Cautiously optimistic on IT services business

Wipro is hopeful, albeit with a proviso, on the business environment turning around in the coming months in the US. The US market contributed 51.5 per cent of the company's IT services revenues during the quarter ended September 30, 2012.

Company Chairman Azim H Premji recalled his meeting with a host of CEOs of big companies during his visit to the US recently and said, “The mood in economic growth there is more muted now. We expect demand pickup in two to three months after elections.”

Echoing a similar viewpoint, Executive Director and CEO -- IT Business T K Kurien said, “We are cautiously optimistic going forward. The pipeline is more or less the same. The investment banking segment is not doing good, but other segments like analytics, retail banking are growing. We expect deals to start after the (presidential) elections.”

For the second quarter ended September 30, Wipro had nine customers with billing of more than $100 million each and 16 customers in the $75 million plus category. In terms of verticals, BFSI contributed 27 per cent of the revenues, followed by manufacturing at 19 per cent and media and telecom at 14.4 per cent, mirroring the trend during the first quarter.

Operating margins, however, marginally declined to 20.7 per cent in the quarter ended September 30, 2012, from 21 per cent in the quarter ended June 30, 2012.

Price realisation from both onsite and offshore services went up 1.9 per cent and 1.5 per cent respectively on a sequential basis.

Executive Director and CFO of Wipro, Suresh Senapaty, said, “Our focus on driving significant operational improvements have helped us predominantly mitigate the incremental wage increases and currency volatility.” The company gave out a hike of 8 per cent to its offshore employees and 3 per cent to onsite employees in the first quarter this year.

Net utilisation during the quarter ended September 30, 2012 was 77.9 per cent, down from 80.7 per cent during the same period last year.

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