Wipro assess risk to counter US slowdown

BANGALORE: Wipro Ltd., like other leading Indian software service firms

including Infosys Technologies, said on Friday that it had begun spreading its

risks. The risk management strategy involves increasing the share of revenue

derived from Europe and Japan to reduce dependence on the slowdown-hit US

economy, and cutting down exposure to a handful of bid-name customers.

"On the de-risking front, we have made substantial progress," Wipro

chairman Azim Premji told reporters and analysts in a conference call after the

Bangalore firm announced its results for 2000/01 (April-March). As a percentage

of its total global IT service revenue, the share of America, mostly from the

United States fell to 61 per cent, the past year from 70 per cent in the

previous year. This while Europe's share rose to 31 percent from 24 and Japan's

to seven percent from five.

The firm’s vice-chairman Vivek Paul told a news conference that the

European revenues, though small, doubled in past year. A sales office was

already open in France and another would open soon in Germany, he said. The firm

also increased the share of offshore services, which involves software work done

in India for overseas customers.

Offshore revenue rose to 50 per cent from 47 per cent in the previous year.

Paul said profitability and customer "lock-in" was higher in the

offshore business. The top 10 customers accounted for 43 per cent of the revenue

in 2000/01, down from 53 per cent in the previous year.

Wipro has faced concerns on future growth because giants like General

Electric Company and telecom equipment maker Nortel Networks have been among key

customers. After the US slowdown, the once prestigious customers have become

less attractive because changes in their spending plans could hit demand for

firms like Wipro. Nortel accounts for nine percent for Wipro's software revenue

while GE accounts for three percent.

(C) Reuters Limited 2001.