Wipro sees growth in China, West Asia

Wipro sees growth in China, West Asia

Bangalore: Wipro Ltd, India’s No. 3 software services exporter, is pursuing large outsourcing deals in Europe and is expanding operations in China that will help get more Japanese contracts, a top official said on Tuesday.

The company also sees stronger demand for outsourcing in the West Asia East and Latin America, and has not been impacted by the Dubai debt crisis that has shaken global markets and confidence in the Gulf business hub, Suresh Vaswani, co-chief executive of IT business at Wipro, told reporters. “The contracts we have in Dubai are good contracts, they are sustainable contracts," he said, adding most of its clients in the West Asia are from oil and gas and manufacturing sectors and it does not have large exposure to the financial sector.

The West Asia along with India accounted for 8.2% of Wipro’s revenue in the quarter ended in September. The firm, headquartered in Bangalore, gets more than half its business from the United States. Wipro, which started operations at its second facility in China last month, is looking at China and Latin America as potential growth markets, Vaswani said. Expanding in China will help to tap business opportunities in that country as well as win clients in Japan, he said.

“Japanese market has been a bit of a challenge for us and in general for the IT industry, but I think things are beginning to look up," Vaswani said.

Some of the large outsourcing deals that Wipro is pursuing are from continental Europe, which is a focus market for the company, majority owned by its billionaire chairman Azim Premji. Shares in Wipro, which the market values at $20 billion, were up 1.9% at Rs649.80 at 0918 GMT in the main market that was up 1.2%. The stock has nearly tripled this year.

Fixed-Price Improving

The company, which gets bulk of its revenue from telecoms and financial services clients, is looking to win more deals from the government and healthcare sectors as countries across the world look to trim costs, Vaswani said. He said Wipro had recently won an outsourcing deal from a government department in Australia, and is bidding for similar projects in the United States and Europe. On pricing, Vaswani said the company had seen a sharp jump in the contracts that had fixed-price component.

Analysts say fixed-price deals give better revenue visibility and help mitigate the pricing pressure, unlike the so-called time and material pricing under which the value of a contract depends on the number of people deployed by an outsourcer for a project.

India’s export-driven outsourcing sector has been on a roll in recent months following a brutal slide in demand at the end of last year as turmoil in the financial sector, software firms’ key client base, led to cancellation or postponement of contracts.

Bigger rivals Tata Consultancy Services and Infosys Technologies, and Wipro, have announced deals in recent months from companies such as BP, mobile operator T-Mobile UK, brewer SABMiller and Volkswagen.

“We do want to capitalise on the upturn that is taking place," Vaswani said. “Things are looking better and, therefore, the outlook is positive."