Turnover, salaries cut into Wipro profits

Turnover, salaries cut into Wipro profits

Summary: Indian software company Wipro saw its business grow but some of the gains were wiped out by a huge staff turnover in its outsourcing arm.

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TOPICS: CXO
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Indian software company Wipro reported a 61 percent rise in third-quarter profit as it added new clients and made improvements in its pricing structure.

Net income under U.S. accounting rules rose to 4.27 billion rupees ($98 million) in the three months ended Dec. 31, from 2.66 billion rupees ($61 billion) a year earlier, slightly higher than analysts expected. Revenues rose 34 percent in the period.

Wipro said it was able to charge new clients more for higher-margin services. The company added 26 clients in the quarter at the unit serving customers outside Asia-Pacific, boosting sales to 20.9 billion rupees ($479 million) from 15.6 billion rupees ($357 million) a year earlier.

However, gains from price increases were offset by increasing salaries and a huge turnover in staff in its business process outsourcing (BPO) division.

The company continues to use currency hedging to offset the rising rupee but said the rupee's rise against the dollar remains a challenge.

"Looking forward, the environment we see is one of strong volume growth with prices moving in a narrow band," Wipro Chairman Azim Premji said. “The rupee appreciation will pose an additional challenge in sustaining profitability.”

Wipro expects fourth-quarter revenue to rise to $370 million from last quarter's $367 million.

Wipro added 2,274 employees at the unit serving customers outside Asia-Pacific in the quarter, bringing its total workforce to 39,337.

Wipro’s larger rivals Tata Consultancy and Infosys this month both reported profit gains of more than 50 percent for the quarter.

Tata Consultancy's net income rose 54 percent on sales 38 percent higher. Infosys said profit rose 52 percent from a year earlier as sales gained 49 percent to 18.8 billion rupees.

The two companies together added about 4,800 workers in the quarter.

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Topic: CXO

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