India’s Wipro posts strong growth in revenue, profits

Riding a boom in offshore outsourcing, Wipro, a software and services outsourcing provider in Bangalore, India, Wednesday reported strong growth in revenue and profits for the quarter ended on Dec. 31, 2006.

Wipro posted revenue of 27.7 billion rupees ($613 million, on the last day of the period being reported) for the quarter up by 33% from revenue of 20.9 billion rupees in the same quarter in the previous year. The company’s net profit grew by 25% in the quarter to 5.3 billion rupees, from 4.3 billion rupees in the same quarter in the previous year.

The results are based on U.S. generally accepted accounting principles (GAAP), and refer to the third quarter of Wipro’s fiscal year which ends on March 31.

Wipro has both a domestic business and an export business. Revenue from its export business for the quarter was 21.2 billion rupees, up by 33% over exports in the same quarter in the previous year. The company added 61 new clients during the quarter in its export business.

The company also added 5,189 employees in its export business during the quarter, taking the total number of employees in its export business to 51,024 at the end of the quarter. Of the new addition, 3,770 staff were added in its IT services business and 1,419 were added in its business process outsourcing (BPO) business.

Strong volume growth, a higher proportion of offshore projects, and continued operational improvements helped offset the impact of lower prices, lower utilization, and the impact of compensation revision for its offshore team, the company said Wednesday. Wipro and other Indian outsourcing companies offer services both at customers’ sites and from their own sites in India.

The company’s BPO business, which was flat in the previous two quarters, saw revenue pick up to 1.9 billion rupees in the quarter ended Dec. 31, 2005, up from 1.7 billion rupees in the same quarter in the previous year.

Wipro acquired during the quarter mPower Software Services, an IT services company in Princeton, N.J., and its development center in Chennai, India. Focused on the payment systems space, mPower has global payment company MasterCard International of New York as its main customer. As part of the deal, Wipro also acquired MPACT Technology Services, a services joint venture in Chennai between MasterCard International and mPower.

To add analog and mixed signal design expertise to the company’s own expertise in digital chip design, Wipro also acquired NewLogic Technologies, a privately held Austrian semiconductor intellectual property and design services company.

Last week, India’s largest outsourcing company, Tata Consultancy Services of Mumbai reported 26.6% growth in revenue for the quarter ended December 31, 2005. But profits grew in the quarter by a mere 3.6% over the same quarter in the previous year, as the company’s expenditure on salaries and wages more than doubled. The company said the increase in salaries and wages was because of new staff joining the company outside India, as a result of the company’s acquisitions, and its own hires in its operations outside India.