Posts Tagged ‘Wipro’

Wipro likely to beat Nasscom’s growth estimates this fiscal, say analysts

July 23rd, 2014

Despite a tepid guidance for the first quarter of this year, fuelled by multi-million dollar deals in the past few months, Wipro is expected to beat Nasscom’s 13-15 per cent growth estimates for the 2015 fiscal.Outsourcing36

Analysts believe that on the back of a strong deal momentum, the company which has been growing at a lower rate than peers like TCS, Cognizant and HCL Tech is expected to bounce back this fiscal year.

In a research note, Espirito Santo Securities said that the strong deal wins in the recent quarters should drive 3-5 per cent quarterly growth guidance for the second quarter of 2015 fiscal. In the last couple of quarters, Wipro has bagged three multi-million dollar deals from companies like Citigroup for $500 million, a $400 million from Takeda Pharmaceuticals and $1.1-billion deal from ATCO.

In 2013-14, Wipro’s revenues grew 16 per cent over the previous fiscal at ₹43,755 crore, while net profit rose 17.5 per cent to ₹7,797 crore. However, this lags behind peers like TCS, which posted a 29.9 per cent growth, followed by Cognizant, which posted a 17 per cent growth in the last fiscal.

Wipro is expected to announce its first quarter results on July 24 and is in the silent period. However, in the last quarter, CEO TK Kurien had told Business Line that the way Wipro is exiting the 2014 fiscal and coupled with its strong deal pipeline, points to growth ahead.

This momentum also indicates that the turnaround strategy pursued by Kurien is on track.

Others agree. “Initiatives taken to improve internal process and an increased focus on automation, instead of depending on people additions have been successful,” said AK Prabhakar, an IT analyst.

Espirito Santo Securities also believed that win rates for large deals have improved by 50 per cent over the past two years and this is visible in higher large deal wins and improving revenues growth.

Further, these deal wins come in geographies such as US and Europe, which contributed about 79 per cent of Wipro’s overall revenues in the last fiscal year.

Sanchit Vir Gogia of Greyhound Research believes that large contracts helps Wipro get access to more high-profile deals at a time when outsourcing demand looks stronger when compared to previous years.


Wipro Bags IT Outsourcing Contract and Acquires ATCO’s IT Services Arm

July 23rd, 2014

Indian outsourcing firm Wipro has announced that it has acquired the IT service arm of Canada’s business conglomerate ATCO and, in addition, bagged a 10-year IT outsourcing services contract.Outsourcing30

Alberta-based ATCO I-Tek, the subsidiary that Wirpo bought for $195 million, has been providing IT Services to the parent company for the past 15 years.
Under the terms of the deal, ATCO will transfer to Wipro its 500 employees in Canada and 50 in Australia. The arrangement will add $112 million annually to Wipro’s kitty for the next ten years.

This is a major outsourcing contract for Wipro, following the acquisition of the IT services arm of Science Applications International Corporation for $150 million. The energy and natural resources verticals has been Wipro’s fastest growing division in the past few years, with the sector accounting for 16% of the company’s revenue in the previous fiscal year.

ATCO said it had to sell its IT arm to ease the regulatory “challenges” in Canada’s utility sector. Outsourcing the IT services would help the company address the concerns expressed by the Alberta Utilities Commission, ATCO stated.

“This alliance ensures ATCO can focus on growing our core businesses of structures and logistics, utilities, and energy while partnering with Wipro for strategic, innovative IT solutions required to support our global operations,” said Brian Bale, Senior Vice-President & Chief Financial Officer, ATCO.
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For Wipro, the deal gives a foothold in the energy and utility sectors of Canada and Australia. The Indian firm has several clients in this vertical in Europe.
ATCO I-Tek offers systems integration and also operates a SAP practice, along with mobility, voice, data, security, disaster recovery and managed infrastructure from its data centers across the world.

“The alliance with ATCO enhances our capability to create, nurture and tap local talent to power our growth journey in Canada,” said Anand Padmanabhan, Wipro’s chief executive, energy, natural resources and utilities.


Wipro bags $1.2 billion outsourcing contract of Canadian firm ATCO

July 18th, 2014

Wipro has bagged a $1.2 billion 10-year deal to manage information technology outsourcing of Canadian energy and utilities firm ATCO, thereby giving a further fill-up to the Bangalore-based IT firm’s oil and gas vertical. Outsourcing25

Under the deal – announced on Friday – Wipro will buy ATCO I-Tek, the IT subsidiary of ATCO for $195 million, and take on board 500 employees. The company, post the closure of the deal in the current quarter, will later merge ATCO I-Tek with itself.

“We have traditionally had a strong position in the Utilities space in Europe and this engagement provides momentum to our business in Canada and Australia,” said Anand Padmanabhan, Chief Executive – Energy, Natural Resources and Utilities, Wipro.

Wipro’s oil and gas unit generates over a $1 billion of the company’s $7.3 billion in revenues and is also one of the fastest growing units even as rival InfosysBSE 0.18 % tries to garner a significant share of providing IT services in the oil and gas market.

“This is outsourcing deal with significant amount of transformational and is also one of the largest deals for Wipro,” Padmanabhan told ET.

This will be the second such acquisition made by the Energy and Utilities division of Wipro, after it bought US-based Scientific Applications International Corp for about $150 million in April 2011.

Padmanabhan said that the buyout of ATCO I-Tek will also help Wipro as the company services other clients in the resource-rich regions of Alberta in Canada and Perth in Australia, though he declined to share the number of clients ATCO I-Tek has for now.


IT stocks in demand

July 4th, 2014

Eight IT stocks rose by 0.04% to 0.74% at 9:39 IST on BSE on positive economic data in US, the biggest outsourcing market for the Indian IT firms.Outsourcing1

Tech Mahindra (up 0.74%), MphasiS (up 0.63%), HCL Technologies (up 0.62%), Oracle Financial Services Software (up 0.59%), Hexaware Technologies (up 0.46%), Infosys (up 0.41%), CMC (up 0.04%) and Wipro (up 0.04%), edged higher. However, TCS fell 0.35% to Rs 2,409.35.

The S&P BSE IT index was up 0.13% at 9,306.73. It underperformed the Sensex, which was up 0.16% at 25,865.47.

The S&P BSE IT index had outperformed the market over the past one month till 3 July 2014, rising 9.93% compared with 3.88% rise in the Sensex. The index had, however, underperformed the market in past one quarter, rising 3.68% as against Sensex’s 14.73% rise.

US employers added 288,000 workers to nonfarm payrolls in June, following a 224,000 increase in May that was bigger than previously estimated. A 1.39 million increase in employment over the past six months was the largest since early 2006, while the unemployment rate fell to 6.1%, the lowest level since September 2008.


IT shares in demand after positive US data

July 2nd, 2014

Seven IT shares rose by 0.11% to 6.32% at 9:37 IST on BSE on positive economic data in US, the biggest outsourcing market for the Indian IT firms.Outsourcing47

MphasiS (up 6.32%), CMC (up 1.76%), Wipro (up 0.62%), Hexaware Technologies (up 0.42%), Infosys (up 0.23%), Tech Mahindra (up 0.19%) and TCS (up 0.11%), edged higher.

However, HCL Technologies (down 0.74%) and Oracle Financial Services Software (down 0.20%), edged lower.

The S&P BSE IT index was up 0.24% at 9,281.37. It underperformed the Sensex, which was up 0.76% at 25,709.22.

The S&P BSE IT index had outperformed the market over the past one month till 1 July 2014, rising 9.50% compared with 5.36% rise in the Sensex. The scrip had, however, underperformed the market in past one quarter, rising 3.63% as against Sensex’s 13.68% rise.

The Institute for Supply Management’s US factory index was little changed at 55.3 in June from 55.4 in the prior month, the Tempe, Arizona-based group’s report showed on Tuesday, 1 July 2014. Readings above 50 indicate expansion.


Global companies boost captive tech centres in India

June 30th, 2014

Global captives or offshore delivery centres (ODCs) of multinational companies that act as technology and business process nerve centres for their global operations are back in favour with about 30 new ones coming up in the last two years.Outsourcing37

With outsourcing of IT and technology service projects  to Indian companies such as Infosys or Wipro or their global rivals such as IBM and Accenture, multinationals have in the past avoided setting up their own centres in India, called “captives” in India. This enabled cost-cutting and also circumvented the logistical headaches in setting up their own operations. However, research and development  seen as a critical in-house activity and increased faith in India as a base, captives are growing again.

Global majors including AstraZeneca, Cargill, Lowes, Mercedes Benz have set up centres in India in the recent years while Grant Thornton, Fidelity and Flextronics are expanding furiously, industry officials said.

“The trend of setting up global captives increased in the last two years with focus shifting to high-end jobs from the cost arbitrage-based model of the past,” said KSVishwanathan, vice president, industry initiatives, Nasscom.

“In the past three months three companies have set up their captives in Bangalore. Four more will come up in the coming months,” he said.

Global captives which had grown rapidly between 2005 and 2010 lost steam with outsourcing to independent vendors for cost reasons before picking up pace again.

“MNCs want to leverage the talent pool. More than cost advantage, their main driver is to retain key data and information within their own set-up and get the mundane work done through partners,” said Vinu Nair, managing partner of recruiting firm Antal International Network.

The trend could hit third-party service providers, but is seen as good news for job seekers.  According to Vishwanathan, captives alone may hire 60,000-80,000 employees in the current year.

For instance, Mercedes Benz Research and Development Centre will hire 800 staff to take its strength to over 2,000 by 2015. Auditing firm Grant Thornton has plans to hire over 3,000 and electronics design and contract manufacturing firm Flextronics 2,000 in the next two to three years.

“There is an increasing trend of high-end research and product development work getting done out of India by companies such as Cisco, GE, Facebook and Google,” Kris Lakshmikanth, founder of Head Hunters India. He said a PhD in the US would earn $150,000 a year — while an Indian counterpart gets $50,000.

India accounts for 45% of global captive centres.


Wipro gets Finnish co Sanoma Corp’s IT infra division as part of outsourcing deal

June 25th, 2014

Finnish media group Sanoma Corporation is set to transfer its IT infrastructure and support functions to Wipro as part of an outsourcing deal.Outsourcing24

As part of the transaction, 38 people in Finland and the Netherlands will become employees of Wipro, Sanoma said in a press statement. Sanoma’s in-house technology team will focus more on supporting the services that are critical to the business units in the future, it said

The centralisation of services to Wipro is part of Sanoma’s € 100 million cost-cutting programme. In Finland, the Helsinki-based Sanoma is merging media operations into one company.

Financial details of the transaction were not disclosed.

Sanoma is amongst the largest media and learning companies in Europe. Its key markets are Finland, The Netherlands, Belgium and Central and Eastern Europe.


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