No worries yet, Wipro sees growth to pick up in Q1

Bangalore: Wipro Ltd expects to see a pickup in growth in the first quarter as companies firm up their outsourcing plans, a top executive said.

Chief Financial Officer Suresh Senapaty told the Reuters India Investment Summit on Tuesday that he expects decision making by clients to accelerate in the latter part of the fourth quarter, leading to "decent growth" from first quarter onwards.

Senapaty, however, was cautious about the next quarter. "Don't expect something great to happen in the fourth quarter."

India's No 3 software services exporter has forecast 0.9 per cent sequential growth for the third quarter from IT services, its biggest segment.

"In this quarter and, perhaps, part of the next quarter you will see an environment of uncertainty. Therefore, decision making is slowing down," he said.

Senapaty expects the technology budgets of Wipro's customers to fall in 2009 as they delay decision making and tighten costs.

In such an environment, which he compared to the Depression of the 1930s, information technology was not getting "the right kind of priority" from the top management of companies, he said.

The crisis has also resulted in delays and some cancellations of projects for the company.

No recovery in sight

Global Equities Research analyst Trip Chowdhry said he does not see a recovery in the next 12 to 18 months.

Wipro -- whose customers include Cisco Systems , Nortel Networks and Credit Suisse -- derived about 60 per cent of its revenue from the United States during the September quarter.

Analysts expect Wipro to post revenue of 258.57 billion rupees for the year ending March 2009, a 23.6 per cent rise, according to Reuters Estimates.

This would be the first year since fiscal 2003 when Wipro would be posting a less than 30 per cent growth.

"Since there is consumption contraction in the western economies, there is significant pressure on customers to realign their cost structures," Senapaty said.

In October, Suresh Vaswani, Wipro co-chief executive, said although the overall pricing environment was stable, the Bangalore-based company was seeing pricing pressure from some of its customers.

Wipro's shares have lost 58 per cent of their value since the beginning of the year.

The Indian IT index is down 54 per cent in the same period, underperforming the broader Mumbai index, which is down 35 per cent.

Other than information technology services, Wipro -- which competes with Tata Consultancy Services Ltd and Infosys Technologies Ltd -- is also into consumer products and services.

It also competes with larger IT services firms IBM and Accenture in the outsourcing market.