Wipro will take rate flux in its stride

Volume growth to counter cost rise

Currency fluctuations, unless they are drastic, will not make any significant impact on the margins of Wipro Technologies.

This is clear from the fact that Wipro has built in the ability to withstand about 1 per cent appreciation in the value of the rupee in a year. Thus Wipro Technologies, which accounts for 77 per cent of Wipro's revenues, foresees "margins moving in a narrow range after absorbing the consequences of currency volatility," according to Sudip Banerjee, president of the enterprise business.

The enterprise business accounts for half of Wipro Technologies' revenues and Banerjee is one of the quartet who will be reporting directly to chairman Azim Premji after the departure of Vivek Paul.

The "narrow range", which can mean a small improvement or the reverse, is the result of two developments pulling in opposite directions. There is optimism over volume growth, whereas cost escalations will pull in the opposite directions.

The optimism over volume growth stems partly from two large customer wins in the last quarter and the expectation that more will follow as a result of the increasingly robust consulting capabilities of the company.

This has given Wipro Technologies both an enhanced positioning vis-a-vis prospective customers and will also help win more downstream business.

Consultancy-led business acquisition also has the prospect of securing better price realisation in view of the more comprehensive nature of solutions offered.

As against this, cost escalation is a drag and will continue to be so with annual compensation revisions coming later in the year. One way of containing it will be to change the "people mix" in projects "" using a higher proportion of younger people in project groups.

What is, however, is not in the company's hands is rising visa costs, the full impact of which has not yet been absorbed.