Wipro Posts Double-Digit Sales Gains As Indian Outsourcers Continue Hot Streak - InformationWeek
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1/17/2007
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Wipro Posts Double-Digit Sales Gains As Indian Outsourcers Continue Hot Streak

By contrast, top U.S. outsourcers IBM and Electronic Data Systems have posted only modest, single-digit sales gains in recent quarters.

Wipro Technologies on Wednesday completed a triple play for India's top outsourcers as the company posted mid-double digit gains in sales and net income for the third quarter. Indian peers Infosys and Tata Consultancy Services both posted similarly impressive results in the past week.

Wipro posted revenue of $899 million for the period ended Dec. 31, marking a year-over-year sales increase of 43%. Net income rose 40% to $169 million. For its fourth fiscal quarter ended March 30, 2007, Wipro said it expects revenue from IT services and products alone to tally $685 million, a 55% gain over the previous fourth quarter.

Drawing on a workforce that earns anywhere from 40% to 80% less than counterparts in the U.S., Indian outsourcers such as Wipro -- which added 37 new customers in the quarter -- are well-positioned to take advantage of corporate America's ongoing desire to cut costs.

On Thursday of last week, Infosys reported a quarterly sales gain of 47%, while TCS on Tuesday said quarterly sales increased 41% year-over-year and for the first time surpassed the $1 billion mark.

By contrast, top U.S. outsourcers IBM and Electronic Data Systems have posted only modest, single-digit sales gains in recent quarters. In an effort to level the playing field, the American firms, along with Bermuda-based Accenture, have been hiring Indian workers by the thousands in recent quarters while expanding operations in the country. The extent to which such efforts are paying off could be revealed when IBM reports year-end earnings on Thursday.

It's not all rosy for India's outsourcers, however. A rising rupee and salary inflation in India are conspiring to chip away at their margins and raise expenses. For instance, Wipro on Wednesday reported that cost of revenue for IT products and services increased 41% year-over-year in the third quarter.

The rupee has risen 5% against the U.S. dollar since August, and tech salaries in hot spots like Bangalore and Mumbai are rising at about 15% annually, according to industry executives.

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