Wipro announce Q3 Numbers – Mixed report highlights increasing challenges for Indian Vendors

Earlier today Wipro released their Q3 numbers. The sustainability of the Indian IT Services providers is going to be tested in 2012 as they look to evolve finally from labour arbitrage or start to face irrelevance.  WIpro has provided some insight and it is a mixed bag. It highlights just how difficult the next few years will be for Indian providers. The more capabilities, markets and industries they have, the more difficult their juggling act becomes.

Numbers wise, IT related revenue for the last quarter was up 2.2% vs Q2, cracking US$1.5B. Margins declined 1.4% from Q3 2010 to 20.8%. This is of major concern.
In terms of business units, the best performing were

  • APAC
  • Analytics
  • Energy/Utilities

The most difficult were

  • Japan
  • BPO
  • Telco

Japan is proving to be difficult. It is always a difficult market, but has shown significant signs of positive sentiment for IT Services vendors in 2011. It is telling that Wipro has not been able to take advantage of this, unlike some peers who report strong Japanese business. Perhaps the growth of Chinese based services providers maybe having some sort of impact, albeit modest.

BPO remains a difficult area for Wipro, Infocrossing is also a challenge for them. It is telling that Infocrossing numbers are not broken out. Perhaps it is spreading itself too thin.

That being said, it should now look to divest in some fashion the legacy consumer products and lighting business of Wipro. As it competes against Cognizant, TCS and the traditional US Services firms, it starts to look like an anachronism to have as a business regardless of the sentiment.

I will be looking closely at Wipro and the other Indian providers this year to see how they can keep pace with the changing market dynamics. I expect some bold plays and some to hit even more challenges this year.

About capioIT - Phil Hassey

If you require further information, please contact Phil Hassey, CEO of capioIT. capioIT is an advisory firm focused on helping organisations to understand emerging technology as the world becomes Digital. Phil may be contacted easily in the digital and real world. phil@capioit.com +61422231793
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