Tuesday, 27 October 2009

‘Pricing’ drives Wipro’s growth

(By Anthony Miller – Tuesday 27th October 2009 9:30am). Or so it would seem, given the apparent 3.4% onshore and 2.5% offshore price uplift that drove Wipro’s Q2 IT services revenues 1.9% higher qoq (all constant currency) to $1,065m. This despite a 1.5% decline in volumes.

But things are never quite what they seem. On deeper questioning, management revealed that the pricing uplift (‘price realisation’ in the Indian vernacular) was due to a whole host of factors, including favourable FX, higher fixed-price contract mix, higher productivity, better ‘non-linearity’ (i.e. disconnecting headcount growth from volume growth), more working days – in fact everything other than ‘we charged more for our services’. But this is in fact the point. Wipro is able to ‘pull the operational levers’ in the business to drive revenues – and indeed margins – forward, even when less work is being done.

Otherwise Wipro’s results and market observations pretty much mirrored those of Infosys and TCS, in seeing a business uptick across most verticals. I will get more detail on the UK/European story later in the week and will bring you (as in TechMarketView subscription service clients!) up to date on this in the next issue of OffshoreViews.

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