Azim Premji: Euro crisis not affecting Indian IT

BANGALORE,Jan21: The resilient Indian IT industry remains unaffected by the uncertainty in the macro-economic environment or the sovereign debt crisis in Europe, Wipro Chairman Azim Premji said on Friday."Fortunately, uncertainty in the macro environment is not affecting the IT industry, at least not in proportion to the uncertainty we see all around us," Premji told reporters here after declaring his company's financial results for third quarter (October-December) of this fiscal (2011-12).Noting that Europe continued to be most vulnerable, Premji said the US was, surprisingly, strong as its economy was driven mostly by companies in good shape with very healthy cash flows."US firms are investing to build capacity as they are able to generate revenues. Though clients in the western world are prepared for slow growth, they are not arresting critical investments, which can give transform business, enhance productivity and cost benefits," Premji pointed out.Asserting that the Indian IT industry would benefit from global outsourcing of services and back office operations due to its maturity, Premji said this year (2012) would be far better than last year (2011) though macro-economic parameters were not clear."We are increasing our focus on the emerging markets as they are in far better shape than the Western world and we continue to execute our strategy and propel the IT business towards a higher growth trajectory though the macro-economic sentiments remain uncertain," Premji observed. Likening the ongoing crisis in Europe to Hindi movies, which keep changing every week, he said clients were making investment decision across verticals except in the debt-ridden banking, financial services and insurance (BFSI) sector.
"We realise that European firms have not taken advantage of global partnerships. Though they have the potential to weakening a little bit, we do not expect a break-up of the European Union zone. There will be some bailouts to revive the economy," Premji noted.Earlier in the day, the company, however, projected flat revenue growth from its global IT services for fourth quarter (Jan-March) after reporting a 2.2 per cent sequential increase in third quarter (Q3) revenue.Though revenue from IT services in rupee terms increased 28 per cent year-on-year (YoY) to Rs.76.1 billion (Rs.7,608 crore) in the quarter (Q3) under review and 12 per cent YoY in dollar terms to $1.5 billion on a weakening rupee, revenue in fourth quarter is projected to be flat at $1.5 billion."We expect revenue from our IT services business to be $1.5 billion in fourth quarter, reflecting a sequential growth of 1-3 per cent on constant currency," Wipro chief financial officer Suresh Senapaty said.The company reported net profit of Rs.1,456 crore (Rs 14.56 billion) for third quarter, posting 10 percent YoY growth and 12 per cent sequentially as per the Indian accounting standard. Consolidated revenue for the group company increased 28 per cent YoY to Rs.9,997 crore (Rs.99.97 billion), which is 8.6 per cent higher sequentially.Under the International Financial Regulatory System (IFRS), net income for the quarter is $275 million and total revenue $1.89 billion. "We saw broad based growth with five of the six verticals growing upwards of four percent in constant currency (Rs 53), exceeding the guidance range," Wipro chief executive T K Kurien said.Operating margin from IT services at 20.8 per cent was 2.2 per cent lower YoY and 0.8 per cent sequentially. "Our client mining strategy continues to show progress with six customers contributing more than $100 million," Senapaty added.As the company's flagship business, IT services accounted for 76 per cent of the total revenue and 92 per cent of its operating income. IT services business division added 39 customers during the quarter, taking the total number of clients to 953 from 930 quarter ago and 880 year ago.The company added 5,004 people for IT services business, taking the total number of IT employees (techies) to 136,734 from 131,730 quarter ago and 119,491 year ago.