Indian outsourcer Wipro posts 29 percent revenue growth

BANGALORE, INDIA -- Wipro, India's third largest software and services outsourcer, reported gains in both revenue and profit for the quarter ended June 30, reflecting a growth in volume of business and higher prices for its IT services, the company announced Friday.

However, revenue growth in the company's business process outsourcing (BPO) business was low, as the company is shifting the focus of this business from call center services to higher-margin, nonvoice transaction processing services, the company said.

On the upside, the company does not expect significant increases in salaries of its IT services and BPO staff over the next two years. Indian outsourcing companies take advantage of low cost staff in India to offer lower priced services to customers abroad.

Wipro's revenue for the quarter was 22.9 billion rupees ($524 million as of June 30, the last day of the period reported), up by 29 percent from the same quarter last year. Profit for the quarter increased by 31 percent from a year earlier to 4.3 billion rupees. The results are based on U.S. generally accepted accounting principles (GAAP).

The results announced by Wipro in Bangalore refer to the first quarter of its fiscal year which runs from April 1 to March 31.

Wipro has both a domestic and export business. Exports for the quarter were 17.3 billion rupees, up by 31 percent over exports in the same quarter last year. The company added 29 clients in the quarter in its exports business, which consists of outsourced services.

Wipro had a total of 41,911 employees at the end of the quarter. Although the company added 2,097 staff in IT services during the quarter, it reduced the number of staff in its BPO business by over 2,000 staff, reflecting the restructuring of that business, Suresh Senapaty, chief financial officer of Wipro, said Friday.

The growth in revenue of the BPO business will continue to be slack over the next two quarters, until the transition to nonvoice services is complete, Senapaty added.

The company's operating margins were affected by increased costs of visas to the U.S., and the appreciation of the Indian Rupee, Azim Premji, chairman of Wipro, told reporters Friday. India's outsourcing industry has a large number of staff working on-site at customer premises in the U.S., and the increase in costs of visas to the U.S. have affected many IT services companies in the country.

Wipro's strong showing is in line with that of other large outsourcing companies in India. India's two largest outsourcers, Tata Consultancy Services in Mumbai, and Infosys Technologies in Bangalore, both reported strong growth in revenue and profits for the quarter ended June 30 this year.

India's software and services exports were $17.2 billion in the fiscal year to March 31, up 35 percent from the previous year, according to the National Association of Software Companies (NASSCOM), in Delhi. Exports of software and services are expected to grow by between 30 percent and 32 percent in the current fiscal year, according to NASSCOM.

High attrition rates and an increase in wages have affected India's outsourcing industry, particularly after the offshore services operations in India of multinational companies like IBM in Armonk, New York, and Accenture in Bermuda started hiring in India about two years ago.