Wipro to boost profit margins from overseas projects

BANGALORE: Indian software giant, Wipro Ltd. plans to improve profit margins

by boosting the share of software it writes in India for overseas clients versus

the work done by employees at customer sites. Wipro also will focus on contracts

that fix prices in advance, rather than on staff services for per-hour billing

fees, it said in its annual report filed at the US Securities & Exchange

Commission on June 20.

Although about 80 per cent of Wipro's 10,000-strong army of software

engineers work in India, its revenues are now equally split between offshore

work done at its Indian development centres and onsite work at client offices.

Wipro, listed on the New York Stock Exchange, is India's largest software firm

by market value and its third-largest software exporter, boasting more than 50

Fortune 500 giants among its clients.

"Our goal is to make every new client account earn over $1 million in

annual revenues within twelve months," the company said. Canada's Nortel

Networks, the world's largest telecom equipment maker, was its top client in the

last quarter ended March, generating nine percent of its software revenue.

The Bangalore-based firm also said it would aggressively increase its

research and development services by focussing on high-growth markets, such as

telecommunications, mobile communications and the Internet. Its shares closed

3.18 per cent down at Rs 1,478.70 on Friday, while Bombay's 30-stock index ended

0.70 percent lower. Its shares have dropped 39 per cent in calendar 2001,

compared with a 15 per cent fall in the Bombay 30-share index.

Wipro said it would target sales in Europe and Asia. "We intend to

increase the number of our clients through a dedicated sales team focused on new

client acquisitions and increasing our presence in Europe and Asia," it

said. Europe accounted for 31 percent of Wipro's software revenues in the past

year, while the United States contributed 61 percent.

The software giant said it is eyeing acquisitions but had not short-listed

any targets. "In pursuing acquisitions, we will focus on companies where a

significant portion of their work can be moved offshore to India to leverage our

low cost offshore delivery model and realize higher margins," Wipro said.

It raised about $114 million in a share sale in the United States last year

and cited acquisitions of overseas companies among intended uses for the cash.

(C) Reuters Limited 2001.