Wipro profits up 24% as it divests non-IT arm

Indian IT services providers Wipro’s profits rose 24% year-on-year to 16.11 billion rupees ($304 million) for the quarter ending September 30.

The company’s profit during the second quarter beat analysts’ expectations, who predicted a net profit of 15.37 billion rupees, according to Thomson Reuters I/B/E/S.

A provider of IT services, including systems integration, information systems outsourcing, IT enabled services and software application development, Wipro saw its sales for the quarter reach 106.57 billion rupees ($2.01 billion), an increase of 17% year-on-year.

Revenue from the company’s IT services arm was $1.541 billion, an increase of 1.7% from the previous quarter and an increase of 4.6% in comparison to 12 months ago.

Most of the company’s revenue came from its IT Services division, which accounted for 79% of its total revenue for the quarter, ending with 140,569 employees and 52 new customers.

The Indian outsourcer said it expects revenue from its IT services business to reach in-between $1.560 and $1.590 billion in the third quarter ending December 31, aided by several multi-million pound deals.

These include a deal to manage all aspects of quality assurance for a retail departmental store chain in North America, in addition to replacing an existing internal messaging platform with a hosted messaging solution for a leading provider of renewable energy in Germany.

In addition, Wipro said it has entered a long-term strategic partnership with Qatar Airways to develop a solution for cargo management and revenue accounting.

Wipro, which was established in 1945 as a vegetable oil manufacturer, announced on Thursday it has separated its IT functions from its non-IT arms, which have formed a new company. Wipro Enterprise Limited will now oversee what was previously Wipro’s Consumer Care & Lighting, Infrastructure Engineering and Medical Diagnostic Product & Services divisions.

Wipro chairman Azim Premji said that Wipro had “chartered a new course” by separating from its non-IT business. “I am confident that the demerger will enhance value for all our stakeholders and provide fresh momentum for growth for each of our businesses,” he said.

“Our focus on driving significant operational improvements has helped us predominantly mitigate the incremental impact of wage increases and currency volatility,” said Suresh Senaparty, executive director and chief financial officer at Wipro.

"Consistent with our strategy to drive business transformation at the intersection of Cloud, Mobility, Analytics, and Social, we are continuing to invest in our Go-To-Market organization in order to engage effectively with both business and technology stakeholders," said T K Kurien, executive director and CEO of Wipro’s IT Business.

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Ben Rossi

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