India's Wipro Fourth-Quarter Profit Beats Forecasts, Outlook Rosy
India's No. 3 software services exporter, Wipro, beat estimates with a 44% jump in its quarterly net profit and forecast strong growth in the year ahead on more outsourcing and
Wipro expects a 33% jump in the April-June revenue from global information technology services at $711 million as customers pay 3% -5% higher fees for services.
The firm said higher billing rates in the January-March quarter helped offset wage rise and currency appreciation, but said the rising rupee was a concern.
"We continue to see robust growth momentum in our differentiated services," Suresh Senapaty, chief financial officer at Wipro said in a statement.
Wipro, which counts telecom gear makers Cisco and Nortel among key clients, earned a net profit of 8.61 billion rupees ($205 million) in the March quarter under the U.S. accounting standards, up from 5.97 billion a year ago.
A Reuters poll of four brokerages had forecast a net profit of 7.71 billion rupees for Bangalore-headquartered Wipro, which provides IT solutions and services such as system integration, software application development and research services.
Wipro's earnings followed quarterly results from top-ranked Tata Consultancy Services and No. 2 Infosys Technologies. Infosys beat expectations with a 70% jump in quarterly profit, while Tata Consultancy posted a slightly-below-forecast rise of 47%.
India's booming software industry has been winning large outsourcing deals from overseas clients trying to cut costs, but a stronger rupee, soaring wages and a possible economic slowdown in the United States, its prime export destination, are concerns.
Shares in Wipro, which has minor interests in computer hardware and consumer goods such as soap, fell nearly 8% in the March quarter, more than a 7% decline in the IT sector index and a 5.2% drop in the main index.
India's software services exports are expected to have risen 33% to $31.3 billion in 2006/07, and are targeted to hit $60 billion by 2010 as firms such as Tata Consultancy and Wipro take advantage of low-cost labor to grab global outsourcing.