Wipro sees growing demand from outsourcing clients

The company has moved its non-IT businesses to a separate company

Indian outsourcer Wipro grew revenue and profits in the second quarter, citing improved demand.

At the end of last quarter, Wipro spun out its non-IT businesses such as consumer care and lighting into a separate company, and is now more closely focused on its IT business.

On Friday it reported that its revenue was up by 5 percent year-on-year to about 97 billion rupees (US$1.63 billion) in the quarter, while profits increased 11 percent from the same quarter last year to 16 billion rupees. The results are in accordance with IFRS (international financial reporting standards).

The company has said that its IT services revenue from outsourcing in the next quarter will be up to $1.65 billion. IT services revenue was close to $1.6 billion in the second quarter.

Other Indian outsourcers like Tata Consultancy Services and Infosys have also indicated an improvement in the outsourcing business, particularly in key markets like the U.S.

TCS, India's largest outsourcer, said last week that its deal pipeline was strong both in the U.S. and Europe. It reported that revenue in the second quarter rose 16 percent year-on-year to over $3 billion, while net income increased by 10.6 percent to $668 million.

While deal closures in the last quarter were lower than expected, 886 deals valued at about $21 billion are coming up for renewal this year in the outsourcing business as a whole, said Siddharth Pai, president of Asia-Pacific for Information Services Group, which analyzes the market. The outlook looks positive for the remainder of this year as a result, he added.

Wipro's IT services business had 147,281 employees as of June 30, an increase of 1,469 people in the quarter, and added 28 new customers. A smaller IT products business had revenue of about 8 billion rupees, a year-on-year decrease of 14 percent. A salary hike for employees, which came into effect in June, affected operating margins in the quarter, the company said.

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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