The Hindu Business Line : Increased focus on consulting biz

Wipro Ltd has said its consulting business has been repositioned with an independent revenue mandate. Its Chief Financial Officer, Mr Suresh Senapaty, said on the sidelines of the press conference to announce the third quarter results that as a stand-alone entity, the consulting business contributed between 1.2 per cent and 1.3 per cent to the total revenues of the company.

Overall, it contributed to about 5 per cent of the total revenues. The billing rates were over $120 per hour, Mr Senapaty said. On a sequential basis, the consulting business grew 10 per cent, while on a year-on-year basis it grew 70 per cent. He said because of the increased focus on consulting business, Wipro’s President for Financial Solutions division, Mr Girish Paranjpe, will now handle it.

Global IT margins

Dwelling on profit margins, Mr Senapaty said: “During the quarter ended December 2007, improved realisations and rationalisation of bulge mix helped us to fully mitigate the pressure on profitability on account of foreign exchange impact.”

Bulge mix is calculated as a percentage of employees with experience below three years over the total number of billable employees. Mr Senapaty also pointed out that the drop in global IT margins by 100 basis points sequentially was primarily on account of the company’s Infocrossing acquisition.

But the acquisition is also helping Wipro penetrate clients. Infocrossing recently expanded its offering to Missouri State in the US to a $400 million order over nine years for its Medicaid programme.

During the third quarter, Wipro added 39 clients with billing rates going up by half a percentage point. In the IT services space, it recruited 2,389 employees — 2,000 less than the number recruited during the September quarter.

Mr Senapathy said for deals over $50 million, it is in talks with between 10 clients and 20 clients while it saw its first $100 million client during the third quarter. The number of clients in the $50 million run rate went up from 9 to 12, while the number of clients in the over $1 million revenue run rate went up from 307 to 313 during the quarter. It said it may increase salaries in the US as well as in India, which could have some impact on the profitability. On the operational front, contribution to revenues from fixed price projects rose by 2 percentage points, while price realisation improved during the quarter by about 50 basis points sequentially.

In the consumer care and lighting business, Wipro has relaunched the Enchanteur brand from its recently acquired Unza range, while its flagship brand Santoor has posted a 30 per cent growth in Q3 revenues. The capital expenditure for the current year is around Rs 75 crore.

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