BANGALORE: Wipro, India’s third largest software services firm, missed forecasts with a 10 per cent rise in second-quarter profit as higher salaries and currency volatility hit margins, but the company said strong outsourcing demand would boost IT revenue.
Wipro, which develops software applications, integrates IT systems and manages call centres, forecast IT services revenue of $1.32 billion to $1.34 billion for the third quarter ending in December, up 3.5 to 5.5 per cent from the second quarter. On average, analysts had expected the firm to forecast a four to five per cent increase in IT services revenue.
“While the macro-economic environment continues to remain uncertain, there is a higher degree of confidence at the macro level,” said Wipro’s billionaire Chairman Azim Premji. Infosys Technologies , watched by analysts as the trendsetter for the industry, last week beat analysts’ profit estimates and raised its annual sales forecast but warned currency volatility could crimp growth for the industry.
The rupee’s 6 per cent rise since the start of September is a concern for the country’s $60 billion outsourcing industry, which draws more than half its revenue in dollars and has significant rupee expenses.
Leader Tata Consultancy Services said on Thursday it expected robust demand for outsourcing as it posted a second quarter profit that beat expectations but flagged volatile currencies as a risk to the sector.
Bangalore-based Wipro, majority-owned by billionaire Azim Premji, said second-quarter net profit rose to Rs 12.85 billion ($290 million) under international accounting standards from Rs 11.71 billion a year ago.
Analysts had forecast net profit of Rs 13.42 billion. Infosys, Tata Consultancy and Wipro have boosted hiring and doled out pay hikes to feed rising outsourcing demand and stave off poaching from rivals such as IBM and Accenture.
Wipro, whose customers include Citigroup, Cisco and Credit Suisse, said it added 29 clients in July-September. Net IT services employee additions for the quarter were at 2,975. Wipro shares, valued at $26 billion, have risen 15 per cent this year versus a 17 per cent jump in the sector index and a 16 per cent rise in the broader Mumbai market.