Wipro said it hopes the new government will boost Indian IT services market growth. IT investments in India have already taken a hit – especially the government sector in the last six months, though Wipro signed 2-3 deals in the telecom and financial services space.
Interestingly, manifestos of the BJP and Congress focus on IT investment to create opportunities across the country.
Wipro CEO TK Kurien on Thursday said the Indian IT services company sees demand in healthcare, retail banking, utilities, process manufacturing, auto and pharmaceuticals. There are challenges in retail, insurance, and hi-tech.
Addressing an analyst call after announcing Q4 FY 2014 result, Wipro CEO said: “We expect some pressure in three areas: retail, insurance, and hi-tech.
Regarding the insurance segment, Wipro considers it as an internal problem and not an industry issue. Wipro has a small business in insurance. The Bangalore-based IT services firm looks at playing the role of treasurer to boost revenues from the insurance vertical.
Wipro is big in both the retail and hi-tech businesses. A significant part of Wipro portfolio sits on the chain side of the business and on the land side and that’s affecting the IT services firm.
Wipro will be betting big on digital technology business. Recently, it launched a new business Wipro Digital whose sole focus is the CMO.
The company is seeing good traction in global infrastructure services and a revival of demand in the application based. The proactive investments in Continental Europe are showing early signs of success in terms of deal wins. U.S. has grown ahead of company average, said Wipro.
IBM and Accenture recently said they are facing pricing pressure in their apps business. Analysts say the year 2014-15 will be key for Wipro because there will be a number of contract renewals that will put pressure on pricing.
Wipro would announce its wage increase on 1 June. On the on-site salary increase will probably be between 2 percent to 3 percent for the eligible population and offshore salary increase would be between 6 percent and 8 percent. Comparing with its competition, salary hike from Wipro would be relatively small. Top Indian IT services firms are looking for around 10 percent salary hike to address intensifying wage inflation pressure in the domestic market.
Wipro focus on India
Wipro Infotech CEO Soumitro Ghosh said the company sees good traction in financial services and telecom in India. In the Middle East region, good traction is happening in the oil and gas segment and energy and oil and gas segment and engineering and construction.
Application services clocked more than 5 percent to 6 percent in terms of sequential growth. Wipro won a couple of deals on the app side both in financial services as well as telecom.
“Over the last six months there has been a considerable slowdown and lots of projects have been really stalled in India. Wipro noticed challenges especially in the government vertical,” said Wipro’s Ghosh.
Wipro on CIO demands
Wipro’s Kurien says the Bangalore-based company is seeing huge pressure in most CIO organizations to cut their budgets. CIOs at such companies, which are going for competitive bidding, have realized that they can get substantial reductions in prices in absolute costs if these IT contracts are with multinational vendors. He did not refer to the recent Airtel-IBM deal.
Pix source: Hindu BusinessLine