Wipro Q3 net jumps 19%, says demand positive

Wipro beat estimates with a 19% rise in December quarter profit and projected growth as a global economic recovery boosts demand for outsourcing services and eases pressure on fees.

Wipro, the country's No. 3 software services exporter behind Tata Consultancy Services and Infosys Technologies, added 4,855 employees during the December quarter, its biggest pace of staff addition in more than two years.

New York-listed Wipro expects its IT services revenue to rise 3.6-5.4% in January-March from the preceding quarter to $1.16-$1.18 billion, after it posted a 4.9% sequential rise in the latest quarter.

"We have seen a positive demand environment," chairman Azim Premji said in a statement.

"In 2010, we expect IT budgets to be flat to marginally positive," he said.

Shares in Wipro rose as much as 2.1% in opening deals to Rs753, their highest since April 2000.

A global economy on the mend, recent deal wins, and stable prices have brightened the outlook for Indian IT companies such as Wipro, Tata Consultancy and Infosys, after the world recession put a lid on the sector's scorching pace of growth.

Research firm Forrester said in a report last week IT sector would see a recovery in 2010 as businesses and governments in the United States and around the world began spending again on technology.

In 2010, global spending on IT will rise 8.1 percent to more than $1.6 trillion after falling 8.9% last year, it said.

The rupee, which rose 3.4% in October-December, the higher salaries and tough competition from firms such as IBM and Accenture are key risks for a sector that earns more than half its revenue from the United States.

Wipro, which integrates IT systems, develops software applications and manages call centres, said October-December net profit rose to Rs12.03 billion ($263 million) under international accounting rules, from 10.10 billion a year ago.

A Reuters poll had forecast a net profit of Rs11.59 billion for Wipro, which counts Citigroup, Cisco, General Motors and Credit Suisse among its clients.

Revenue rose 5.6% to Rs69.77 billion, as it added 31 clients for its IT services business.

Tata Consultancy and Infosys, the top two software exporters, both beat quarterly profit estimates last week, and forecast a positive outlook on hopes of an increase in outsourcing demand from western clients.

Shares in Wipro, majority-owned by billionaire chairman Azim Premji, rose 13% in the quarter, in line with the sector index and more than a 2% in the main index. The stock nearly tripled in 2009.