Wipro net up 56% in Q3

Strong growth in software testing, a telecom practice spin off, and technology infrastructure services helped boost Wipro Limited's net profit for the three months to December to Rs 427 crore, up 56 per cent year on year, but slower than last quarter's 12-quarter high of 79 per cent.

Wipro's total income for the third quarter increased to Rs 2,110 crore, up 39 per cent on the same quarter last year.

But, it was also a quarter in which the company spent money on paying its employees higher salaries, handed them stock against options that matured, and hired fewer staff in its main business "" the global IT services and products.

Azim Premji, Wipro's chairman said all the key verticals of the business had done well, enabling Wipro Technologies to reach a revenue of $352 million, thus beating its revenue guidance of $347 million beat its revenue guidance for the quarter. For the last quarter of the year, ending March 2005, its revenues are expected to be Rs 1,670 crore ($370 million).

Attrition continued to plague Wipro Spectramind, the company's business process outsourcing (BPO) business, the bulk of which is call centre work. The total attrition rate for global IT services and products however "came down to an annualised rate of 12 per cent", a company release said.

Sequentially, net profit increased 3.64 per cent on the second (September-ended) quarter's Rs 412 crore and total income increased 6.6 per cent on that quarter's Rs 1,979 crore.

Vivek Paul the company's vic-chairman, who runs the global IT services and products business from that division's Mountain View headquarters in California, said the company had realised a 1 per cent sequential improvement in charging customers more.

However, the next six months were likely to be flat, with "volume based growth and prices moving in a narrow band", he added.

Global IT services and products, the mainstay of Wipro, revenue increased year-on-year 38 per cent to reach Rs 1,589 crore in the third quarter and profit before interest and tax, at Rs 414 crore, was up 65 per cent.

The business added 26 new customers resulting in a net increase of 16. The business contributed 76 per cent of Wipro's revenues and 87 per cent of profits before interest and tax.

Net addition of staff to the business during the quarter was 947. "Our utilisation was down to 66 per cent which meant there was that much scope to improve on operations by getting that figure to go higher," Paul said.