Wipro records slowest growth among peers

    K. Venkatasubramanian
    BL Research Bureau
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Does better at adding clients

Wipro recorded the lowest growth among peers in the September quarter, though it has managed to give account of itself as far as acquisition of large-sized clients is concerned.

The company’s growth was not broad-based, with only its financial services and energy and utilities growing significantly this quarter. Utilisation too did not improve.

But it has managed to improve its pricing and has also managed to mine its top clients well.

During the quarter, Wipro’s IT Services revenues grew marginally sequentially to Rs 8,373 crore, while its earnings before interest and tax (EBIT) was largely flat at Rs 1,731 crore. In dollar terms, revenues were up 1.7 per cent, which was lower than competition.

The volume (person-months billed) growth for Wipro, at 0.2 per cent, was the lowest among peers such as Infosys, TCS and HCL Technologies, which had managed 2.5-5 per cent growth. This suggests that its competitors may be having better traction with clients. The fact that utilisation remained stagnant at 77.9 per cent indicates some amount of sluggishness.

The silver lining for Wipro came from an increase in pricing, as realisations were up 1.5 per cent on an average.

Narrowly led growth

Revenues from verticals such as manufacturing, telecom and healthcare fell 0.5-4.4 per cent sequentially. Growth was led largely by finance solutions and energy and utilities, as they expanded at a pace faster than the overall company’s rate.

But there were some points to cheer for the company as well.

Wipro managed to add one client in the $100-million category and two in the $75-million bucket.

Revenues from its top 10 customers grew at a pace faster than the company’s, indicating robust client mining during the quarter. The US and European regions too expanded satisfactorily. That discretionary spends may not have been that forthcoming was testified by the fact that only offerings such as BPO and infrastructure services, which are non-discretionary in nature, grew at a fast clip. Disparity in growth metrics between TCS and HCL on the one hand and Wipro and Infosys on the other hand has once again played out this quarter. Infosys, which has had lackadaisical growth over the past few quarters, has generally done better than Wipro. It is thus highly unlikely that Wipro would manage to grow at the trade body Nasscom’s predicted growth for the industry at 11-14 per cent.

(This article was published on November 2, 2012)
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