Bangalore: Wipro Ltd, India’s No. 3 outsourcing firm, is seeing a pick-up in growth momentum in Europe in this quarter on increased demand and stability in billing rates, a senior official said on Monday.
Wipro saw good opportunities in Europe as some economies revived, and corporates’ decision-making had become faster than in the period after the collapse of Lehman Brothers, said Ayan Mukerji, head of European operations for Wipro’s IT services business.
“From my perspective, if we look at some of our wins in quarter one and the pipeline that we have and what we think that we will close, it’s not too bad,” Mukerji told Reuters in a phone interview from his London office.
“I am definitely not absolutely upbeat, but I am very optimistic,” he said.
“I think quarter two is definitely looking better than quarter one.”
Wipro, whose financial year runs from April to March, was seeing stability in pricing in Europe, and most of the talks with its clients on price cuts have ended, Mukerji said.
Germany and France, the two key European markets for Wipro, reported a return to economic growth in the April-June quarter, ending their recessions.
Indian software firms such as Wipro and Infosys Technologies are looking to expand in markets such as Europe and Asia Pacific to cut their dependence on the US market, which brings in more than half the sector’s about $60 billion revenue but has been badly hit by economic and market turmoil.
Europe accounted for about 26% of Wipro’s revenue in the quarter ended June, compared to 27% a year ago. The United States brought in 60% of the company’s Rs62.5 billion ($1.3 billion) revenue in April-June.
In Europe, the outsourcers face competition from big global IT players such as IBM Inc, Hewlett-Packard and Accenture, as well as European firms such as Capgemini and Anglo-Dutch computer services firm Logica.
The Wipro executive said overall IT spending in Europe was likely to remain flat to lower for at least the next couple of quarters, but more companies were likely to take to offshoring to reduce costs.
Last month, oil and gas major BP Plc chose Wipro and four other outsourcers, IBM, Accenture, Tata Consultancy and Infosys, as part of a drive to consolidate the number of its services providers.
Mukerji said the firm expected to win more deals from global corporations’ drive to reduce number of IT services providers.
Shares in Wipro, which counts Citigroup, Cisco, Nokia Siemens Networks and Credit Suisse as clients, ended up nearly 1% on Monday at Rs557.70 on the Bombay Stock Exchange.
Wipro, which has a market value of $17 billion, trades at 20.6 times its one-year forward earnings, as compared to 21.2 times in Tata Consultancy and 21.7 times in Infosys, according to Thomson Reuters I/B/E/S.
Wipro, majority owned by billionaire Azim Premji who turned the family’s ailing vegetable oil business into IT services major, offers IT solutions such as system integration, software application development and manages call centres.