Wipro: Higher Revenue Growth in Middle East, China

According to a top executive at Wipro Ltd, India's third largest software services supplier, the company is chasing bigger deals in Europe. Additionally, it also thinking about extending its operations in China. This is bound to drive more contracts in Japan as well, reports Reuters.

Moreover, Wipro sees higher demand in locations like Latin America and the Middle East. This is despite the fact that the Dubai debt crisis has roiled yet another turmoil in global financial markets, not to mention investor confidence. Co-CEO of IT business at Wipro, Suresh Vaswani, commented that the company's contracts in Dubai are indeed good contracts and that they will be sustainable.

He added that many of Wipro's clientele in the Gulf business hub stem from oil, gas and manufacturing segments. These sectors do not reflect a significant amount of exposure to the financial sector that has undergone a shakeup in the recent recession in the U.S.

For the quarter ending in September, the Middle East and India shored up 8.2 percent of total revenue for Wipro. Bangalore-based Wipro obtains more than 50% of its business from the U.S., but demand is dwindling in the U.S. due to tight pricing in the wake of the recession.

Incidentally, Wipro began its second operations in China in November, and is looking at both Latin America and China as destinations for potential growth in outsourcing. Investing in China also means winning contracts in Japan, according to Vaswani.

The IT industry as a whole has found it difficult to tap the Japanese market and it has certainly been a challenge for Wipro as well.

In terms of the large outsourcing, deals that Wipro is setting up, many of these are from Europe as continental Europe is a highly focused market for the firm. Shares of Wipro have increased threefold in 2009, with a market value capping $20 billion. Its chairman Azim Premji holds majority of Wipro shares.

Most of Wipro's revenue stems from clients in the financial services and telecom industries. With increasingly countries seeking to trim costs, Wipro is seeking to win contracts from healthcare and government as well. With respect to pricing, the company has seen has seen a sharp rise in contracts with fixed pricing.

Wipro has recently won deals from the Australian government, and is looking for similar contracts in Europe and the U.S. Analysts comment that deals that have a fixed-price element offer improved revenue visibility. Additionally, it helps to ease pricing pressures.