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Wipro chief says business is improving

Wipro Ltd, India's largest software company by market value, is seeing business improve from its early year dip, its chairman and founder said in an interview on Monday.

"This quarter is a little better than the previous,'' said Azim Premji, who still holds over 80 per cent of the company currently valued at $8.1 billion.

"The last quarter everyone really froze in their tracks, checking how bad it was. But certainly in the enterprise space order flows have started all over again, although not as big as in the third and fourth quarter of last year,'' he said.

Even business from its telecommunications customers, which is Wipro's other sector alongside the enterprise business, was not dropping revenues, Premji said.

In Europe in particular sales to telecom companies were still up by some 40 per cent year-on-year.

He said he was confident revenues would grow faster than the Indian market for software and software services exporters which is set to grow by 40 to 45 per cent this year.

Sales could top $1.0 billion this year, compared with $660 million in 2000, Wipro said in April, and Premji saw no reason to revise this figure.

This compares with a virtually stagnant it services industry in the US, which grows by an average 12 per cent longer term. Amid industry-wide concerns whether the US slowdown would spill over to Europe, Premji said that he did not expect as bad a drop.

"I don't think Europe is going to be as affected as the US,'' he said.

Indian software and services companies are able to maintain relatively high growth figures compared with their US and European peers because they offer customers an opportunity to benefit from India's well-educated work force and low wages.

Typically, Wipro offers software coding and maintenance of which between 50 and 75 per cent can be done remotely in India. The Indian company has been eying consultancy firms in the US in an attempt to complement its business there, but despite the economic slowdown takeover targets had not yet faced the fact that their valuations have tumbled.

"It's not just that valuations have dropped because of lower sales. It's also that the growth prospects for the future have fallen, which means that the intrinsic value has fallen (which should mean even lower valuations).''

"But they're not coming to terms with that, otherwise we could have done a deal earlier," Premji said. Its first two target markets for takeovers are the US and Britain, he added.

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