Wednesday, 21 January 2009

Wipro sees 24% European growth

(By Anthony Miller). While currency moves left Wipro reporting a 4% seq. decline in European revenues in the Dec. ’08 quarter (+9% yoy), like peers TCS and Infosys the ‘real’ numbers look quite different. At constant currencies, Wipro’s European revenues grew nearly 8% seq. and 24% yoy bringing calendar year European revenues to some $1,15bn, of which around two-thirds comes from the UK. Also like peers, chairman Azim Premji’s outlook messages were much the same, i.e. it’s pretty horrible out there and it’s going to get worse.

On the early morning concall I asked management about a couple of deals that caught my eye. In the US Wipro announced a major IT outsourcing contract with “a large outsourcer of data processing services”. It appears this was won against the usual suspect global oustourcers (no names, no pack drill), but they made the point that other Indian SIs were not in the running. Wipro will run the infrastructure entirely from its US data centres which came part and parcel of its Aug. ’07 acquisition of US outsourcer InfoCrossing. I have always been sceptical as to why Wipro thought it needed to buy onshore assets while its peers focus solely on remote infrastructure management, but they are winning deals, and infrastructure outsourcing (including remote management) is now just over 19% of Wipro’s revenues. Clearly the margins on these onshore deals cannot be anywhere near offshore levels, but it looks like share-gain is the name of Wipro’s game.

The other deal that I asked about was that with “a large UK-based food retailer”, for whom Wipro will do a major Oracle/Retec roll-out. Enabler, the Europe retail consultancy and Retec specialist Wipro acquired in June ’06, played an important role in winning the deal. Enabler was a spin-out from Portuguese retailer Modelo Continente.

Wipro is the most acquisitive of the major Indian SIs and is not shy of taking big bites (e.g. the recent acquisition of Citi Technology Services). I guess it works for them. No comment on the impact of the Satyam fall-out or Wipro’s exclusion from World Bank business (see here) but I will try to findout more on this afternoon’s concall.

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