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TK Kurien is finally under some shade, after spending two years out in the sun. He has always said that his team had put its head down in the past eight quarters trying to iron out the chinks and the September quarter has showed us how.
India’s third-largest IT-services exporter has not been a consistent performer as far as the IT earnings season had gone in the past 2 years—so expectations were muted even this time around. But there was a surprise in store. Wipro posted a 2.7% dollar revenue growth for the July-September period, the highest sequential rise in the last seven quarters, backed by demand growth in major markets of US and Europe. While it may be said that one swallow does not make a summer, the IT major seems to have crawled its way back into some kind of form.
Like the CEO himself said after the earnings, Wipro still has plenty of work to do. He referred the September quarter performance as the beginning of a journey. The key was the bettering broad based growth. Wipro was able to grow its key verticals, something it has not been able to do in recent times.
Infrastructure services grew 2.8%, business application services 4.6% and product engineering moved up 3.5%. In terms of geographical revenues, Americas grew 3% sequentially while Europe showed a 0.7% growth quarter-on-quarter. India and Middle Eastern markets showed a growth of 5.5%. The company has also bettered its OPM during the quarter, up 2.5% sequentially to 22.5%, the highest in the last three years.
So it was a fine all round performance, some thing that would have made a Jacques Kallis proud. As company chairman Azim Premji said the improved performance was reflective of the global economy. There is improved client confidence and the momentum is showing. Its top 10 clients continued to drive growth, with improvement in discretionary spending.
Wipro has given a wider guidance range of 1.8-3.6% growth for the December quarter, which analysts felt did not match up to expectations, considering the uptick in momentum. The IT major is looking to see how it rise above the challenges posed by the US Immigration Bill. The company is planning to hire big in the United States. The plan is to invest more in local talent.
Still the growth lagged the 34% growth posted by TCS and 64% registered by HCL. There is considerable room for