Testing, infrastructure businesses up: Wipro

The third of the fiscal saw software testing and technology infrastructure services emerge as strong contributors to the revenues of Wipro Ltd's global IT services business which accounts for the bulk of the company's revenues and profits.

With more customers willing to take a bet on taking testing offshore, said Sudip Banerjee, president of enterprise solutions at Wipro's global IT services and products business, software testing contributed 7 per cent of the revenues of Wipro Technologies' business. It was 6 per cent the previous (second) quarter.

Customers were looking for expertise in lifecycle testing, testing management and test strategy both on the technology front and as businesses. It was also becoming more offshore-centric, Banerjee said at Wipro's investor conference after the company announced its third quarter results here on Friday.

"If we ran tests using the Taguchi method, we could perhaps bring down the test cases by between a one-fifteenth and a one-tenth," said Vivek Paul, vice chairman of Wipro and head of Wipro Technologies. If the number of "test cases" to be run are in tens of thousands, that would mean a significant improvement in efficiency, and reduced costs for customers.

"Taguchi Methods" is the American Supplier Institute's (formerly the Ford Supplier Institute) trademarked term for the quality engineering methodology developed by Genechi Taguchi, a Japanese engineer who developed them.

The methods, devised and honed over nearly four decades are now helping an Indian IT services company doing global business, and boost its revenues. Taguchi himself became a four times winner of the Deming Award, considered the highest honour in quality among engineers.

The methods work best if one already has a working design, product, process, system or plan and requires finishing touches, which ties in nicely with Wipro's business model.

"Our processes are proprietary but the specifications come from the customers, for we have to test the software in the environment that they specify," said Paul.

Technology infrastructure services (TIS), won eight new projects during the quarter and five renewed projects.

A large US manufacturing firm was one of the contracts won, to manage some 1,00,000 messages sent back and forth. TIS contributed 8 per cent of the global IT services business during the quarter. It was 6 per cent the previous quarter.

Also of significance was a contract, with Mumbai-based Yes Bank, to manage its entire IT infrastructure.

"Revenues from that seven year project will be significant for Wipro Infotech," the India, West Asia and Asia Pacific IT business of Wipro, said Suresh Senapathy, vice president of finance.

The bulk of the revenues within the global IT services business continued to come from application development and maintenance (ADM) which accounted for 61 per cent of the Rs 1,589 crore revenues.

Other contributors to the revenues of global IT services business include business process outsourcing (11 per cent), package implementation (11 per cent) and consulting (2 per cent).

Revenues, in terms of the geographies come from no more than marginal changes, with the US accounting for 65.4 per cent, followed by Europe (30.2 per cent), Japan (4 per cent) and others.

During the quarter, the total number of clients bringing in business of over $1 million increased to 163 from the second quarter's 157.

Of this, the top client accounted for 4 per cent of the business' revenues, down from 5 per cent last quarter, as the "client sold parts of their business and the revenues would come from those parts," Senapathy said.

The top five clients account for 17 per cent of the business' revenues and the top 10, 30 per cent.