Wipro Q3 net up 24 p.c. on outsourcing

BANGALORE: Wipro Ltd., India's third-largest software exporter, reported a 24 percent rise in quarterly profit on Wednesday, beating analyst forecasts as it coped with pay rises to retain high-tech staff and lower pricing.

Bangalore-based Wipro, whose ailing back-office services unit recently put behind it troubles triggered by high staff turnover, said revenue from its main information technology unit, accounting for three-quarters of sales, was expected to rise 8 percent from last quarter to $510 million in the quarter to March.

New York-listed Wipro, powered by computer maintenance and research service outsourcing, posted 5.3 billion rupees ($120 million) in net profit under U.S. accounting rules in the third quarter to December, up from 4.27 billion a year ago. Consolidated revenue grew 33 percent to 27.7 billion rupees.

A Reuters poll of 10 brokerages had expected Wipro to post a net profit of 5.04 billion rupees on revenue of 26.9 billion.

"Strong volume growth, higher proportion of offshore projects and continued operational improvements helped offset the impact of lower price realisation, lower utilisation and the impact of compensation revision for our offshore team," Suresh Senapaty, chief financial officer, said in a statement.

Wipro reported after Tata Consultancy Services Ltd., the leader in India's $17-billion industry that relies on English-speaking workers earning a fifth of Western salaries, narrowly missed forecasts, while No. 2 Infosys Technologies Ltd. met estimates.

Wipro said it won 61 new clients in the latest quarter, while adding 5,189 employees to the workforce, raising it to 51,024.

Wipro, which counts telecom gear makers Cisco and Nortel as big customers, is a diversified firm and a strong player in Asian IT infrastructure contracts. It has minor interests in computer hardware and consumer goods such as soap.

Wipro is a keen contender for a chunk of a big outsourcing deal expected from automaker General Motors this quarter.

Electronic Data Systems gets $2 billion a year from the current GM deal, due to expire this year. Giants like EDS, Accenture and International Business Machines are quickly ramping up service staff in India to match local leaders.

Wipro's shares, riding a strong wave of software outsourcing, have risen 57 percent from a 12-month low last April, outperforming a 52 percent rise in the BSE IT index.

Wipro, valued at about $15 billion, is 83 percent owned by Chairman Azim Premji, India's wealthiest man.

It had estimated a 12 percent average rise in salaries in the latest quarter, when it also committed $80 million to buy two overseas firms to build up chip design and electronic payment skills.

Like Infosys, Wipro faced uncertainties over fluctuations in the value of the rupee, which lost 2.3 percent against the U.S. dollar over the quarter ended December, while the company had to cope with the costs of foreign exchange hedging.

Wipro's long-ailing back-office unit and the exit of its high-profile vice-chairman last year had raised questions about Wipro's bounce-back, but the company reported strong business momentum last October.