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Friday, 20 July, 2001, 15:01 GMT 16:01 UK
Indian firms defy tech slowdown
Business in India
By Sanjeev Srivastava in Bombay.

The Indian software giant Wipro has reported a jump of 97% in its consolidated net profit for the April-June quarter, compared with last year.

The earnings of India's third largest software exporter surged to 2.14bn rupees (Rs), equivalent to $45.5m, and net sales rose 28% to Rs7.8bn.

Wipro also announced it has won a $70m contract from a telecom subsidiary of the UK-based Lattice Group.

The Lattice order will be spread over a three-year period, but Wipro expects the project to generate $30m in the second half (October-March) of the current financial year.

Analysts say the Lattice order should help Wipro compensate for its loss of business from core clients such as Alcatel, Lucent Technologies and Nortel Networks.

New business

The higher earnings came as the company adding 25 new customers this quarter and raised billing rates 20% for new customers.

Wipro's offshore billing rates for this quarter were 3.5% higher while the online rates registered a jump of 2.6%.

Wipro shares, which jumped nearly 5% soon after the profits statement, closed 1.2% higher at Rs1,380 on Friday.

Wipro chairman Azim Premji, India's richest man, told journalists that the company expects to grow faster than the industry average this year.

Nasscom, the top body of Indian software and services exporters, has projected 40% growth in Indian software exports despite a global slowdown in technology-related spending.

Vivek Paul, Wipro vice-chairman, said the company has been able to maintain its profitability in the face of a global slowdown because the management has remained focused on productivity.

"The company is committed to reduce costs and to improve margins," Mr Paul told journalists.

Weathering the storm

Wipro's results have come in the wake of a decent showing from other Indian software companies such as Infosys Technologies, Satyam Computers and Digital Equipment.

The results of the top-rung Indian IT companies indicate that, despite a global slowdown in technology spending, the Indian software services story looks intact.

The Nasdaq-listed Infosys Technologies, India's second largest software exporter, earlier this month reported a better than expected 50% jump in profits and 69% growth in revenues for the quarter ending 30 June.

Satyam registered a growth of nearly 100% when compared with the same quarter last year while profits of Digital Equipment rose over 200% in the same period.

Indian advantage

According to Samir Arora, equities head of the Singapore-based mutual fund Alliance, top Indian software companies will continue to grow at 30% or more on an annualised basis both because of the quality of their work and the cost advantage they have over their counterparts in the west.

Sushil Chowksey of Rosyblue Securities also feels that the first-quarter results of top software companies - except those in the education business which have come out with dismal numbers - has vindicated those who believed in the Indian software story.

"The numbers show the 100% plus growth rates of Indian companies in the boom days of 1999-2000 was no flash in the pan," Mr Chowksey said.

He said diversification of Indian companies into new markets such as Japan and Europe, rather than concentration on the US, had also helped them ride out the tough times.

See also:

10 Jul 01 | Business
Infosys profits jump
30 Mar 01 | Business
Wipro shares dive
23 Jan 01 | Business
Bridging the digital divide
10 Nov 00 | Business
Global search for IT skills
11 Apr 01 | South Asia
Indian stocks slide on software results
09 Jan 01 | Business
Infosys suffers despite profit rise
18 Feb 00 | South Asia
Wipro forges ahead
12 Apr 01 | South Asia
Indian software lobbyist dead
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