Wipro met its guidance for the December quarter, but continues to lag its top-tier peers on several important factors. The company did witness broad-based growth across its key segments, but that was still not good enough to match its competitors.

During the quarter, the company witnessed a decline in volumes (man months billed), but was able to obtain improvements in realisations in excess of three per cent.

Peers such as TCS, Infosys and HCL Technologies experienced volume growth of two-three per cent.

Decline in volumes may be indicative of sluggish client traction for Wipro.

The company’s revenues (in dollar terms) increased 2.4 per cent sequentially in the December quarter, while EBIT (earnings before interest and taxes) remained flat.

For its competitors, revenues rose in the range of 3.3-6.3 per cent.

Balanced growth

Though Wipro lags behind its competitors, there were some noteworthy aspects in its results.

All its verticals grew during the quarter, with healthcare, retail and energy-utilities segments growing at or faster than the overall company’s revenue rate at 2.4-7.1 per cent. Its largest vertical, financial solutions, too grew, though at a slower pace.

High-margin offering such as business application services grew at an impressive rate of 4.7 per cent sequentially while technology infrastructure services too witnessed increased traction.

These factors suggest that Wipro has been able to tap into discretionary spends of clients.

Large-sized client addition too was healthy with one customer being added in the $100-million category and one in the $50-million bucket. In this regard, Wipro’s performance was better than HCL’s.

Despite all these numbers it has to be said that though there has been growth across segments for Wipro, they are no where close to what its competitors registered.

But it is clear from an industry standpoint, especially after the results of the top four India-listed offshore vendors that IT spending (including on discretionary projects) and outsourcing are reviving and concerns in this regard may have largely abated.

(This article was published on January 19, 2013)
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