Wipro chases big ticket customers as services demand increases

Wipro chases big ticket customers as services demand increases

Strong demand across banking, financial services and insurance

Wipro is seeing strong demand for its services from clients in banking, financial services and insurance (BFSI), while it faces challenges in its India business and in the U.S. healthcare sector.

India's no.3 IT firm said that BFSI, its biggest segment, now accounted for 30 per cent of its revenues, up from 25.7 per cent a year ago, as it reported a two per cent rise in net profit for the three months through June, beating analysts' forecasts.

Wipro said it expected revenue form its key IT services business for the quarter ending September to be in the range of US$2.01 billion to US$2.05 billion.

That would mean growth of 0.3 per cent to 2.3 per cent from its current revenue of US$2.03 billion, after adjusting for the loss of roughly US$23 million in revenue due to the sale of its hosted data services business in the June quarter.

"While we see continuing challenges in our India business and the ACA (Affordable Care Act)-related decline in healthcare, we do see stronger momentum in the rest of our business led by BFSI and the Americas," Wipro CEO Abidali Z. Neemuchwala told a news conference.

More than half of Wipro's sales are in the Americas.

Wipro also said it has been trying to restructure its India business, which along with the Middle East contributes less than 10 per cent of its revenues, while the uncertainty around ACA, commonly known as Obamacare, in the United States has pushed healthcare clients to hold off big spends.

The company also said it needs to attract more big spending clients - it has only eight customers that bring in annual revenues of more than US$100 million.

“I wish we were doing better on that," Wipro CFO Jatin Dalal said. "We are pushing up from the base and you hopefully will see an acceleration from hereon."

There was ample client demand for Wipro's software services though, Dalal said.

"Our challenge is to make sure we harness the demand... and how quickly we convert that from a demand to opportunity, opportunity to order book, and order book to revenue."

Wipro said net profit for the three months to June 30 totalled US$309 million, topping analysts' expectations according to Thomson Reuters data - its results came out after the stock market closed.

It also announced that Wipro will partner with Alight Solutions and buy out the U.S.-based human resources solutions provider's India operations for US$117 million in cash.

India's US$154 billion software services industry, led by Tata Consultancy Services and Infosys, faces tighter margins in legacy businesses such as routine infrastructure maintenance as clients increasingly demand more work for less money.

Still, Tata Consultancy Services this month reported a record profit helped by a rebound in its financial services business. Infosys too reported a rise in net income even though it missed street estimates.

(Reporting by Sankalp Phartiyal and Krishna V Kurup; Additional reporting by Aby Jose Koilparambil; Editing by Jason Neely and Susan Fenton)

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