Wipro Ltd (NSE: WIPRO) Q3 2025 Earnings Call dated Jan. 17, 2025
Corporate Participants:
Dipak Bohra — Corporate Treasurer and Head of Investor Relations
Srini Pallia — Chief Executive Officer and Managing Director
Aparna C. Iyer — Chief Financial Officer
Analysts:
Vibhor Singhal — Analyst
Abhishek Kumar — Analyst
Abhishek Bhandari — Analyst
Rishi Jhunjhunwala — Analyst
Ravi Menon — Analyst
Gaurav Rateria — Analyst
Sudheer Guntupalli — Analyst
Sandeep Shah — Analyst
Ashwin Mehta — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Wipro Limited Q3 FY ’25 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded.
I now hand the conference over to Mr. Dipak Bohra, Senior Vice President, Corporate Treasurer and Investor Relations. Thank you, and over to you, sir.
Dipak Bohra — Corporate Treasurer and Head of Investor Relations
Thank you, Yashashree [Phonetic]. Warm welcome to our quarter three financial year ’25 earnings call. We will begin the call with business highlights and overview by Srinivas Pallia, our Chief Executive Officer and Managing Director, followed by updates on financial overview by our CFO, Aparna Iyer. We also have our CHRO, Saurabh Govil, on this call. Afterwards, the operator will open the bridge for Q&A with our management team.
Before Srini 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’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 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.
Srini Pallia — Chief Executive Officer and Managing Director
Thank you, Dipak. 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 de-growth 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 regards.
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 APMEA remained soft for us. Americas one 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 too de-grew 0.6% sequentially and grew 1.2% on a year-on-year basis led by BFSI sector. Europe de-grew 2.7% sequentially and 4.6% on a year-on-year basis. APMEA de-grew 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 and manufacturing and resources grew 0.4% quarter-on-quarter and declined 8.7% year-on-year. Technology and communication 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, we 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-five 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 business — 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 wins.
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 payer-in-a-box, WealthAI, and software-defined vehicle. Additionally, we also secured multiple cross-industry wins with our next-gen managed services and CyberShield offering. At Wipro, we continue to invest in AI education. 50,000 of our employees now hold advanced AI certifications. Beyond skilling, 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 is — 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 on 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 FY ’25, 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 successfully 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.
Aparna C. Iyer — Chief Financial Officer
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 delivered 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 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%.
Four, 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, which is effective FY ’26. Along with this, the board has also declared an interim dividend of INR6 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, 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.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions]. We’ll take our first question from the line of Vibhor Singhal from Nuvama Equities. Please go ahead.
Vibhor Singhal
Yeah. Hi. Thanks for taking my questions, and congrats on a solid performance especially on the margins front. Srini, my question was on the deal wins. The deal wins were definitely up on a Y-on-Y basis given close to $1 billion in terms of that 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 closer to a mid-single-digit kind of a Y-on-Y 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?
Srini Pallia
Thank you, Vibhor. Let me reflect on your question. Our current large deal 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 Americas, Europe and India, whereas if you look at EMR, manufacturing is strong in Europe compared to U.S. And our ENU is robust in Americas including U.S. and Canada, followed by our ANZ and Europe.
In terms of healthcare, consumer and tech and comm, we are seeing more traction in the medium- to large-size around $50 million to $100 million. Now if you look at our quarter three, our large deal TCV has been at $1 billion, which is still up 6% year-on-year by value and up by three deals by count. 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 two ’25 and we now have a good foreclosure, so we don’t see it as a cause for concern.
Vibhor Singhal
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 anvil or do you believe there is still some time to be able to reach that stage?
Srini Pallia
If you look at the 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 Americas is definitely we see a positive sign in BFSI segment, which is good news for us. We also see some level of taking 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 working with them to understand where the spend is going to be.
But if I were to actually extend your question to the overall demand environment, we see Americas very strong and the demand continues to pick up, while if you look at our bookings into $1 million to $5 million and $5 million to $10 million range has been very strong. However, in Europe, while the economies are challenged, we all know what’s happening in Germany, U.K. 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.
Vibhor Singhal
Got it. Thanks for that detailed 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 press 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 wage hike?
And a related 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 in the next three to four quarters?
Aparna C. Iyer
So Vibhor, yes, 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 three 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 from on the back of improved execution rigor both in our core and in the consulting business, right? 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&A, right? So despite the wage hike and everything, you will see those numbers coming down. And these are conscious reductions that we drove and that have also yielded into the margin improvement. Where do I look at? Is there a revised aspirational ban? Nothing that we would like to share at the moment. We have got to 17.5% that we had shared and it’s a 12-quarter high. So in some sense, we are very conscious that we should sustain it. And therefore for Q4, we are saying that we will — we are confident of holding it in a narrow band and we’ll take it from there.
Vibhor Singhal
So 17.5% plus/minus could be the aspirational band now?
Aparna C. Iyer
Yeah, at least for now.
Vibhor Singhal
Got it. Thank you so much for taking my questions, and wish you all the best.
Aparna C. Iyer
Thank you so much, Vibhor.
Operator
Thank you. We’ll take our next question from the line of Abhishek Kumar from JM Financial. Please go ahead.
Abhishek Kumar
Yeah. Good evening. Thanks for taking my question. Congratulations on a very good performance. So my first question is on growth and related to that is on guidance. Last two quarters, we have now been coming closer to the top end of our guidance, which is not happening in quarters prior to that. So just wanted to understand what has changed? Are the mid-quarter negative surprises kind of abating and that is helping us hit the top end, or the demand environment has been improving? So that is on the performance.
And related to that on guidance, next quarter, despite the fact that furloughs will be absent, etc., at the midpoint, we are still looking at flattish growth similar to 3Q. So some of the puts and takes for our 4Q guidance. Thank you.
Aparna C. Iyer
Yeah, sure. So Abhishek, if you look at it, guidance — guide, 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 in a range. 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. Two, also the demand environment is improving, right? It does show that the stability, right, 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 quarter three. And that’s what we have the present visibility for, Abhishek.
Abhishek Kumar
Sure. Okay. Maybe one question on margin, Aparna. 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.
Aparna C. Iyer
I don’t think there are any one-offs. It’s likely to sustain. You can model it at the same level.
Abhishek Kumar
Right. Thank you, and all the best.
Operator
Thank you. We’ll take our next question from the line of Abhishek Bhandari from Nomura. Please go ahead.
Abhishek Bhandari
Yeah. Thank you and good evening to the management. I had a question on growth and the guidance again. So Srini, if I look at your growth for this quarter, it was broadly led by healthcare, partly by [Technical Issues]. But in banking, we had a negative sort of number. Is it more 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 levers and optimism in banking, given that there could be dereg and other stuff happening which could increase the business?
Srini Pallia
Hi, Abhishek. Let me give you some color to this. If you look at BFSI, it was impacted by furloughs in quarter three. However the sector has grown 3.4% year-on-year. This is clearly a combination of discretionary spread led by Capco, which Aparna just talked about it, which is the consulting work, and also nondiscretionary piece. Some of the large and midsized deals which are more on the themes of vendor consolidation, cost takeout. If you look at BFSI budgets going forward, we feel there’ll be an uptick on the budgets, 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.
Abhishek Bhandari
Got it. And Srini, second and last question is again on guidance part. Given that we had a great execution this quarter, we exited more than the top end. We are talking about some return of this specialty demand. Furlough would be absent as Abhishek also asked. And there may be some tailwind coming from the execution of near — the projects in the near past. So I’m still curious why have a negative number from a guidance perspective when most of the things are actually positive for you?
Srini Pallia
So like Aparna said, we’ve 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, BFSI and healthcare clearly are doing well and some of the sectors for us both EMR which is energy and manufacturing resources and consumer still need to recover. However, if you look at on the geo side, we see momentum building up in Americas while Europe and APMEA remains soft for us.
Abhishek Bhandari
Got it. Last question, Aparna, to you. Now that we have raised the return on capital to shareholders to around 70%, how should we think the mode of return and investment? You had mentioned blocks of three years. So could it again be lumpy if you decide to use the buyback route or do you want to make it more like an annual spin-off? Thank you.
Aparna C. Iyer
In terms of mode of return, we continue to prefer both dividends and buybacks, and — or even special dividend as appropriate. We will — the board will make a decision. We want this to be more consistent, but we’ve continued given that we one cannot rule out a buyback. 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 want to 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.
Abhishek Bhandari
Thank you and all the best for calendar ’25.
Aparna C. Iyer
Thanks, Abhishek.
Operator
Thank you. Next question is from the line of Rishi Jhunjhunwala from IIFL Institutional Equities. Please go ahead.
Rishi Jhunjhunwala
Yeah. Thank you. Just one question around mining, but the non-top-10 clients better or basically even looking for hunting opportunities. If you look at — we have done reasonably well when it comes to growth in top-10 clients, it’s up 15% year-on-year, whereas except that, our revenues are still declining at a 5% rate. So just wanted to understand, outside of the top-10 client mining, 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 our — the decline in non-top-10 seems to be a lot higher than what we generally see in industry peers? Thank you.
Aparna C. Iyer
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, top 50 as a show of strength and that’s something that we focused on. The reduction that you’re seeing in our active client portfolio, 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. There’s also the furloughs and 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 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 count, Rishi.
Rishi Jhunjhunwala
Okay. Thank you so much.
Aparna C. Iyer
Yeah.
Operator
Thank you. Next question is from the line of Ravi Menon from Macquarie. Please go ahead.
Ravi Menon
Hi. Thank you for the opportunity. Sir, this quarter without any aid, the margins have been incredible. So actually a bit surprised that…
Operator
Sorry, Mr. Menon, can you use your handset mode, please? Your audio is not very clear.
Ravi Menon
Hello?
Operator
Yes, please go ahead.
Ravi Menon
Yeah. 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 looks like at least the rupee seems to be depreciating. So how should we think about margins for the headwinds and tailwinds next quarter?
Aparna C. Iyer
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 a lot like the salary increase and everything is behind us. It is going to be a lot of business as usual. And so there are not particularly headwinds that I would like to call out.
Ravi Menon
Thank you. And Srini, healthcare, seasonally, 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?
Srini Pallia
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 four sub-industries, Ravi.
Ravi Menon
So extremely broad-based, can say?
Srini Pallia
Yeah.
Ravi Menon
Thanks so much, and best luck.
Srini Pallia
Thanks, Ravi.
Operator
Thank you. We’ll take our next question from the line of Gaurav Rateria from Morgan Stanley. Please go ahead.
Gaurav Rateria
Hey, hi. Congrats on great execution on margins. My first question is on the large deals. Have you seen any change in the average tenor of these deals and hence the conversion of these deals into revenues?
Aparna C. Iyer
In some sense, Gaurav, 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 have picked up this quarter, which also means our ACV growth was particularly good after several quarters. There is 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 our bookings in Q3 are definitively — the deal tenor has come down.
Gaurav Rateria
Got it. 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, APMEA geography? And where are we in terms of these interventions? Are we likely to see any changes in the outcomes? Thank you.
Srini Pallia
Sure, Gaurav. Let me just kind of talk about both of them, APMEA and Europe, where we have been very soft. As far as APMEA is concerned, we have the 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 APMEA covers. We’re also relooked at our go-to-market approach with a very defined, both account teams as well as teams that can go after new logos. In fact specifically, in APMEA, specific to each of the countries, we have identified set of accounts, and we are also differentiating ourselves with consulting IT and AI, which is definitely a different value prop to this market. Pipeline is being rebuilt, and we see the pipeline growing. And I think if we continue to execute, we should see momentum coming back in APMEA.
In the Europe, again, very similar. We have created a new leadership at an SMU level. We’re also making sure we continue to focus on certain sectors and double down on them. We — while Europe has shown de-growth in quarter three, I can definitely tell you pipeline is strong. All we need to do is focus on deal conversion. And I think with the consulting teams and the local delivery capabilities that we have, I feel we have all the ingredients in place. Now it’s all about execution in Europe.
Gaurav Rateria
Thank you so much.
Operator
Thank you. We have a next question from the line of Sudheer Guntupalli from Kotak Mahindra AMC. Please go ahead.
Sudheer Guntupalli
Hi, Srini. 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.
Aparna C. Iyer
I’ll just give you one fact and then maybe Srini can speak about it. Inb terms of just the top 10 growth, right, the top five, top 10, they’ve been doing well. Even if you have 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 year-on-year in constant currency terms. So that’s something that’s quite broad-based. Certainly, sectors that are doing well are adding to it in terms of BFSI, health. So they are adding those clients and the top 10 are doing really well.
And yeah, if you would like to add.
Srini Pallia
Yeah, sure. So Sudheer, the context of the deals that I talked about when Gaurav asked that question, similarly, both in Europe and APMEA, 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 is talked about can be the role models for the rest of the accountings as well in terms of [Indecipherable] 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. If you look at, like we talked about demand environment strengthening in BFSI and health, whereas in certain sectors especially energy and manufacturing for us have been weak. But I see a turnaround — at least based on the quarter three, we have seen that uptick in manufacturing that will actually result into the accounts that we are focusing on.
Sudheer Guntupalli
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. As I said for furloughs we are operating at 86% to 88% kind of utilizations. So when should we think that the hiring engine should start picking again?
Srini Pallia
So the hiring Indian 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 resignations have been coming down. So we will look at overall supply chain in terms of utilization, demand, attrition, and look at hiring. But I feel that we will be robust in hiring as we move forward.
Sudheer Guntupalli
Thank you, sir. All the very best.
Operator
Thank you. Next in line is Mr. Sandeep Shah from Equirus Securities. Please go ahead.
Sandeep Shah
Yeah. Thanks for the opportunity and congrats on a good execution. The first question, I think Srini, you meant that the portfolio-specific issue in energy and 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.
Srini Pallia
Thanks, Sandeep. Sandeep, if you look at the way we have the four strategic market units, clearly, Sandeep, Americas, and Americas too, we talked about our performance last few quarters. Having said that, we did call out that APMEA and Europe has been soft for us. Now if you embed the industries into those four markets, clearly, the industries that we have, the sectors that we are — we see growth and opportunities in the last three quarters I’m talking about, has been banking, financial services and healthcare. 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, it has been a good quarter, quarter three, and I know we have a very strong and robust pipeline around that. I see that we have to just execute into those — that segment. And finally, 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, bringing some of them home.
Sandeep Shah
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?
Aparna C. Iyer
We prefer both dividends and buyback. That said, you’ve seen that our — the dividend that we have declared is substantially higher compared to what we’ve done in the previous year. The capital allocation that we have committed is 70% and above of the net income over a block of three years, the effective FY ’26. So you should look at the block starting FY ’26 for us to meet that number. And like I said, all modes, including dividend, buyback, special dividend, everything will be explored.
Sandeep Shah
Okay. Thanks and all the best.
Aparna C. Iyer
Thank you.
Operator
Thank you. [Operator Instructions]. Next question is from the line of Ashwin Mehta from Ambit Capital. Please go ahead.
Ashwin Mehta
Hi. Thanks for the opportunity and congrats on good results. Aparna, 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 bp-odd benefit on depreciation from a Y-o-Y perspective. So what is driving this substantial reduction in terms of depreciation?
Aparna C. Iyer
Actually, Ashwin, on depreciation, the — in Q3 of the last fiscal, we actually had a 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, there is some optimization but that’s a result of the natural face-off of intangible amortizations that we do, right? So like I said, what you’re seeing in Q3 is actually devoid of any noise, and you can model that as going forward.
Now to the point on 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 of print you’re seeing is a reduction, but that’s how we just define, A, because of furloughs, the utilization looks lower, but there is — if you look at the core utilization even outside of this is very, very strong. Two, if you look at the FPP productivity that we’ve been driving, been 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 parties services cost, it’s also something that we have reduced. So improved quality of revenue is also playing out into the margin expansion. And then again — so those are some of the levers.
Ashwin Mehta
Sure. Thanks, Aparna. Thanks for the clarification. All the best.
Operator
Thank you. Ladies and gentlemen, that was the last question for today.
I would now like to hand the conference back to Mr. Dipak Bohra for closing comments. Over to you, sir.
Dipak Bohra
Yeah. 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.
Operator
[Operator Closing Remarks]