India's Wipro posts strong growth in revenue, profit

Wipro's R&D services accounted for 33 percent of its export revenues

Riding a boom in offshore outsourcing, Indian outsourcing company Wipro reported strong growth in revenue and profit for the quarter ended Sept. 30, the company announced on Wednesday.

Growth in Wipro's business process outsourcing (BPO) business was flat, however, at a time when the company is trying to expand beyond its main call center business and into this area of back-end transaction processing. It recently set up a new facility in Eastern Europe to provide BPO services to European customers.

Wipro posted revenue for the quarter, the second of its fiscal year, of 25.0 billion Indian rupees ($568.7 million as of the last day in the quarter being reported), up 26 percent from 19.8 billion rupees in the same quarter a year earlier. The company's net profit grew by about 23 percent, to 4.7 billion rupees, from 3.8 billion rupees in the same period last year.

The results are based on U.S. generally accepted accounting principles (GAAP), Wipro said.

Wipro lost the heads of its export business and its BPO business last quarter, prompting speculation that their departures would hurt the company's business. "Our experiences and successes so far have reinforced our confidence in our leadership team as well as the current organization structure," Azim Premji, Wipro's chairman, told reporters in Bangalore.

The company added 39 new clients during the quarter. It also added 4,575 new employees, taking the total to 45,835 as of Sept. 30.

The economic environment is improving and Wipro's clients are now looking to off-shore outsourcing as a way of spurring growth rather than merely for cost-cutting, according to Girish Paranjpe, Wipro's president for its financial solutions practice.

If the main driver for offshore outsourcing was once cost-cutting alone, clients are now turning to Wipro to help them meet time-to-market objectives, and to offset a shortage of quality engineers in the U.S., Paranjpe said on the sidelines of a media briefing about the company's results.

"We have now moved from experimental offshoring to mainstream offshoring as clients have gained greater confidence in the process," Paranjpe said.

Wipro has also been moving up the value curve to offer research and development (R&D) services to telecommunications equipment makers and service providers, independent software vendors (ISVs), automotive electronics makers, consumer electronics companies, and semiconductor companies.

The company is designing a next-generation mobile phone for a vendor in Japan that combines voice, video, and data capability, said A.L. Rao, the company's chief operating officer. Wipro works with some clients on product definition and architecture, he added. R&D services accounted for 33 percent of Wipro's export revenues in the quarter.

Wipro has both domestic and export businesses. Exports for the quarter were 19 billion rupees, up by 26.5 percent over its exports in the same quarter last year, said Suresh Senapaty, the company's chief financial officer. About 66 percent of export revenue came from North America, followed by 29.4 percent from Europe, he added.

Wipro's India, Middle East, and Asia Pacific IT business posted revenues of 3.9 billion rupees, up by 26.5 percent over the same quarter last year.