Wipro's growth lags competitors' despite offshoring boom

The results of Wipro's reorganization are expected to show later this year

Wipro's second-quarter revenue grew, the company reported Wednesday. However, its larger competitors, Infosys and Tata Consultancy Services, grew faster.

IT services revenue at Wipro totalled US$1.4 billion for the quarter, up 17 percent from a year earlier.

Wipro was expected to underperform in the quarter, despite a boom in the offshore outsourcing market, said Amneet Singh, vice president for global sourcing at research firm Everest Group.

The impact of a management and business reorganization at the company in January may be felt only later in the year, he said. Wipro appointed a single CEO in January, abandoning its previous dual-CEO structure, and announced a greater focus on key industry segments such as healthcare.

The company is seeing early signs of positive momentum after the re-organization, it said.

Wipro may also have been hurt by lackluster growth in demand from the media and telecom sector which accounted for about 17 percent of its revenue, Everest's Singh said. The company was however able to hold its margins despite a wage rise in the quarter, he added.

Wipro also has businesses in lighting and consumer care, and does not report net profits separately for its IT services business.

The company's total revenue for the quarter was 85.6 billion rupees ($1.9 billion as of the last day of the quarter), up by 18 percent over the same period last year. Net profit was 13.35 billion rupees, up by 1 percent.

IT services accounted for 75 percent of the company's revenue for the quarter.

The company added 4,105 staff in its IT services business in the quarter, taking the total to 126,490 at the end of the quarter. It also added 49 new customers during this period.

Wipro, like other Indian outsourcers, depends on the U.S. and Europe for most of its revenue. The Americas accounted for 53 percent of revenue, followed by Europe at 28.6 percent in the quarter.

TCS, India's largest outsourcer, said last week that its revenue for the quarter was $2.4 billion, up by 34.4 percent from the same quarter last year, according to international reporting standards. Net profit grew by 30.6 percent to $532 million, despite a wage increase of between 13 percent and 14 percent in the quarter. The country's second largest outsourcer, Infosys, reported that its revenue for the quarter was $1.7 billion, up by 23 percent from the same quarter last year. Net profit was up 17.8 percent at $384 million.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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Tags outsourcingbusiness issuesservicesfinancial resultsoffshoringwiproinfosysTata Consultancy Services

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John Ribeiro

IDG News Service
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