Wipro expects western sales boost, oil prices a worry

Wipro, India's third-largest IT services exporter, expects higher technology spending by western clients to boost sales in its next fiscal year, it said after posting forecast-beating quarterly profit on January 16.
About three quarters of the company's revenue is derived from businesses in the United States and Europe, which Wipro says are beginning to reinvest in technology to cut costs and boost efficiency, though it said demand from energy companies could be at risk because of plunging oil prices.
"In terms of budgets and spending, we definitely see fiscal 2016 better than 2015," Chief Executive T.K. Kurien told a news conference at the company's headquarters in Bengaluru, previously known as Bangalore.
For its third quarter to December 31, Wipro made 21.93 billion rupees ($354.6 million) in net profit, up nearly 9 percent on the 20.15 billion rupees in the same period the previous year.
The average forecast from analysts was a profit of 21.45 billion rupees, according to Thomson Reuters data.
The company said revenue from its IT services business is expected to be $1.8 billion to $1.85 billion in the January-March period, representing growth of up to 3.4 percent from the preceding quarter. Wipro's bigger Indian rivals Tata Consultancy Services and Infosys have also forecast accelerating growth from April, especially in North America.
Global IT spending will touch $3.8 trillion in 2015, a rise of 2.4 percent on last year, research firm Gartner said on January 12, though that was down on an earlier projection of 3.9 percent because of a strengthened dollar.
For Wipro, meanwhile, oil prices cast a shadow over its forecasts, with Kurien saying that the company could start to feel the knock-on effects after about two quarters.
Energy companies including BP, which Wipro counts as a client, ConocoPhillips and Schlumberger have cut jobs because of oil's 60 percent price slump since June.
Wipro, which added 44 clients in the December quarter, makes about 17 percent of its revenues from the energy sector, against roughly 5 percent at both Tata Consultancy Services and Infosys.
"In the short term there will be a blip, but in the long term there won't be an impact," Kurien said.
Wipro also announced the appointment of Jatin Dalal, senior vice president in the finance department, to take over from retiring CFO Suresh Senapaty from April.