Wipro eyes more financial deals to boost growth

BANGALORE Fri Jan 17, 2014 7:57pm IST

People walk in the Wipro campus in Bangalore June 23, 2009. REUTERS/Punit Paranjpe/Files

People walk in the Wipro campus in Bangalore June 23, 2009.

Credit: Reuters/Punit Paranjpe/Files

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BANGALORE (Reuters) - Wipro Ltd (WIPR.NS) is eyeing more lucrative financial industry contracts from Europe and the United States to catch up with its bigger rivals, as India's No. 3 outsourcing services provider looks to grow its sales by up to 4 percent in this quarter.

Like its rivals Infosys Ltd (INFY.NS) and Tata Consultancy Services Ltd (TCS.NS), Wipro is banking on a revival in demand for IT services from the industry's biggest markets as the economies of the United States and Europe improve.

"As the global economy is progressing towards stability, we see optimism amongst clients, especially in the West," Chairman Azim Premji said, after Wipro reported a slightly higher-than-expected net profit for the December quarter.

India's $108 billion outsourcing sector generates more than 90 percent of its sales from providing services, including setting up IT networks and developing software applications, for overseas clients.

Banks and insurers like Citigroup (C.N), Bank of America Corp (BAC.N) and British insurance group Aviva (AV.L) are among the biggest spenders on technology services, ranking among the top clients for Indian IT oursourcing firms.

The company, owned by billionaire Premji, generated about 26 percent of its sales from its financial clients in the December quarter, lagging the nearly 34 percent notched by Infosys and 43 percent at Tata Consultancy.

Wipro, which has been trying to grow its share of revenues from financial clients, said sales at its financial solutions business grew about 3 percent over the previous quarter, faster than 0.5 percent rise at TCS and a 2 percent growth at Infosys.

Last month, Wipro agreed to buy a U.S.-based mortgage services provider to boost its offerings for financial services clients.

Wipro expects to add new clients and is looking for acquisition opportunities in the financial sector to boost growth, its Chief Executive T.K. Kurien told reporters.

"BFSI (Banking, financial services and insurance) is a large piece for everybody and that's where the bulk of the IT services spends are and you need that to really drive growth and meet industry growth. So they are in the right direction," said Nitin Padmanabhan, an analyst with Espirito Santo brokerage.

NEW CLIENTS BOOST SALES

Wipro said revenue in its main IT services business in the three months to March 31 will be in a range of $1.71 billion to $1.75 billion, a rise of 2-4 percent from the previous quarter, matching analyst estimates. The outlook included revenue from its acquisition of the mortgage services provider.

"From an organic perspective, (the outlook) is possibly a little disappointing. But, otherwise commentary is pretty solid and possibly growth should improve as it goes through the year," Padmanabhan said.

The company's consolidated net profit from continuing operations for the three months ended December 31 rose to 20.15 billion rupeesfrom 15.9 billion rupees a year earlier, Wipro said in a statement on Friday.

That compares with the 19.95 billion rupee mean estimate of analysts surveyed by Thomson Reuters I/B/E/S.

Revenue at the company's IT business rose 6.4 percent to $1.68 billion in the quarter, as the company added 42 new customers.

Tata Consultancy and Infosys also beat net profit estimates for the December quarter.

(Writing by Aradhana Aravindan and Sumeet Chatterjee; Editing by Miral Fahmy)

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