Company says demand continues to be strong

Our Bureau

Bangalore, Oct 19

Wipro said on Friday that it has not been affected by slowdown in the US and maintained that demand continued to be strong.

“We have not experienced any slowdown in the US,” said Mr Azim Premji, Chairman, Wipro Ltd, adding that a clarity on the IT budgets of US clients for 2008 was expected sometime in December or January.

Mortgage segment

However, Mr Premji said that it was only the uncertainty that affected the Indian IT and BPO industry. There was some uncertainty in the mortgage segment and most of that has been discounted, he added.

Wipro derived less than one per cent of its revenues from the mortgage segment and is reasonably insulated, he said.

Further, Mr Premji said the company had set up its first delivery centre in the US at Atlanta, Georgia. The company expects to have around 200 people at its Atlanta centre. Wipro has received a subsidy from the State Government to set up the centre at Atlanta, he said.

“We believe our operations have to localise and we have done it successfully in Japan and Europe, which have yielded good dividends,” Mr Premji said, adding that the company stands a better chance to win local state government contracts. “Our global delivery model requires about 25-30 per cent of our people to work with customers overseas. On the other hand it will also displace our H1-B visa costs,” Mr Premji said.

Adds 5,341 employees

The Chief Financial Officer, Mr Suresh Senapaty, said the company expects to maintain its operating margins in a narrow range for the December quarter notwithstanding lower billing days and salary hikes.

The company added 5,341 employees on a net basis, which comprised 4,463 employees in IT services, including 926 from Infocrossing and 878 employees in the BPO. Net addition during the first half stood at 9,660, up 30 per cent year-on-year. The company had a total headcount of 77,478 as of September 30 and reported a drop in IT services attrition by 2.2 per cent to 17.9 per cent.

Wipro, Mr Senapaty said, has been signing new deals at 3-5 per cent rates higher than its average billing rates and was re-negotiating existing contracts at 2-5 per cent higher rates.

Forward covers

The strong rupee had a marginal impact on its earnings and that the company had bought forward covers worth $730 million as of September 30, to hedge against currency fluctuations. Mr Senapaty said the company had cash and cash equivalent of close to $300 million and may leverage the balance sheet to fund any of its future acquisitions if required. The US accounted for 63 per cent of the company’s revenues, while European revenues stood at 32 per cent and Japan accounting for 3 per cent.

Revenues from BPO grew 21 per cent year-on-year to Rs 278.4 crore during the second quarter of this fiscal, while operating margins stood at 22 per cent.

(This article was published in the Business Line print edition dated October 20, 2007)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.