Ladies and gentlemen, good day, and welcome to Wipro Limited Q1 FY24 earnings 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 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Dipak Kumar Bohra, Senior Vice President, Corporate Treasurer, and Investor Relations. Thank you, and over to you, sir.
Thank you, Yashaswi. Warm welcome to our quarter one financial year 2024 earnings call. We'll begin the call with the business highlights and overview by Thierry Delaporte, our Chief Executive Officer and Managing Director, followed by a financial overview by our CFO, Jatin Dalal. Afterwards, the operator will open the bridge for Q&A with our management team. Before Thierry 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 of 1995. These statements are based on management's current expectations and are associated with uncertainties and risks, which may cause the actual results to differ materially from those expected.
The uncertainties and risk factors are explained in our detailed filings with the 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. Over to you, Thierry.
Deepak, thank you. Hello, everyone. Welcome to our first quarter earnings call. Joining Jatin and me today, we have our Chief Growth Officer, Stephanie Trautman. We have our Chief Human Resources Officer, Saurabh Govil, our Chief Operating Officer, Amit Choudhary, and our Chief Technology Officer, Subha Tatavarti. I'll start today with an overview of our financials for the quarter, moving into some details of our business, the demand environment, and some direction for the coming quarters. Okay? Jatin will go into greater detail of our operational metrics, and of course, we'll be happy to answer your questions after this. Q1 was another quarter of robust deal closure for us. In total contract value terms, we closed large deals to the tune of $1.2 billion, which is a 9% year-on-year growth, and actually the highest bookings in 8 quarters.
During this quarter, we booked 10 deals in the greater than $30 million TCV range. Total bookings from a TCV standpoint stand at $3.7 billion. We added 2 new accounts in the greater than $100 million revenue bucket, taking the count of businesses that contributes more than $100 million in revenue to 21. The number of $100 million accounts has more than doubled from 10 to 21 in the last two and a half years since we started on this transformation. All around us, in almost every industry, we see businesses that have been reducing discretionary spends in response to the weaker macro environment. That's had an impact on our revenues as well. In constant currency terms, Q1 revenue grew 1.1% year-on-year. This translate into a growth of 6.1% year-on-year in rupee terms.
It's very much within the previously guided range. Yes, we are seeing some softness in revenues. Despite that, we have held margins steady. Operating margin for the first quarter was 16%. This is 112 basis points, to be precise, higher than our operating margin in the Q1 of last year. We maintain margin by mostly three points: improving productivity in our fixed price project, a better utilization of talent, and finally, by managing our fixed costs. At the same time, we continue to invest in people and in technology to build a more agile and efficient organization. This margin resiliency is especially significant. Wipro has undertaken one of the largest enterprise-wide transformations in the industry, starting November 2020. We're proud of the progress we've made since.
The success of this transformation becomes clearer when you consider the magnitude of this change, and when you see that we have continued to perform while we continued to transform. On one end, we were aligning to market needs, and on the other, undergoing a deep internal transformation. Our focus on accelerating this transformation, along with maintaining undivided attention on client experience and delivery excellence, will progressively translate into improved growth and margins. We have recorded an 11.5% growth in earnings per share year-over-year. Cash flow has remained strong. Cash conversion stood at 130% of net income. This quarter, we closed our largest ever buyback, allowing us to return $1.5 billion to our shareholders. Our industry, like every other, is undergoing a seismic shift with the advancement of artificial intelligence.
AI can and will fundamentally change every aspect of business. Anticipating this revolution, Wipro had started investing and building AI capabilities over a decade ago already. We have delivered over 2,000 global AI engagements during this time. Today, we are using GenAI for multiple use cases, like enterprise knowledge mining, virtual assistants, content creation, automation in software development lifecycle, and for synthetic data generation. To accelerate innovations in this space, yesterday we announced a $1 billion investment in AI and launched a new AI-first innovation ecosystem called Wipro ai360. This ecosystem basically will bring together Wipro's full range of capabilities, including solutions, services, platforms, research, and intellectual property, as well as partnerships, to fuel our growth in this area. We're also placing responsible AI operations at the heart of all our AI work.
Wipro ai360 is meant to empower our talent pool and be ubiquitous across all our operations and processes and our solutioning for clients. This AI-first approach will unlock more value, productivity, and commercial opportunities for our employees as well as our clients. First, we need to train our people in this fast-moving field. Over the next 12 months, we will train our entire workforce, nearly 250,000 employees, in AI. From hackathons to challenges on our talent crowd platform, Topcoder, to dedicated trainings. We will leverage our blockchain-based DICE ID platform to become the industry standard for AI skills credentialing. Demand for AI specialized talent will grow exponentially over the coming years. We know that, and we'll be prepared. Subba is here with us today to share more on this. I'd like to talk us through our strategic market unit performances, as always.
In Americas, order bookings in terms of total contract value grew 37% year-on-year. Revenues for the quarter grew 1.5% year-on-year in constant currency terms. This revenue growth was led by healthcare and medical devices at 9%, followed by consumer goods and life sciences at 7% each. High tech and BFSI are the two sectors that were impacted the most due to softer discretionary spends. As a result, our Americas 2 market declined 2.7% year-on-year in Q1. Our European business unit delivered a year-on-year revenue growth of 4% in Q1. This revenue growth was led by Southern Europe and Nordics, which grew 26% and 14% respectively in the Q1 . In our APMEA business, bookings in total contract value terms are looking healthy, with a 23% quarter-on-quarter growth. Revenues for the quarter grew at 3% year-on-year.
Within this SMU, our Indian business grew 7%, our Middle East business grew 6.4% year-on-year. In Q1, we also completed the transition to the four global business line model that we had announced earlier in the year. This evolution of our business model is actually already showing up as faster time to market, also more inclusive one Wipro customer on delivery wins. Whatever challenges our clients may have, the solution exists within our global ecosystem, we are tapping into the talent, the capabilities, and the solutions from every corner of our firm. We are increasingly able to build bespoke solutions for clients, that's what is setting us apart. Ultimately, our focus is and always will be on serving our clients with greater innovation, with attention to detail, and with excellence.
Great example of this is our recent win with a global digital interactive entertainment leader. Wipro will modernize their network infrastructure, delivering improved responsiveness and user experience. We will drive scalability to handle increased workloads and reinforce end-user security, all the while creating a platform that supports the client's expansion plans. This project brings together Wipro's architecture, consulting, cloud migration, implementation, and managed services capabilities. This win is also a good example of how Wipro can bundle solutions from multiple partners to deliver a wide range of capabilities that are tailored to our clients' needs. In terms of the demand environment, in some ways, we are seeing tech investment normalize after the sharp acceleration in spending during the second part of the pandemic. More and more, clients are expecting faster return on investments and optimizing costs through increased use of automation and vendor consolidation.
In parallel, we continue to see solid demand in high-growth areas like cloud transformation. Clients are seeking out Wipro's FullStride Cloud capabilities for the next phase of their cloud strategy. We are helping them run more efficient and agile businesses and capitalize on the emerging opportunities presented by artificial intelligence. For example, a large global medical device and a healthcare company has selected Wipro to transform their operations infrastructure into a modern, cost-effective, and cloud-first model. Wipro FullStride Cloud will deliver a consistent and omni-channel workplace for 120,000 employees in 160 countries. We will help this client achieve 40% automation, cost optimization, and while simplifying their global operations. Now, we are able to do all of this and more, thanks to our 250,000 associates around the world.
We want to see them succeed in their roles and their career. As part of our transformation, we've continued to work on various aspects of employee experience, with several new initiatives to streamline policies, to streamline processes, talent support, and training and development opportunities. We also want to make sure employees' voice and concerns are heard. Our 2023 employee engagement survey showed an overall engagement of 88%, which is higher than before, and now benchmarks us to global standards on employee experience. We're also named one of India's Best Companies to work for by the Great Place to Work Institute for the second year in a row. That, to me, is table stakes. We must, and we will, continue to improve how Wipro is experienced by our employees.
Because all of these efforts, attrition has continued to moderate quarter on quarter, coming in at an 8-quarter low of 14% in the Q1 . I'm confident that our long-term business strategy is correct and well-suited to ride the changes we predict in the industry. Most importantly, I believe our business strategy will keep us competitive and resilient in the future. Final word, as always, on our guidance before I close. For the next quarter, we are guiding for a sequential growth of -2% to +1% in constant currency terms. We expect margins to be in a similar range as in the last few quarters. With that, let me turn it over to Jatin for his comments.
Thank you, Thierry. Good evening, good morning, everyone. I'll summarize our performance for quarter one. We grew 6% year-over-year in revenue terms. We improved our operating margin by 112 basis points year-over-year, result. As a result, we grew 14% on operating profit terms. Our other income was one of the highest in recent quarters. We grew it 110% year-over-year. Our tax rate went up slightly higher, and effective tax rate was 24%. As a result, our net profit year-over-year grew 12%. Let me talk about cash flows and Forex. We continue to convert our profits into healthy cash flows. Our operating cash flow for the quarter was 130% of our net income, and free cash flow at 126%.
We had, after completion of buyback, $3.5 billion of gross cash and $1.7 billion of net cash in the beginning of this quarter. Our Forex, the realization rate was quite healthy and improved at 81.90 for quarter one, and we had $3.6 billion of Forex hedges at the end of the quarter. We'll be very happy to take your questions from you.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. 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 have our first question from the line of Sudheer Guntupalli from Kotak Mahindra AMC. Please go ahead.
Yeah, thanks for the opportunity. Thierry, just a bit on the macro, unlike during some of the previous downturns, this time around, many of the macro variables are continuing to be surprisingly resilient, both in U.S. and in Europe, except for a brief period of panic around the regional banking crisis. Based on your client conversations, what is the key concern or key variable that you are gathering? Could it be the end of the rate hike cycle, or what else could drive a return of the spends? If you were to second-guess, how quick that could be?
Yes, Sudhir, I really like the question you just asked. I think it's a real one. let me try to respond, you know, to that. Interactions with clients have more or less, I would say, a similar pattern, which is that on one end, there is no one question the fact that technology is critical to the success of the evolution of the company, whatever the industry is, by the way. Second, I think it's the recognition of the fact that, you know, over the last years, there has been massive investment made in technology.
Third is certainly, the fact that, you know, macroeconomy continues to shed a little bit of, you know, mixed messages to, you know, those industries and to the leaders across those industries. At the end of the day, I've always been very confident on the fact that technology was, you know, on top of each of these leaders' agenda, and that, you know, they have a lot of transformation programs in mind to drive, and at the same time, they are a little influenced. I think it's even more than influenced. They are very aware of the fact that this climate of uncertainty is weighing on some, you know, potential decisions for company to continue the same volume of investment.
They have made some choices, and I think there's a certain level of cautiousness driven by the fact that, the macro environment is still, you know, is still a little uncertain. That's what I'm, what I'm hearing. That's probably, you know, what we're observing is actually a reflection of that, Sudheer. I think that when we look at the type of deals we are winning, we are winning more deals than ever before, and that is being consistent for the last three or four quarters. Every quarter, when we look at our TCV, performance is actually solid. I think, you know, you all have this question about, you know, the conversion to revenue.
The answer is, the reality is that while we close all these deals and, you know, and they respond to, you know, ambition from clients, there's a reduction of what we all call the discretionary spend, which are, you know, typically smaller deals, shorter period, and where, you know, it's probably easier for less strategic for clients to put a stop to it for some time. That's what we are seeing. The second question is about, you know, is there perspective? You know, what about the second half of the year? Again, really reflecting on my discussion with clients. There could be a point in time where they feel, "Okay, we have this budget that we haven't spent yet.
The year has unfolded in being possibly better than feared, so it's time for us to resume the investments or the spend. You know, we are getting prepared for that, and whenever it happens, we'll be ready for that. Knowing if it is going to happen, you know, in a month or two, or three , or four, that I don't know. I'm staying cautious in the way I'm projecting an evolution of this market in which we've been for the last six months, and obviously, keeping a very, very close focus on it. We'll see, but for the time being, I would say the market we see is not dramatically different from the market we saw three months ago. Back to you, Sudhir.
Yeah, got it, Thierry. Just an extension of that, is the panic around the banking crisis completely behind us? Going forward, do you foresee that there can only be an improvement in the demand situation from where we are, assuming macro variables remain reasonably stable?
I mean, there will be, you know, again, predicting the future, you know, we've been, over the last two years, a bit shaken up by some macro element that we could not necessarily, predict, and that have had a massive impact on a lot of what has happened after. By definition, I'll be cautious on that. I think that, you know, a lot of banks still have, you know, reasonably good fundamentals. They are very aware of the importance of technology for their own transformation. Yes, it will resume at some point in time.
It will restart with a lot of, you know, in particular, a lot of the consulting activities that have been, you know, reduced and where, you know, they will need to launch those large program aiming at improving the efficiency of the organization and, you know, their KPIs and ratios.
Got it, Thierry. Just, one quick one: the $1 billion investment commitment in AI over three years, is it fair to assume it will be largely in the M&A route?
It's not fair. Sudhir, actually, it is the majority of it will be organic. You know, this is organic. It is investment that we are already engaging now, and we will accelerate it steadily over the next three years, not three quarters, three years. Yes, there is in there a bit of budget for M&A, but we do not suspend, if you like, the progression that we want to drive over the next three years to acquisition. It will come as a complement or as an acceleration, but we are already in action now.
Thanks, Thierry. That's it on my side. I'll leave it with you guys.
Okay. Thank you, Sudhir.
Thank you. We have our next question from the line of Nitin Padmanabhan from Investec. Please go ahead.
Hi, good evening. Thanks for taking my question. I had a couple. First, Thierry, if you think about the cut in discretionary versus, let's say, the lower ACV of deals versus what we would have seen in the prior two years, which do you think is a, you know, a more significant driver of the weakness? Is it equally weighted, or is one higher than the other? That's the first question. The second is, how are Capco and Rizing sort of faring in the current environment? Finally, Jatin, your thoughts on margins going forward and how are you thinking about compensation increases? Because we hear a couple of companies actually sort of pushing it out or sort of doing away with some of it.
Just wanted your thoughts on these three things. Thank you.
Okay. Nitin, the first question was on. Actually, you know, I'm not sure I can easily answer your question, whether it's discretionary or ACV. You know, by definition, what is ACV and not showing a difference with TCV is by definition, short-term deals, and that includes mostly discretionary spend. I would say, you know, you can call it the way you want. Those are short-term deals, right? Versus, you know, large deals, basically. That's... I don't know, Jatin, you have a better way to answer this first question? No. The second one is about Capco and Rizing. Same comment I would have made, I'm sure I have made a quarter ago. It's a consulting business. There's where there's a lot of discretionary spend.
It's a little harder this days than it was, you know, some quarters ago. It doesn't change at all the strategic nature of these deals. And I think it is, you know, always been clear for us that these were, you know, investment for the future and not, you know, tactical. You know, we know consulting are early cycle, type of business, so, you know, and that's what we are seeing. Having said that, actually, you get, one, the fundamentals are good. Second, I take the example of Rizing, because that's the last, addition to our organization. When was that? A year ago. Yeah, about a year ago, huh? May. A good year ago.
Frankly, the traction it gets in our SAP business is beyond our expectation at the time of the acquisition. There's no doubt, you know, whether it's in our, in the way we are able to develop, you know, true strategic level of exchange with SAP, or in the way we are going for, you know, large transformation, large deals in SAP, that Rizing has been a great addition to the family. That's the second one. The third one, you know, I'm always tempted to respond on margin. For some reason, we always ask the CFO on margin. Go ahead, Jatin.
Okay. Nitin, first, what I want to share is in quarter one, despite a significant volatility in revenue, we have done well to stay flat on operating margins. That was because of variety of operational levers that we were able to manage very well, including improvement in utilization, which would have been, as you can imagine, quite difficult in such a revenue scenario. As we enter quarter two, we definitely want to hold on to this trajectory, and we will continue to leverage the efforts that we have taken in quarter one to continue with the same consistency in quarter two.
As Saurabh mentioned in the press release, as we have spoken about it earlier today, we did our last salary increase in September of last year, and we plan to do that for this year, sometime in quarter three . At least for quarter two, that's not something that we are penciling in at this point in time.
Sure, Jatin. On the utilization, you think you have more room? Because it already seems to be maxed out, so would you need to start hiring in anticipation of demand, maybe six months down or?
Nitin, next to me is Amit, our COO, who is obviously, you know, driving the utilization up. Amit, over to you.
Thank you, Thierry, and thank you, Nitin. Yes, utilization clearly is going to continue to be a KPI that we'll keep driving. We will also looking at different components of utilization, not only the aggregate number, in terms of location, in terms of seniority. Yes, there is still some room to drive our utilization up from where we are.
Sure. Thank you, Thierry. Thank you, Jatin. Thank you, Amit. Very helpful. Thank you, and all the best.
Thank you, Nitin.
Thank you. We have our next question from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.
Hi, thanks for taking my question. First question is for Thierry. The success of strategy pursued by us is pretty well reflected in our higher win rates, large deal closures, and even better TCVs. When we really compare revenue growth versus some of the peers, there is still a divergence. How do we really explain this? Is this more to do with the portfolio mix, or any other factor that could explain this gap?
Gaurav, you know, as you can imagine, I run Wipro, and I'm with this leadership team working on, you know, driving, you know, the performance of Wipro in the right direction. We are focusing on our priorities. We are focusing on our journey. I mean, just look at yourself, the growth, the profile of growth of Wipro over the last three years. You know what? You know, the most important point is, has it been a change to the previous trend of growth of this organization? You know, I'm not sure I'm not gonna benchmark our performance every quarter against, you know, every other company in our industry. We have our own journey. We have our engage, our transformation, three years ago.
We are working on many different aspects of our progression, if you like. Growth has been solid, double-digit, two years in a row. Yes, there is a slowdown. It's a reality for everyone, if you want to me to refer to reflect on others as well. I think that's what I'm saying. Having said that, I believe that we are, every day becoming more impactful in the market. As you said, it's visible in the deals that we have closed, the large deals that we have closed. It's also visible in the way we are growing our large account, and that is, we're showing that our account strategy has been paying off every single quarter for the, for the last 10 quarters.
We have doubled the number of $100 million account in 2.5 years. You know, I think it's a testament to the ability of the company to grow when we are focused, whether it is in term of account, in term of sector or markets.
Great. Second question is regarding the investment committed, for generative AI. How are we gonna fund this investment? If we can quantify, this would have any implications on our longer-term margin aspirations? Thank you.
Gaurav, so funding is, you know, it's funded by the operations, to be clear. This is in our plan. It's baked into our plan. Amit explained to you a few minutes ago, that, you know, there's a lot going on in term of, you know, improving the efficiency of our operations, or what we call our operational excellence. Whether it's in the way we are, you know, injecting more automation and AI into our delivery to be more efficient, or whether it is in the way we are, you know, streamlining of our operations, reducing the layers and just being more nimble and more agile as an organization. All of that is driving, you know, operational improvements that we are reinjecting in our future.
We've never compromised on, you know, development or, you know, mid to long-term strategy. We've never compromised on, you know, the obsession for our clients and for excellence in delivery. AI, obviously, is an investment, but also a gigantic market for us, and so that's how we look at it. So you should look and consider that, you know, because we consider we are positioned, well positioned in that market, that, you know, it will trigger revenue growth and profitability over the next quarters. Jatin, do you want to add anything to that?
No, Thierry.
No? Okay. All right.
Thank you so much.
Thank you. We have our next question from the line of Girish Pai, from Nirmal Bang Equities. Please go ahead.
Yeah, thanks for the opportunity. Considering the demand environment, how would you characterize the competitive intensity that you see in the market today compared to, say, six months back?
Competitive activity? Competitive intensity?
You know, it is a very competitive environment as we look to renew our existing book of business and acquire new clients with new opportunities. Of course, we're finding ourselves in situations where we really have to differentiate our value proposition and drive more value for our customers. We're winning against all of our competitors. If you look at our large deal wins this quarter, it was pretty mixed in terms of what we were winning and who we were winning against. I think as Thierry mentioned, our strategy is really paying off. We're better poised to be highly competitive and a true transformation partner with our clients, and that's showing up in our wins.
Thank you, Stephanie.
Is the higher competitive intensity impacting pricing as we speak right now? Is the customer able to extract sweeter deals from you in terms of, you know, larger productivity benefits down the road?
Jatin? Yeah. Hi, Girish. I hope you are well. No, the answer right now is yes, of, I mean, in sense that there is nothing unusual that we see on large deals that we don't normally notice. Obviously, if there is a $200 million or $300 million deal, you would benchmark it with the best standards on productivity, best standards on pricing. That is not out of ordinary behavior of dropping prices or giving deferrals in billing, et cetera. Those behaviors we have not yet observed that would worry us.
Okay, lastly, on GenAI, there's been mixed commentary around the inflationary impact of this on at least certain service lines. What's your take on this, and how early or late will this happen, if at all it happens?
Yeah, Girish, your specific question is, does generative AI already, I mean, is it already reflecting in reduction in revenue and potential headcount for the GBLs for our service lines?
No, I'm saying, will the productivity gains that people claim or there's been claims around it, will that be entirely passed on to customers, resulting in some kind of revenue compression in the times ahead?
Yeah. Girish, we haven't seen that yet, but as you already know that every competitive deal goes with a certain assumptions of year-on-year productivity numbers that are baked in. Those numbers will continue gradually. They will continue to bake in the productivity benefits that GenAI will bake in. I would request Subha to add from her perspective, how does she see this journey to unfold?
Thank you, Jatin. Girish, we feel that GenAI is a fundamental shift in how any business would do business or operate. What does that mean? It means that we will see greater and greater efficiencies and productivity in every sector and every vertical, and it will also translate into how our business will run more efficiently moving forward as we begin to ramp up adoption of this technology across every business process, every technology stack, and every offering, and every interaction we have with our customers. Yes, there will be productivity gains for our customers. We hope to drive them for them, to drive it for them, but we also see significant productivity gains for our business as well going forward.
Okay. Thank you very much.
Thank you. We have our next question from the line of Abhishek Kumar from JM Financial. Please go ahead.
Yeah, hi, good evening, and thanks for taking my question. I wanted to understand the assumptions that have gone into our guidance for the next quarter. I think last quarter, if I remember right, we mentioned that, you know, some of the clients had already intimated us about certain ramp downs, and the impact was to be felt in 1Q. Our sense is that that probably is in the base quarter now. What is driving another, you know, sort of at least at the lower end, another sequential decline for the next quarter? Have we seen more such intimations coming our way and project ramp downs continuing?
Abhishek, if you look at the guidance for Q2 is actually showing a, I would say, a slight improvement over Q1, right? What I think we are saying is uncertainty remains. There's no deterioration. You know, we stay a bit cautious because of the uncertainty, right? That's how we see the quarter two for us.
Sure. In terms of how the last quarter panned out, was there any stabilization towards the second half of the quarter or the weakness sort of persisted through the quarter?
... You know, this is a difficult question. I'm not sure I can answer. I mean, it's too early to tell, right? You cannot make a trend based on 20 or 30 days. I don't think I'm in a position or Jatin or anybody here is to tell you that, you know, based on the last 30 days, we can see a trend. I think it's, you know, this is the reality with the context of uncertainty is that precisely it's a little bit, you know, erratic. You know, some industries certainly are more cautious than others. Banking, financial services, technology, you see that. I mean, technology have reduced.
There are actually some technology companies that have been going through several waves of layoffs, so there's a bit of a slowdown on the technology side after several years of strong acceleration of investments. Comms is also a sector where we are seeing that. Some other sectors, you know, healthcare, energy, utilities, are sectors that are actually probably investing more and, you know, less cautious, if you like. This is the context. The reality is that, you know, you're probably gonna have to wait for some more months before really getting the confirmation that the market has rebounded for good.
That's helpful. Thank you and all the best.
You're welcome.
Thank you. We have our next question from the line of Ravi Menon from Macquarie. Please go ahead.
Hi, thank you for the opportunity. Thierry, I just wanted to understand your reorganization into four global business lines. You know, if I look at it, consulting is still separate. Would have thought that this is a good opportunity to embed consulting more deeply and try to increase the cross-sell for that. Could you explain the rationale or the logic behind the reorg?
Okay. All right. Ravi, I have a 1-hour version of the answer, and I'll try to be concise. Back in late 2020, when we implemented our operating model with SMU and GBLs, we decided, because this organization had never gone through a metric setup, you know, we felt that, you know, it needed to be extremely simple for it to be rapidly implementable, that's what we did. That's why we went with two GBLs, iDEAS and iCORE. What possibly we could not anticipate at that time is the speed of the growth we would experience in those two GBLs in two years. 45% growth made those two GBLs massively bigger than what we had anticipated when we launched the model.
In parallel, the level of maturity of our organization to work with SMUs and GBL working together in a very integrated model, has dramatically progressed. Finally, we have really listened to our clients, and we've seen couple of things. One, you know, the fact that, you know, we've done great in engineering, and it was maybe time for engineering to, you know, just fly on its own a little more, right? We have a fabulous potential at Wipro to really be a leader in engineering even more. Second was the fact that, you know, more and more our clients were expecting from us that we come to them with a comprehensive cloud strategy, addressing both infrastructure and applications, without, you know, dissociating between those two different dimensions.
I think, you know, we felt that, you know, by combining those two components into what we call now a FullStride Cloud Services, would make us more impactful and more competitive and more just able to better respond to their expectations. Third, as you said, you know, we've made acquisitions in consulting. We also had a consulting business. You know, by experience, that consulting needs to be at the forefront of the market, so needs to be as close as possible to the accounts and to the clients. They also need to be very closely connected to the other GBLs, because basically every global business line, every offerings, need to work hand in hand with our consultants.
At the same time, they need to be managed differently because consultants operate under a different operating model and different ways of working. I have a deep understanding of, you know, this business, and, you know, it is clearly, the objective was to create this platform, this consulting platform, you know, for the future of, for the, for the future of Wipro. Finally, our fourth GBL is what we call Enterprise Futuring. It's actually combining different type of businesses, DOP, data, and a digital experience that have, you know, as part of their evolution and applications, obviously, the necessity to leverage artificial intelligence in everything they do. Those four GBLs have been put in place on April first.
That, you know, we are already in operation under this model for the last three months, and it's impressive. I'm gonna share with you something. It's been working so smoothly, this new model, that I almost forgot to mention that we had just done it to the board few hours ago. It says a lot about how, you know, seamless this implementation has been. For sure, the intention is to increase our impact in the market with our clients and at the same time, streamline our operations and reduce the layers, if you like, between, you know, our teams operating and our clients.
Thank you for the detail, Thierry. If I look at the kind of deals that you're announcing, it looks like, you know, you actually started doing more complex deals and more, if I might call, outcome-oriented deals, where, you know, it's there is some risk transfer, and you actually get paid for the transfer of risk along, you know, and that allows you to, I guess, make better margins than a simple, you know, risk-ten shift.
Completely agreed, this is exactly our strategy, that we've, you know, laid out three years ago, and we're executing against that quarter after quarter.
Thank you so much, and best of luck.
Thank you.
Thank you. We have our next question from the line of Dipesh Mehta from Emkay Global. Please go ahead.
Yeah, thanks for the opportunity. Couple of questions. First, about if you can provide clearly some update about the global account executive program and empowerment, which you earlier suggested is the key focus areas. If you can give some update where we are in that journey. Second question is about the four service line, which you said, if you can provide some update, I think in terms of growth, how the traction is happening, which area is seeing more weakness compared to others. If you can provide some sense about those four service lines. Last question is for Jatin, about EBIT margin aspirational. I think earlier we used to say 17% is what we aspire to reach sooner. If you can give some sense about how you expect that EBIT margin journey to play out. Thank you.
Okay. you know, I'm gonna let Jatin address the question 3, and then I'll come back for question 1 and 2. Okay?
Yeah. Deepesh, clearly we had mentioned that, you know, 17-17.5% is a medium-term outlook that we have for our business, but that, and that ambition remains. We will continue to work towards that. However, we need to manage the short term, and in the short term, there is volatility in the market and uncertainty in the revenue line, and that does impact our ability to drive the improvement that we want to drive. I hope you appreciate that we have been able to deliver a very strong execution in quarter one, that despite the volatility in revenue, we have delivered a flattish operating margin for quarter one, and that journey and focus will continue to move towards that medium-term goal.
It won't be an immediate outcome that one would be able to drive towards. I think we have right building blocks in place to move towards towards that goal. I will hand it over back to you.
Yep. Jatin, thank you. The first question. First one was around GA program. As part of our strategy back in 2020, we decided that we would have a very account-focused strategy. We would choose the industry we want to have a position in. We would choose the markets where we want to establish our position, grow, and really invest long term. In these accounts, we wanted to grow these accounts not only in volume, but also in value, so in impact, basically. With the clear ambition to be not only an IT provider, but actually a true transformation partner for our clients. As part of this ambition, we have decided to invest in two tall account executive, those GAs.
We renamed it to really send a signal inside the team that, you know, as a GA, you are a tall leader of the account you're managing. You're the CEO of the account you're running. You're representing Wipro for the account. We must all align behind you in your account strategy. Frankly, this has fueled the growth over the last three years. You know, I said a few minutes ago that, you know, the number of $100 million account has gone from 10 to 21 in the last 2.5 years. I think it's a reflection of that. We have now a lot more accounts of over $100 million. We have a lot more $50 million account, and we continue this strategy.
In fact, we reduce the tail of accounts to have less account, but more impact in these accounts. We invest more, and as you said, we empower the GAs, the account executives, to really drive and have the possibility to make decisions, invest, and, you know, and, grow those relationship, but also make sure that we are positioned as a true partner in those accounts. Finally, you as part of this program, I mean, we've onboarded a lot of talent. We have today a significant diversity inside our organization, and in particular in the account executive team as well, which is driving a lot of, you know, positive impact inside our organization every day, beyond those accounts. The second point you had was the service lines, so the four service lines, the performance of those four service lines.
Jatin, you want to say something?
Yeah. Dipesh, as you know, we like most of our competitors, we no longer publish the actual financial performance of these four service lines. Suffice to say that, you know, except for consulting where we have talked about the impact or a slower growth that we have seen, rest of the service line continue to perform very well and in line with the overall growth of the company.
Mr. Mehta, does that answer your question? Thank you. We have our next question from the line of Mukul Garg from Motilal Oswal Financial Services. Please go ahead.
Yeah. Hi, thanks. Thierry, I just want to clarify, you know, regarding the billion-dollar investments, you know, which you guys have announced in GenAI. Can you give, you know, some sense on where the majority of this investment will be rooted to? Is it something which, you know, you guys will primarily invest into tools, which, you know, you will build out on, you know, using AI? Is this something where a big portion will kind of end up supporting employees who are trained in that, and hence the compensations will be higher than what, you know, you are currently kind of giving?
Is there something else, where this, you know, investment will kind of be consumed, given the quantum of the number? Second, you know, Jatin, if you can just help us understand, you know, how to look at this investment. You know, it will pass through your balance sheet, you know, through capitalization, or, you know, will you be expensing this out, in income statement? If, it is an income statement item, can this be an incremental expenditure on top of what you are currently doing?
You know, we have a very comprehensive plan, of course, behind the $1 billion, Mukul, and it, you know, it includes, it's about investing into solutions, into assets, into accelerators, into capabilities, into methods, and it's across the organization. It's also about training. There's a lot of aspects of these investments, and of course, you know, as well, M&A. Jatin?
Yeah. And Mukul, I think just as Thierry described various streams of investment, I think the accounting treatment will follow those streams. For period cost, of course, that would be expense, but large programs which could have future benefits to organization over the years, would be capitalized. And of course, M&A would be accounted as per the merger and acquisition accounting policy. So it would follow the overall approach, but it is not incremental dollar spend in ID, and all the expense lines will remain what they are. As Thierry discussed or described earlier on this call, this would be funded through the gains on operations that we will make. In that sense, it should not be seen or modeled as an incremental large P&L hit that you will take over the years.
No, no, it's absolutely. It's not outside of our margin profile, for sure. I just want to add one thing. I realized I forgot 2 things. It's also about investing in research, in platform, and also, you know, with that we have Wipro Ventures, right? Wipro Ventures carries today, about 2/3 of the investments of Wipro Ventures are in the AI field. You know, we'll continue because it's incredibly important as well to continue to go after cutting-edge startups through Wipro Ventures. Over to you, Mukul.
No, great. I think that's helpful, and thanks for the color. Thank you.
You're welcome.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference back to Mr. Deepak Kumar Bohra for closing comments. Over to you, sir.
Yeah. Thank you all for joining the call. In case we could not take any questions due to time constraints, please feel free to reach to the investor relations team. Have a nice evening. Thank you.
Thank you. On behalf of Wipro Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.