, especially in the cloud space, Bengaluru-based IT major Wipro posted an 18.9% year-on-year (YoY) growth in its consolidated net profit in the second quarter of the financial year at Rs 2,930 crore, beating street expectations and surpassing the $10 billion annualised revenue run rate milestone.

However, it reported a 9.6% drop in net profit in Q2, owing to tighter margins as a result of salary increases and an amortisation charge on the acquisition of London-based consultancy firm Capco in the previous quarter. In the second quarter, the operating margin fell to 17.1% from 18.8% the prior quarter.

"Even after absorbing the full impact of our recent acquisitions and investing heavily in our business across sales, capabilities, and talent, we maintained our operating margins in a narrow band in Q2," stated Jatin Dalal, Chief Financial Officer. We finished a compensation rise that covered 80% of our employees, making it the second raise this calendar year. He went on to say, "We produced a solid gain in earnings per share of 23.8 percent year over year."

As the demand for IT workers grew, the attrition rate jumped to 20.5 percent from 15.5 percent in Q1. In the second quarter, it added a total of 11,475 people, which was a new high. During the quarter, it hired 8,150 new employees, exceeding the target of 6,000.

In the current fiscal year, the corporation plans to hire approximately 12,000 new employees, up 33% from the previous year. The IT major will hire around 30,000 people from the school for the upcoming fiscal year 2022-23, owing to increased demand and attrition.

In the coming quarters, the company expects a 2-4 percent sequential increase in net profit and a 27 percent year-over-year increase.

Wipro's revenue for the quarter ended September 2021 was $2.58 billion, up 6.9% sequentially and 29.5 percent year over year.

Americas 2, which encompasses banking, securities, investment banking, and insurance, as well as manufacturing and Canada, accounted for 30.6 percent of total revenue, up 7.1 percent sequentially and 31 percent year over year. It was followed by Europe, which accounted for 30.2 percent of the company's sales and grew by 7.1% quarter over quarter and 50.1 percent year over year.

The company's CEO and Managing Director, Thierry Delaporte, stated that "Our business plan is performing effectively, as seen by our Q2 results. For the second quarter in a row, we increased at over 4.5 percent organically sequentially, resulting in a 28 percent YoY increase in the first half of this fiscal year."

The high churn rate in the IT business, according to Deven Choksey, MD, KR Choksey Investment Managers, will put pressure on profits. "However, the company should be viewed favourably based on the contract pipeline," he added.