October 15, 2004

Stop worrying about IT offshoring - it's doing fine

Author: Robin 'Roblimo' Miller

According to the quarterly report [pdf link] we received today from Wipro, India's largest IT services and business process outsourcing contractor, revenue was up 47% -- and profits were up 67% -- over last year. Better yet, Wipro claims it has added 34 new clients in the last quarter, and "10 are Fortune 1000/Global 1000 customers."From the press release:

· Net Income was Rs. 3.8 billion ($ 84 million), representing an increase of 67% over the same period
last year

· Revenue was Rs. 19.8 billion ($ 431 million), representing an increase of 47% year over year
· Global IT Services & Products Segment Revenue was Rs. 15. 0 billion ($ 326 million), representing an increase of 45% over the same period last year
· Global IT Services & Products Earnings Before Interest and Tax (EBIT) was Rs. 4.0 billion ($ 88 million), representing an increase of 90% over the same period last year
· Rs. 4.8 billion ($ 105 million) cash generated from continuing operations

· Global IT Services & Products added 34 new clients in the quarter (including 3 in its IT Enabled Services operations)

· Wipro's India, Middle East & Asia Pac IT business segment signed a five year AUD 17 million
contract with AXA Australia to provide Application Maintenance and Development Services to support their Wealth Management and Financial Protection products.

Outlook for the Quarter ending December 31, 2004
Azim Premji, Chairman of Wipro commenting on the results said "The strong results clearly demonstrate that
Wipro is winning in a market where customers are seeking higher value. Our Global IT Services business delivered strong sequential Revenue growth of 13% and improved Operating Margins for the fifth successive
quarter. We continue to benefit from the investments made over the last few years. We have good business momentum across our businesses. Coupled with our compelling portfolio of services, this gives us immense
confidence on our long term prospects. Looking ahead, for the quarter ending December 2004, we expect our Revenue from our Global IT services business to be approximately $347 million."

Vivek Paul, Vice Chairman, said "We continue to sustain our growth across all our key verticals and service lines in our Global IT business. Good volume growth and stable pricing environment resulted in Revenues of
$327 million, ahead of our guidance of $318 million. Excellent execution and continuing focus on improving productivity helped deliver Operating Margin expansion. In terms of service lines, after a couple of subdued
quarters, our Business Process Outsourcing business rebounded strongly with a sequential revenue growth of nearly 20%."

Suresh Senapaty, Corporate Executive Vice President -Finance said, "Improvement in Operating Margin in our Global IT Services business was driven by better price realization for Onsite projects, an increase in the
proportion of Revenues from Offshore projects, and continued operational improvements partially offset by lower utilization primarily due to a net addition of over 5,500 employees to our team, including around 3,300
in our IT Services business. Further, in a move that could significantly improve employee retention and enhance the alignment of employee interests with those of shareholders, we have issued Restricted Stock
Units to our key employees."

The IT sector is obviously rebounding

If these glowing statements are correct, it looks like the recession that has thrown so many IT workers out on the street is now over, and at least someone in the business is hiring like mad.

It's good to see that President Bush's plan to stimulate the economy is working so well. For a while it looked like it wasn't having much effect.

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