MUMBAI, India — Indian software services provider Wipro said quarterly profit jumped 31 percent to 13.19 billion rupees ($284 million), beating expectations, as India’s No. 3 outsourcer ramped up staffing to meet stronger global demand.
Revenue for the April-June quarter rose 16 percent over the same period last year to 72.36 billion rupees ($1.56 billion) under international accounting standards.
A Thomson Reuters poll of 23 analysts forecast quarterly profit of 12.15 billion rupees.
“We are seeing strong demand … across our industry,” chairman Azim Premji said in a statement Friday. “We added the highest number of billable employees ever, in this quarter.”
Premji said revenue from the company’s core information technology services business would be $1.25 billion to $1.28 billion for the September quarter, 4.1 percent to 6.1 percent higher than the June quarter.
Indian software services companies have been looking to Europe, where outsourcing is less entrenched than in the U.S., for growth. But the debt crisis in Europe has thwarted those ambitions and pushed down the euro, crimping earnings for companies like Infosys Technologies, which saw profit slide 6.6 percent from the April to June quarters.
Wipro’s European revenues slipped to 25.4 percent of the total in the June quarter, down from 26.2 percent last fiscal year. But it managed to make up for that with strong growth from India, the Middle East and other emerging markets.
During the quarter Wipro took over Citibank’s data center in Meerbusch, Germany, a suburb of Dusseldorf. It is the company’s first facility in Europe.
Girish Paranjpe, joint chief executive of Wipro’s IT business, told CNBC-TV 18 that most of Wipro’s European clients are in the U.K., France and Germany, away from the troubled south.
“We are away from the hotspots,” he said. “I’m fairly confident Europe will do good for us.”
Executives said wage pressures have been a major headwind. The sector’s quick rebound from the global downturn has forced companies like Wipro, Infosys and Tata Consultancy Services (TCS) to ramp up hiring and increase wages in a scramble to hold on to staff.
Wipro said it added net 4,854 employees during the quarter, bringing net staff additions over the last three quarters to nearly 15,000. Despite a February wage hike, attrition for the quarter was a high 23 percent.
“We have given promotions to as many as 20,000 people and consequent promotion increases,” said Suresh Vaswani, joint chief executive of Wipro’s IT business. “The issue is not unique to us and it’s reflecting the demand environment today.”
Wipro said that despite rising employee costs it increased margins by 30 basis points, thanks in part to a stable pricing environment and volume growth of 4.7 percent for the quarter.
BP is one of Wipro’s key clients, but executives said the oil spill and costly clean up effort had not affected their relationship.
“In comparison to Infosys and TCS, Wipro’s headline performance is modest,” said Rajiv Mehta, an analyst at IIFL’s private client group. “A big positive surprise was margin expansion against expectation of sharp decline.” He said the headcount addition and strong growth guidance suggest growth momentum will continue, despite pressure on margins from rising employee costs, pricing pressure, and declining staff utilization.
Wipro stock surged 4.2 percent before closing down 0.84 percent, at 412.1 rupees a share, on the Bombay Stock Exchange in an otherwise flat market.