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India's Wipro profits up 24%, beats forecast
by Staff Writers
Mumbai (AFP) Nov 2, 2012

Wipro, India's third-largest outsourcing firm, reported Friday quarterly net profit jumped by a surprise 24 percent on stronger demand as clients sought to pare costs in a weak global economy.

Net profit for the second financial quarter to September climbed to 16.11 billion rupees ($301 million) from 13.01 billion rupees a year earlier.

The figure outpaced market expectations of profit of around 15 billion rupees.

"The pipeline and business environment is looking up. We saw a pick-up in demand in banking and financial services," said Wipro's chief financial officer Suresh Senapaty.

The firm said it won a string of orders, including multi-year deals with a US-based healthcare firm and a large North America-based department store chain.

Quarterly revenue rose 17 percent year-on-year to 106.20 billion rupees.

"IT demand is still holding out," Wipro chairman Azim Premji told reporters after a series of meetings with chief executives of top Fortune-500 firms in the United States.

"The quality of demand and business orders is promising. We are cautiously optimistic for the future," Premji, India's third-richest man according to Forbes magazine, said at the company's Bangalore headquarters.

The results were released a day after the company announced its non-technology operations would be hived off into a new firm, allowing Wipro to focus on its core business, which accounts for 86 percent of revenue.

Premji said Wipro has "chartered a new course" with the split in its businesses.

Wipro shares gained 3.19 percent to an intraday high of 372.95 rupees after the earnings but then slid on profit-taking to close up 0.98 percent at 364.95 rupees.

Wipro forecast revenues from IT services of $1.56 billion to $1.59 billion in the next quarter ending December -- in line with analysts' expectations.

The firm added 53 clients and 2,017 people to its staff in the last quarter.

"Wipro's results are largely in line with estimates. Its guidance for IT services looks decent after continuous disappointments in previous quarters," Ankita Somani, an analyst at Mumbai's Angel Broking said.

Last month, India's biggest outsourcing firm TCS posted a 44 percent rise in quarterly profit, beating estimates, while earnings of Infosys disappointed investors with lower-than-projected revenues, even though profits increased.

TCS, Infosys and Wipro lead India's flagship IT outsourcing industry, which carries out a wide range of jobs for Western firms such as answering calls from bank customers, processing insurance claims and software development.

India, with its large English-speaking workforce, accounts for at least 50 percent of the global outsourcing market and the industry is a vital exporter.

Most of India's IT outsourcing firms say the outlook remains challenging as clients in their key US and European markets contend with sluggish growth and slow decision-making along with political opposition to outsourcing jobs in the face of high domestic unemployment.


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