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Wipro hit by currency volatility and staff costs

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CIOL Bureau
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BANGALORE, INDIA: Indian IT major Wipro Ltd, which posted a disappointing quarterly result, today said that currency volatility and wage increase have impacted the result.

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Wipro's chief financial officer Suresh Senapaty admitted that wage increase and sharp appreciation of rupee against the dollar during the quarter impacted the operating margin in IT services business by 2.5 per cent sequentially.

“Though we saw a strong volume growth of 6.6 per cent sequentially, operating margin declined to 22.2 per cent in second quarter from 24.7 per cent in first quarter owing to 1.3 per cent impact of employee progressions (wage hike) and 1.2 per cent impact from lower foreign exchange realisation,” Senapaty told IANS.

The company suffered $15 million loss due to currency volatility, which was three percent during the quarter and 12 percent on annualised basis.

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India's No. 3 software exporter also followed bigger rivals, Tata Consultancy (TCS) and Infosys Technologies in flagging economic uncertainty as a concern for the $60 billion sector that gets more than half its revenue from exports.

Meanwhile a senior executive of Wipro said that it is not seeing clients asking for price cuts for its services and the No. 3 Indian software exporter has been able to raise fees in select cases.

The outsourcing demand from Wipro's telecom clients has started looking up, but technology and manufacturing sectors were sluggish, Manish Dugar, CFO of Wipro's IT services business told the Reuters Trading India chatroom.

Following the financial results, Wipro saw its share value come down by nearly 5 per cent. At 1.10 IST Wipro shares were down 4.84 per cent and its share price stood at Rs 447.

(With inputs from Reuters)

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