Indian Outsourcer Posts Big 3Q GainsIndian Outsourcer Posts Big 3Q Gains

Indian service provider Wipro Ltd. is taking advantage of the rush by U.S. businesses to move IT work and call-center operations to lower-cost areas. Wipro reported Wednesday that revenue for its third quarter ended Dec. 31 increased 44% year over year to $343 million as the company added 24 accounts--including 19 from the United States--during the period. Net income rose 21%, to $58 million from $48 million, during the same period.

However, sales may be cooling as Wipro, India's largest publicly traded IT services firm, begins to face stiffer competition from U.S. vendors that are bolstering their presences in low-cost areas such as India and the Philippines. For its fourth quarter ending in March, Wipro expects global IT services revenue of $269 million. That would be a 7% increase over the comparable third-quarter number, but it would mark the first time in eight months that the company failed to report double-digit sales growth for IT services.

Wipro also cautioned that it's facing a tougher operating environment. The rise of the rupee against the dollar and higher labor costs in India caused the company's ratio of operating income-to-revenue to fall from 27% a year ago to 21% in the most recent quarter.

Still, Wipro appears to be benefiting strongly from the overall growth in the offshore-outsourcing market. Its sales of business-process-outsourcing services grew 29% year over year, while sales of IT infrastructure services jumped 17%. According to data released Wednesday by market-watcher Datamonitor, the dollar value of IT services contracts containing an offshore delivery element jumped 890% to $1.66 billion worldwide in 2003 compared with 2002.