Technology Budgets Flat to Slightly Higher, Says Wipro
TIANJIN, China, Sept 13 (Reuters) - Wipro Ltd (WIPR) (NYSE:WIT), India's No.3 software services exporter, said on Monday that customers remain cautious about technology spending, with budgets flat to slightly higher as they look for transformational projects.
"Folks are cautious in the way that they're spending," Martha Bejar, Wipro's president of global sales and operations, told Reuters in an interview at the World Economic Forum in China. "Customers are spending a lot more time making decisions ... but we're not seeing cancellations or delays."
Strong demand for outsourcing helped Wipro, which develops software applications, integrates IT systems and manages call centres, to post a strong June quarter, although a softening in Europe's revenue contribution raised concern about profitability ahead.
Changes in customer information technology budgets year on year ranged from flat to an increase of 4 percent, said Bejar, adding that the company did not see weakness in Europe.
Companies were increasingly focused on technology projects that yielded long-term changes in their operations, such as cloud computing, as opposed to those that merely made existing processes more efficient, she said.
"What we do see is a lot more focus on discretionary spending ... projects that are transformational," said Bejar. "It's not only about cost, it's about innovation."
The company is banking on infrastructure management as one of its potentially big revenue growth drivers going forward, and is also positive about opportunities in cloud computing and green energy.
Wipro, majority owned by billionaire Chairman Azim Premji, who mostly travels economy class, was starting to see business pick up in China, said Bejar, who acknowledged that business growth in the world's fastest growing major economy had been slower than expected.
"Our experience has been very positive with local talent," she said. "Local business has been a little tougher. It's something now that's been beginning to pick up ... (but) that has taken a lot longer than probably we had initially anticipated."
Europe accounted for 25.4 percent of the company's revenue in the June quarter, down from 26.3 percent in the previous quarter, while the U.S. brought in more than half of its revenue in the latest quarter.
By contrast, emerging markets in Latin America, Asia and Africa are still a relatively small part of Wipro's business, accounting for 7 percent or less of revenue, as domestic companies in those markets are still reluctant to fork out big money on major IT projects.
Wipro employs about 600 people in China at two centers, one in Shanghai and the other in Chengdu. But those numbers are a far cry from the thousands that IT outsourcing companies were expecting to employ in China when they set up operations in the country over the last six or seven years. (Reporting by Doug Young; Editing by Don Durfee and Chris Lewis)