Wipro sees rosier end to year as U.S. clients spend

By Aby Jose Koilparambil and Subrat Patnaik

BANGALORE (Reuters) - India's third-biggest software services firm Wipro Ltd , under pressure to improve lacklustre sales growth, said it saw a rosier end to the year as more confident U.S. clients increase spending.

Wipro, which provides outsourcing services for big-name clients such as U.S. bank Citigroup, posted an 8 percent increase in second-quarter net profit on Wednesday, narrowly missing expectations. It said it continued to face "headwinds" in key accounts, particularly European clients.

But chief executive TK Kurien, appointed in 2011 to turn around the technology firm, said there were improvements ahead as discretionary spending returns in North America.

 

"We expect the revenue to come back in quarter four of this year or maximum quarter one next year," Kurien told reporters. "But it will come back."

For the quarter ended Sept. 30, Bangalore-based Wipro posted consolidated net profit of 20.85 billion rupees ($340.4 million). Analysts, on average, were expecting Wipro to make 21.09 billion rupees, according to Thomson Reuters I/B/E/S.

Total revenue rose to 118.16 billion rupees from 109.91 billion rupees in the same period last year.

"Overall the demand environment continues to hold steady. In North America we see discretionary spend returning," Kurien said. He added the group saw opportunities in continental Europe, where outsourcing has yet to expand to U.S. levels.

Wipro added 50 new customers during the quarter.

Kurien was picked to lead the company more than three years ago by founder chairman Azim Premji, after Premji sacked joint CEOs Suresh Vaswani and Girish Paranjpe.

Wipro, however, has struggled to catch up with rivals such as Tata Consultancy Services and Cognizant Technology . Peer Infosys has itself been hit by management changes over the last couple of years, but has reassured investors with a new chief executive. [ID:nL3N0S51OA]

"Infosys has now laid out their plans, so we know what the idea is. Wipro has talked about plans for some time, but it does not show on results," Ankita Somani, analyst with MSFL Research said.

Wipro said it expected revenues from its IT services business to be in the range of $1.81 billion to $1.84 billion in the current quarter. For thee quarter ended Sept., the unit saw revenues of $1.77 billion.

Shares in Wipro closed ahead of the results at 583.65 rupees on Wednesday in the Mumbai market.

(1 US dollar = 61.2300 Indian rupee)

(Additional reporting by Nivedita Bhattacharjee in MUMBAI; Editing by Clara Ferreira Marques and Mark Potter)