Wipro Ltd, India’s No. 3 software services exporter, is seeing an uptick in demand at its key financial services segment, driven by consolidation in the banking industry, a top executive said.
“Some of it is driven by the consolidation activities we are doing for our clients,” Wipro Technologies Chief Financial Officer Manish Dugar said at the Reuters India Investment Summit at Bangalore.
The company’s banking, financial services and insurance segment (BFSI), which accounts for about a quarter of its revenue, has been pressured by project delays and tightened customer spending amid the global slowdown.
“BFSI has seen some spending increase in the last two quarters, driven by M&A-related work and the requirements of compliance jobs is driving the tech spending in BFSI,” said Rohit Kumar Anand, an analyst with PINC Research.
The global banking sector has seen a slew of mergers and acquisitions in the recent past, and firms such as Wipro are cashing in on the growing need for technology services to hasten integration.
Wipro, which competes with larger rivals Tata Consultancy and Infosys, has forecast IT revenue to rise between 3.8 percent and 5.7 percent in October-December from the preceding quarter to $1.09 billion to $1.11 billion, exceeding street expectations.
The company, which integrates IT systems, develops software applications and manages call centres, posted a 1.9 percent sequential rise in July-September IT revenue.
In October, IT research firm Gartner said global IT spending was likely to decline 5.2 percent in 2009, marking the worst year on record, but it expects a return to growth of 3.3 percent in 2010.
Emerging markets, which account for about 20 percent of Wipro’s total revenue, are expected to be “big thrust areas” for
the company going forward.
“When I say emerging markets, predominantly it’s India and the Middle East, but Australia is becoming a big part of the business now,” said Wipro’s Suresh Vaswani, joint CEO of IT business.
“While some markets may get challenged, some other markets somehow compensate.”
The United States accounts for half of the company’s revenue, while Europe contributes about 30 percent. New York-listed Wipro also runs consumer products and lighting businesses.
Wipro shares were up 0.45 percent at 649.70 rupees on Wednesday in the main Mumbai market, which was up 0.65 percent.