Wipro looks for growth in new geographies (Second Lead)

July 24th, 2012 - 9:19 pm ICT by IANS  

Bangalore, July 24 (IANS) India’s third largest IT bellwether Wipro Ltd is betting on customers in new geographies to sustain growth momentum despite currency volatility and pricing pressure.

“At the macro environment level, we see growth coming from new geographies, especially from projects in Brazil, which is promising because customers are viewing technology as a key enabler to drive their internal transformation,” Wipro chairman Azim Premji said Tuesday.

Asserting that the company’s global IT services delivered sequential growth in line with guidance, Premji said despite headwinds and volatile demand, revenue grew on year-on-year (YoY) basis in all key geographies.

“Customers continue to be focused on driving productivity and globalisation. Our IT services were buoyed up by export driven growth in India and business in Europe, which was more resilient for us than the prevailing sentiment there,” Premji told reporters.

Highlighting the company’s performance in the first quarter (April-June) of this fiscal (2012-13), the IT czar said counter-cyclical presence in products and geographies and a customer portfolio, which has a global spread, helped the company balance the quarter.

Though the global software major grew its topline and bottomline in double digits on annualised basis in rupee terms, its net income and revenue from its IT services business slipped sequentially in dollar terms in the quarter under review from previous quarter (January-March) of last fiscal (2011-12).

As a result, the global software major projected a flat growth of $1.54 billion revenue from its global IT services for the second quarter (July-September) of this fiscal (2012-13).

“Revenue from our IT services business is expected to be $1.54 billion in second quarter (Q2) and marginally higher (1.3 percent) from $1,496 million ($1.5 billion) posted in first quarter (Q1) under the International Financial Reporting Standards (IFRS),” the company said earlier in the day.

The company posted net profit of Rs.1,580 crore (Rs.15.80 billion) in first quarter, registering 18 percent year-on-year (YoY) growth and 6.7 percent sequentially (quarter-on-quarter) as per the Indian accounting system.

Similarly, consolidated revenue for the quarter under review (Q1) rose 24 percent YoY and 7.9 percent sequentially to Rs.10,653 crore (Rs.106.53 billion), including Rs.8,314 crore (Rs.83.14 billion) from its global IT services.

Under the IFRS, net income for first quarter is $284 million and total income $1.92 billion, including $1.5 billion from IT services.

In dollar terms, net income, however, declined 2.4 percent sequentially from $291 million from previous quarter.

“We have seen high levels of volatility in currencies globally. IT services revenue in dollar terms was impacted by $25 million due to cross currency volatility,” Wipro chief financial officer Suresh Senapaty said.

The IT services business added 37 clients during first quarter, taking the total number of clients to 919 as against 943 quarter ago and 937 a year ago.

“We have delivered revenues in line with our guidance in a volatile environment. We will continue to build differentiation and invest in technology driven business transformations for our customers as well as rewarding our talent,” chief executive T.K. Kurien said on the occasion.

The global IT services division added 2,632 people in the quarter, taking the total headcount to 138,552 employees as on June 30.

Admitting that discretionary spending had not picked up yet, Senapaty said the demand environment was two-pronged, with activity level higher in existing customers resulting in strong pipeline on one hand and uncertainty and delays in closing deals on the other.

“Discretionary spending is soft and little moderate in the current environment,” he noted.

Pricing was marginal onsite while down sequentially one percent offshore.

“Pricing is within the range and pricing pressure only in small pockets,” Senapaty said.

The company’s outlook for the full year is, however, predicated on improvement on closure of large deals.

In India, decision-making is getting delayed, with cost of capital being very high and volatility being very high.

“Decision-making in capital investment got delayed in the private sector as well as in the government. Given the tough environment, we do not see as good a quarter two as normally we would have wanted to see,” Senapaty added.

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