Wipro Versus Infosys

Both Wipro and Infosys Technologies have increased their profit margins during the quarter ended December 2001 and thereby set the benchmark for the sector.

Infosys Technologies' gross profit margins increased two percentage points to 42.7 per cent, while Wipro's increased 0.6 percentage points to 32 per cent.

The difference in the finance performance of the two companies stems from the difference in their business mix. Specifically, Infosys reported a sales growth of 23.04 per cent while Wipro, which also manufactures consumer goods, reported sales growth of 12.6 per cent. As against Infosys' net profit growth of 23.87 per cent, Wipro's reported a marginally lower net profit growth of 17.74 per cent.

Infosys increased its overseas business by 22.5 per cent during the quarter ended December 2001, to Rs 648.35 crore while Wipro's revenue from global IT services increased by 16.37 per cent at Rs 555.92 crore. Typically, billing rates in offshore contracts are higher than in on-shore (domestic) projects, analysts said, adding that Infosys seems to have worked harder at adding new business contacts or getting more projects from existing clients in the third quarter than Wipro. "In the wake of the September 11 incidents, it sure called for aggressive marketing (for Infosys) to post a 20 per cent growth in overseas business," an analyst with a foreign brokerage said.

Since both companies have done better on the overseas business front, this analyst said the prospect of increased business in later quarters seems promising. "They will get more business as they establish their credentials. Overseas business volumes will increase in subsequent quarters," he added.