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Wipro to boost fixed-price, home-based work

Software giant Wipro Ltd plans to improve profit margins by boosting the share of software it writes in India for overseas clients versus the work done by employees at customer sites.

Wipro also will focus on contracts that fix prices in advance, rather than on staff services for per-hour billing fees, it said in its annual report filed at the US Securities and Exchange Commission on June 20.

Although about 80 per cent of Wipro's 10,000-strong army of software engineers work in India, its revenues are now equally split between offshore work done at its Indian development centres and onsite work at client offices.

Wipro, listed on the New York Stock Exchange, is India's largest software firm by market value and its third-largest software exporter, boasting more than 50 Fortune 500 giants among its clients.

"Our goal is to make every new client account earn over $1 million in annual revenues within twelve months," the company said.

Canada's Nortel Networks, the world's largest telecoms equipment maker, was Wipro's top client in the last quarter ended March, generating nine per cent of its software revenue.

The Bangalore-based company also said it will aggressively increase its research and development services by focussing on high-growth markets, such as telecommunications, mobile communications and the Internet.

Its shares closed 3.18 per cent down at Rs 1,478.70 on Friday, while Bombay's 30-stock index ended 0.70 per cent lower. Its shares have fallen 39 per cent in calendar 2001, compared with a 15 per cent fall in the Bombay 30-share index.

Wipro said it will target sales in Europe and Asia.

"We intend to increase the number of our clients through a dedicated sales team focused on new client acquisitions and increasing our presence in Europe and Asia," it said.

Europe accounted for 31 per cent of Wipro's software revenues in the past year, while the United States contributed 61 per cent.

The software giant said it is eyeing acquisitions but had not shortlisted any targets.

"In pursuing acquisitions, we will focus on companies where a significant portion of their work can be moved offshore to India to leverage our low cost offshore delivery model and realise higher margins," Wipro said.

It raised about $114 million in a share sale in the United States last year and cited acquisitions of overseas companies among intended uses for the cash.

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