Indian Outsourcer Wipro Outpaces U.S. Rivals with 33% Quarterly Growth - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

IoT
IoT
Business & Finance

Indian Outsourcer Wipro Outpaces U.S. Rivals with 33% Quarterly Growth

Wipro Technologies also said net income jumped 25% for the quarter while earnings per share increased 24%.

Eat your heart out IBM. That's what some executives at Indian IT services upstart Wipro Technologies must be thinking after the company on Wednesday reported a 33% increase in sales for its most recent quarter. By contrast, Big Blue a day earlier said its sales of IT and business services declined 5% during the same period.

Wipro said that IT services revenues increased 33% to $472 million while total revenues also increased 33% to $617 million.

It's another sign that tech service providers in low-cost countries like India and, to a lesser extent, China, are here to stay and will increasingly challenge U.S. heavyweights for lucrative outsourcing engagements. Along with IBM, other U.S. tech mainstays, including EDS and Hewlett Packard, are watching their services businesses stagnate or grow only modestly while offshore competitors have consistently posted strong double-digit gains in recent quarters. Wipro reported some other impressive numbers for its third quarter, ended December 31st. Net income jumped 25% to $118 million while earnings per share increased 24% to eight cents. The results "signal the next phase in Wipro's growth," said company chairman Azim Premji, in a statement. Wipro said it expects its sales of IT services in its fourth quarter will hit $510 million.

Wipro, along with Indian peers Infosys and Tata Consultancy Services, is starting to gain share against Western rivals in part because it can beat them on price. The bulk of its operations are in India, where labor, real estate, and most other factors of production cost significantly less than in the U.S. Western firms are building new capacity in India and shifting work there to stay competitive, but they remain burdened with infrastructure in costly locations like Silicon Valley, Dallas, and New York state.

A key number tells the tale. Wipro's third-quarter gross margin, a measure of how profitably a company can deliver goods or services, was 34%. By contrast, IBM's gross margin for services in its recently completed fourth quarter was 27.4%. EDS, in its most recent quarter, reported an abysmally low gross margin of 12.2%.

Wipro's challenge is to sustain a healthy growth rate as it increases in size. To that end, it's looking to diversify. During its third quarter, the company acquired system-on-chip designer NewLogic Technologies AG and payments processor mPower Inc. Premzi said the acquisitions will help Wipro increase its "share of wallet" from key customers. In the process, it hopes to keep lightening the wallets of some big competitors.

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
State of the Cloud
State of the Cloud
Cloud has drastically changed how IT organizations consume and deploy services in the digital age. This research report will delve into public, private and hybrid cloud adoption trends, with a special focus on infrastructure as a service and its role in the enterprise. Find out the challenges organizations are experiencing, and the technologies and strategies they are using to manage and mitigate those challenges today.
Slideshows
IT Careers: Top 10 US Cities for Tech Jobs
Cynthia Harvey, Freelance Journalist, InformationWeek,  1/14/2020
Commentary
Predictions for Cloud Computing in 2020
James Kobielus, Research Director, Futurum,  1/9/2020
News
What's Next: AI and Data Trends for 2020 and Beyond
Jessica Davis, Senior Editor, Enterprise Apps,  12/30/2019
Register for InformationWeek Newsletters
Video
Current Issue
The Cloud Gets Ready for the 20's
This IT Trend Report explores how cloud computing is being shaped for the next phase in its maturation. It will help enterprise IT decision makers and business leaders understand some of the key trends reflected emerging cloud concepts and technologies, and in enterprise cloud usage patterns. Get it today!
White Papers
Slideshows
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll