Bangalore, Jan 21 (PTI) The country''s third largestsoftware exporter, Wipro, announced a major leadership revamptoday, shortly after posting lower-than-expected growth inquarterly sales by just 10 per cent to Rs 1,318.8 crore.
Wipro has been posting much lower numbers than its peers-- Tata Consultancy Services and Infosys -- for the past fewquarters, an indicator that the Indian software exporter hasnot been able to take advantage of the recovery in demand forIT services.
"I don''t think we should try making excuses about ourperformance. We have underperformed in Q3, relative to ourcompetitors and relative to our potential as a company," WiproChairman Azim Premji told reporters here.
He added that the company has not been able to takeadvantage of the recovery as much as its peers have,especially in the health and financial services sector.
In a move aimed at simplifying its organisationalstructure, the joint CEOs of Wipro''s IT business -- GirishParanjpe and Suresh Vaswani -- have been replaced by T KKurien.
"The Joint CEO structure was one of the key factors thatsuccessfully helped us navigate the worst economic crisis ofour times. With the change in environment, there is a need fora simpler organisation structure," Premji said.
Vaswani and Paranjpe will step down from theirresponsibilities with effect from February 1, 2011. However,they will continue to work together till March 31, 2011, toensure a smooth transition.
"There is an uptick in IT spending and outsourcing... Itwas thought appropriate by the company that we need to haveone CEO," Chief Financial Officer Suresh Senapaty said.
Wipro''s total revenue increased by 12 per cent to Rs7,829 crore during Q3, FY''11, vis-a-vis the same period lastyear. IT services revenue, which accounts for 76 per cent ofthe company''s business, stood at Rs 5,949 crore, translatinginto 15 per cent growth year-on-year.
The company expects revenue from its IT services businessto be in the range of USD 1,384 million to USD 1,411 millionin the fourth quarter, translating into an increase of 3 to 5per cent vis-a-vis third quarter earnings.
According to marketmen, Wipro''s Q3 numbers failed toboost investors'' confidence, as there was no "positivesurprise".
"The earnings by Wipro are below-market-expectations.
Investors opted for profit-booking as the numbers failed toenthuse them. Moreover, all the three major software firms,including Infosys, grew in the range of 4-5 per cent," SMCCapitals Strategist and Head of Research JagannadhamThunuguntla said.
The board of directors have proposed payment of aninterim dividend of Rs 2 per equity share of Rs 2 face valueto its shareholders. Wipro shares closed at Rs 456.05 on theBSE today, down 4.59 per cent from the previous close. MOREPTI JD MSR APR SR AKH ARV
The company saw 1.5 per cent growth in business volumes compared to the the second quarter of the 2010-11 financialyear. In comparison, TCS reported a 5.7 per cent increase,Infosys a 3.1 per cent rise and HCL Technologies a 6.5 percent jump.
The company witnessed the net addition of 3,591 employeesin the quarter, taking its total head count to 1.19 lakhemployees as on December 31.
It had cash-and-cash equivalent reserves of Rs 6,487.8crore on December 31, 2010.
On a standalone basis, Wipro posted a marginal dip in netprofit to Rs 1,223.7 crore for the reporting quarter.
Senapaty said the operating margins for IT servicesremained little changed at 22.2 per cent in comparison to Q2,FY''11, despite fewer working days and a fall in the number ofstaff on billable projects.
The margins were supported by higher billing rates, amongother factors, he added.
Revenue in the IT products segment dipped by 13 per centyear-on-year to Rs 879 crore in Q3, FY''11, while Wipro''sConsumer Care and Lighting vertical recorded a 21 per centyear-on-year increase to Rs 695 crore in the reportingquarter.
IT products accounted for 11 per cent of the company''stotal revenues, while Consumer Care and Lighting made up 9 percent of the total revenues.