Wipro (VARBusiness 500 no. 108), the third largest Indian software vendor, saw its fourth-quarter profit rise, but failed to meet analyst's profit expectations, the company recently reported. Some of that may have to due with IT customers holding company purse strings a bit tighter.
During a conference call with reporters to announce the results, Girish Paranjpe, president of Wipro's Finance Solutions division noted that some customers seemed more cautious toward the end of 2007, cutting IT budgets and prioritizing their budget dollars.
"Most of the clients have flattish IT budgets. There are a couple of clients where their IT budgets have been curtailed. However, that does not automatically mean that it will affect offshoring or outsourcing, it may accelerate that," Paranjpe said. "After having the budgets in place people now are trying to prioritize their spends over rest of the year. So, my sense is that by the end of this quarter we will get a better picture about how the spends are going to be prioritized. But as of now, it does look usual and I do not see any impact immediately."
Wipro, a solution provider specializing in systems integration, software application development and maintenance services, saw an 11 percent rise in third-quarter profit from the same period last year, to $210 million, but analysts had expected a slightly higher profit of $218.7 million. The IT services firm, which counts Cisco and Nortel among its customers, felt the impact of Indian wage inflation as well as a stronger rupee.
"Our margins remained flat despite an appreciating rupee and increased cost, on account of wage hikes effected," Azim Premji, Wipro chairman told reporters during a conference call. "We continue to win large deals and have a healthy pipeline of these deals as we move into a new calendar year. Among our industry-facing business units, financial services business grew nearly double digit sequentially during the quarter despite this being challenging times for the sector. We also had retail and healthcare vertical growing ahead of our company growth rate."
Wipro saw a 32 percent increase from last year's total revenue to $1.33 billion. Its Global IT Services and Products revenue of $917 million was up 26 percent from the same period in 2006, and that segment added 39 clients in the quarter.
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