Synopsis
IT major Wipro identifies Artificial Intelligence adoption as a significant risk. Flawed algorithms and biases could lead to legal and financial issues. Evolving regulations also pose threats. The company warns that AI's rapid integration into client offerings and internal operations carries inherent uncertainties. Inability to effectively innovate or integrate AI may impact Wipro's competitive standing and financial results.Listen to this article in summarized format
In its FY26 annual report, the Bengaluru-headquartered company noted that while it is increasingly integrating generative and autonomous AI into its client offerings and internal operations, the technology remains "uncertain and evolving".
"The development, adoption, and use of AI technologies remain uncertain and evolving, and we may not be able to successfully develop, deploy, or scale AI-enabled solutions or realise the anticipated benefits. Any inability to innovate or integrate these technologies effectively, or the failure of such technologies to perform as expected, could adversely affect our competitive position, operational efficiency, and financial results," Wipro stated.
The company cautioned that AI systems operating with limited human intervention increase the risk of unintended outcomes. Deficiencies in these solutions, Wipro noted, could lead to project delays, failure to meet contractual service levels, disputes, and ultimately, the loss of business.
The rise of AI automation, improved efficiency, and independent client tools could lower the demand for certain core services. Consequently, this might hurt prices, profit margins, service levels, and the mix of services offered by the firm.
Furthermore, the IT services provider highlighted that the use of AI increases its legal and regulatory exposure.
"Clients may seek enhanced contractual protection relating to AI use, including representations, warranties, indemnities, audit rights and obligations concerning intellectual property ownership, data usage, cybersecurity, regulatory compliance, and AI-generated outputs.
"If AI-enabled solutions cause harm to clients, their customers or other third parties, we could be subject to regulatory action, litigation, financial liability, reputational harm or increased compliance costs," Wipro said.
Alongside operational AI risks, Wipro underscored the growing menace of highly sophisticated cyber threats.
The company warned that the malicious use of advanced AI models to create deepfakes and AI-generated social engineering has significantly expanded the threat landscape, making the company and its third-party vendors vulnerable to data breaches and ransomware attacks.
Beyond technological challenges, the company listed macroeconomic and geopolitical uncertainties as material risks to its growth.
"Recent and continued geopolitical changes, including changes in tariffs and trade policies, where we or our clients operate, and other geopolitical events, conflicts or disruptions around the globe, may directly or indirectly hamper our growth," it said.
Wipro, which derives approximately 62 per cent of its IT services revenue from the Americas and 27 per cent from Europe, noted that ongoing conflicts in the Middle East, South Asia, and between Russia and Ukraine could lead to supply-chain disruptions, inflationary pressures, and reduced business confidence.
This, in turn, could prompt clients to delay, reduce, or reprioritise their discretionary technology spending.
Additionally, the company warned that rising wage costs in India could diminish its historical competitive advantage against tech firms in the US and Europe, potentially squeezing profit margins.
