Wipro IT chiefs quit; Q3 growth lags rivals
Wipro surprised markets with the resignations of the joint-CEOs of its IT business.
Bangalore: Wipro Ltd surprised markets with the resignations of the joint-CEOs of its information technology business, after reporting profit growth rates which lagged rivals Infosys Technologies Ltd and Tata Consultancy Services.
India's third-ranked software services exporter said company veteran TK Kurien was taking over as the new chief executive of the unit.
"The joint CEO structure was one of the key factors that successfully helped us navigate the worst economic crisis of our times. With the change in environment, there is a need for a simpler organization structure," Wipro Chairman Azim Premji, said in a statement.
Wipro, which counts Citi, Cisco and Credit Suisse among its clients, forecast IT services revenue of $1.38 billion to $1.41 billion for the fiscal fourth quarter, up three to five per cent from the quarter ended in December.
IT services constitute about three-fourths of Wipro's revenue.
"We are positive on all the large cap IT firms. We expect pricing to go up in the second half of FY 12, but volume growth for IT companies looks to continue," Rohit Anand, IT sector analyst at PINC Research in Mumbai, said.
Earlier this month, sector leader Tata Consultancy Services beat profit estimates and said it saw strong demand for outsourcing services, while No. 2 Infosys missed forecasts and said the outlook for global economic growth was sluggish.
India's top three IT service exporters have been on a hiring spree and have doled out pay hikes of up to 20 per cent to ward off poaching by global rivals.
Global spending on technology is likely to rise 5.1 per cent.
to $3.6 trillion in 2011, according to research firm Gartner, higher than its previous estimate as the dollar's recent weakness helped push IT spending beyond its forecast for 2010.
But rising wages and intensifying competition from global firms such as Accenture and Hewlett-Packward are key risks to India's showpiece $60 billion outsourcing industry. Volatility in global currencies is also a worry to the export-focused sector.
Bangalore-based Wipro said fiscal third-quarter net profit rose to Rs 13.19 billion ($290 million) under international accounting standards from 12.03 billion a year ago.
A Reuters poll of brokerages had forecast a net profit of 13.18 billion rupees for Wipro, which develops software applications, integrates IT systems and manages call centres.
Wipro, which also makes computer hardware, consumer care products and electric bulbs, posted revenue of Rs 78.3 billion($1.7 billion) in the quarter, compared to analysts' estimates of Rs 80.1 billion.
The firm added 36 new clients, its biggest client addition in five quarters. It added 3,591 net staff in the third quarter.
Shares in Wipro, which has a market value of just over $25 billion, rose 9.3 per cent in the third quarter, underperforming a nearly 15 per cent rise in the sector index, but outpacing the main index's 2.2 per cent gain.