BANGALORE, INDIA: Though strong demand for outsourcing helped India's Wipro Ltd to handsomely beat estimates in the June quarter, a softening in Europe's revenue contribution raised concerns about profits ahead.

India's No.3 software services exporter's Europe revenue share fell mainly due to currency volatility, but it continued to see a strong business pipeline from the region.

Europe is the second-biggest market for Wipro, which develops software applications, integrates IT systems and manages call centres, and the $60 billion Indian outsourcing sector, after the United States.

An indicator of the troubles facing the region came when a newspaper reported on Friday that several of Spain's 18 savings banks, including some that have been involved in recent mergers, have failed tests to see how they would cope with worsened economic conditions.

"The demand for outsourcing services continues to be healthy at this point of time but Europe is a concern in the near term for these companies," said K.K. Mital, head of portfolio management services at Globe Capital. "Pricing may continue to be an issue till there is some stabilization in Europe," Mital said.

Also read: Will UK's cost-saving move affect Indian IT?

Wipro's results mirrored the strong growth of sector leader Tata Consultancy Services, while it fared better than No. 2 Infosys, which posted a surprise fall in quarterly profit last week.

"The situation in EU is uncertain, but we continue to see good traction in terms of pipeline as well as deal closure," said K.R. Lakshminarayana, Wipro's chief strategy officer for IT business.

"At the customer level, decision making as well as deal flow continues to be robust," he told the Reuters Trading India chatroom, responding to a query on business prospects in Europe following the economic uncertainty.

The company said Europe accounted for 25.4 percent of its revenue in April-June, down from 26.3 percent in the March quarter. The United States brought in more than half of its revenue.

Wipro added 22 new clients in the June quarter, its slowest pace of client addition in more than a year, reflecting the cautious environment linked to the debt crisis in Europe.

Research firm Forrester said in a report this month that Europe's volatile economic situation and uncertainty about corporate IT budgets would result in possible delays or cancellations of some outsourcing projects.