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Wipro sees slowdown in big new contracts

This article was posted on Feb 1, 2009 and is filed under Stock News

Davos, Switzerland: Wipro Ltd expects demand for new software and systems to stagnate for up to two years as a result of the global economic slowdown, a top executive said on Saturday. In response, Wipro plans to focus on providing operations services and helping clients cut costs, Wipro joint Chief Executive, Girish Paranjpe, told Reuters in an interview.

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He sees a return to growth in the new software and systems segment “18 to 24 months from now” when clients could look to launch new products or streamline internal systems which have come about through mergers and acquisitions.

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“We are really using this next 12 to 18 months to invest in that capability, so that when growth returns and clients look at their own internal systems more rationally, we are there (and) well positioned to help them actually to execute on that.”

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Paranjpe, speaking on the sidelines of the annual meeting of the World Economic Forum, declined to give a projection for revenue growth in the 2009/10 fiscal year, but said he thought Wipro could attain its target of 18 per cent revenue growth for the full 2008/09 year to March.

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Wipro’s profits rose 8.7 per cent in the October to December period, but it said last week that it anticipated a quarter-on-quarter decline in revenue for the January-to-March quarter.

Wipro, which counts Citigroup, Credit Suisse and Cisco among its clients, had so far not seen any impact on its business from the recent revelations of overstated profits and fictitious assets at rival Satyam Computer Services, Paranjpe said.

“So far we have not seen any fallout in terms of cancelled orders or withdrawn inquiries or anything of that sort, maybe just a higher degree of due diligence from new prospects before they close the deal,” he said.

Wipro had not pro-actively approached any of Satyam’s clients, he added.

“But some of the clients have tried to make contingency plans, saying that if they wanted to continue their business operations without Satyam being in the fray, how could we help,” he said.

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“We don’t want the reputation of the industry to go down, so as long as clients’ business operations don’t suffer, broadly they will be alright.”

source: http://sify.com/finance/derivatives/fullstory.php?id=14848720

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