Wipro profits jump as Indian IT firms defy downturn
Indian IT companies are searing ahead, unaffected by the international downturn in technology spending across Europe and the US, according to financial reports for the last quarter.
Market leaders such as Wipro have seen demand vary wildly this year, but are now reporting jumps in net profits of up to 200 per cent.
Wipro, whose IT division, Wipro Technologies is the biggest Indian IT agency to operate in the UK, reported capitalisation up to $45.6 million in the same week that the BSE stock index shed nearly 3.5 per cent back in February.
Despite being hit hard in March when its shares momentarily lost half their value, the company has just reported a jump of 97 per cent in consolidated net profit for the April-June quarter, compared with last year. It has also just won a $70m contract from a telecom subsidiary of the UK-based Lattice Group which will be spread over three years.
Wipro expects the project to generate $30m in the second half (October-March) of the current financial year.
Also announcing a sharp rise in profits is Nasscom, an Indian software and services exporter, which has projected 40 per cent growth in Indian software exports despite the global slowdown in IT spending.
Infosys Technologies, India's second largest software exporter, similarly reports a 50 per cent jump in profits and 69 per cent growth in revenues for the quarter ending 30 June.
Smaller companies like Satyam registered growth of nearly 100 per cent when compared with the same quarter last year whilst Digital Equipment's profits rose more than 200 per cent in the same period.
The figures come after Hilary Cropper, Chairman of IT outsourcing company Xansa (formerly FI Group) recently warned services companies they will not stay in business unless they use offshore development to cut costs.
"If companies don't have that capability they won't survive. The fact that you can produce high-quality people at a fraction of the UK cost is key," she said.
"We have more than 1000 people in India and, over the next three to four years, you'll see several thousand more. Industry manufactures where it gets the lowest cost."
Demand for Indian engineers in the UK has increased sharply in recent months as companies look to cut costs whilst continuing to support and maintain their IT base.
The costs companies can save by outsourcing can dramatically reduce a company's annual expenditure.
Current rates figures show that Indian IT professionals experienced in Java and Microsoft .Net offer their services for around £150 per day compared to £400 per day for UK contractors, or the £600-£1200 rates charged by UK consultancies.
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Richard Powell, UKTECH