The Hindu Business Line : Wipro sees operating margins range-bound — BPO unit targets more income from non-voice service offerings

Home Page - Software
Info-Tech - Outlook

Wipro sees operating margins range-bound — BPO unit targets more income from non-voice service offerings

Our Bureau

(From left) Mr Azim Premji, Chairman,Wipro; Mr Sudip Banerjee, President, Enterprise Solutions; and Mr Girish S Paranjape, President, Finance Solutions, at a press conference in Bangalore on Wednesday. - G.R.N. Somashekar

Bangalore , Jan.18

WIPRO's BPO unit is targeting a 40 per cent share of revenues from the non-voice service offerings over the next two years, said the Chief Executive, Mr T. K. Kurien.

At present, the non-voice service accounts for around 17 per cent of Wipro BPO's total revenues. Mr Kurien said the focus is more on transaction processing services and the company has some six customers in this space. It would get into the transaction-based pricing model by the end of March, he added.

Wipro BPO is setting up a near-shore unit in Romania, which is scheduled to be operational by March-end. "We expect to have around 250 people in Romania," Mr Kurien said.

Revenues from the BPO business grew by 12 per cent to Rs 189.5 crore during Q3 as compared to Rs 169.8 crore in the corresponding period last year. The operating margins for Q3 FY06 expanded by 3.5 per cent on a gross basis. A salary hike implemented during the quarter impacted the operating margins by about 1.5 per cent.

Wipro BPO's Q3 operating margins stood at around 16 per cent. The BPO unit added some 1,419 employees, taking its overall headcount to around 14,398.

The likely appreciation of the rupee against the dollar, coupled with the impact of a salary hike for its onsite employees from early January, would keep Wipro's operating margins range bound for Q4FY06.

This was despite an expected improvement in utilisation rates, offshore leverage and BPO operating margins among other factors. "On a net basis, because of all these factors, we expect our operating margins to move in a narrow range," said Mr Suresh Senapaty, Chief Financial Officer. Wipro expanded its operating margins by 40 basis points to 22 per cent in Q3.

Commenting on the customer IT spend for 2006, Mr Senapaty said the initial trend looks positive. However, a clear picture would emerge by the end of Q406, he added. Though the contractual pricing with customers was stable during Q3, the realisations were lower primarily due to the lesser number of working days in the quarter, Mr Senapaty said.

The offshore pricing was steady but the onsite price realisation was lower by 3.5 per cent, he added. "We expect to make up in the current quarter because the number of days will be higher this quarter."

Wipro, Mr Senapaty said, was looking forward to the mega outsourcing deal from automotive major General Motors, which is likely to be finalised either this quarter or the next.