India's Wipro profits up 24%, beats forecasts
Friday, 02 November 2012
BANGALORE: India's third-largest outsourcing firm Wipro reported Friday second-quarter net profit jumped 24 percent, thanks to stronger demand as customers sought to reduce costs in a weak global economy.
Net profit for the three months to September rose to 16.11 billion rupees ($301 million) from 13.01 billion rupees a year earlier.
The profit outpaced market expectations of 15.23 billion rupees, according to a poll by Dow Jones Newswires.
"The pipeline and business environment is looking up. We saw a pick-up in demand in banking and financial services," said Wipro's chief financial officer Suresh Senapaty.
The firm said it clinched a string of orders, including multi-year deals with a US-based healthcare firm and a large North America-based department store chain.
Quarterly revenue rose 17 percent to 106.20 billion rupees from a year earlier.
Wipro delivered "revenues in line with its guidance and is continuing to see consistent improvement in engagement with customers and employees," its chief executive T.K. Kurien said in a statement.
The Bangalore-based company announced Thursday its non-technology operations would be hived off into a new firm, allowing it to focus on its core business, which accounts for 86 percent of revenues.
Its chairman Azim Premji -- who is India's third-richest man according to Forbes magazine -- said Wipro has "chartered a new course" with the split in its businesses.
Wipro shares gained 3.19 percent to an intraday high of 372.95 rupees after the earnings but then slid on profit-taking to trade up 0.89 percent at 364.6 rupees by early afternoon.
Wipro forecast revenues from IT services of $1.56 billion to $1.59 billion in the next quarter ending December -- in line with analysts' expectations.
The firm added 53 clients and 2,017 people to its staff in the last quarter.
Last month, India's biggest outsourcing firm TCS posted a 44 percent rise in quarterly profit, beating estimates, while earnings of Infosys disappointed investors with lower-than-projected revenues, even though profits increased.
TCS, Infosys and Wipro lead India's flagship IT outsourcing industry, which carries out a wide range of jobs for Western firms such as answering calls from bank customers, processing insurance claims and software development.
India, with its large English-speaking workforce, accounts for at least 50 percent of the global outsourcing market and the industry is a vital exporter.
Most of India's IT outsourcing firms say the outlook remains challenging as clients in their key US and European markets contend with sluggish growth and slow decision-making along with political opposition to outsourcing jobs in the face of high domestic unemployment. (AFP)