Array

TOKYO, May 26 (Reuters) Wipro Ltd., India's third-largest software exporter, is on track to boost its IT services revenues by 34 percent in the April-June quarter on strong sales to overseas clients, its chairman said on Friday.

In an interview with Reuters, Azim Premji also said the company's operating margins, based on U.S. accounting rules, were holding ''steady'' against the margin of 24.5 percent achieved in its fourth quarter that ended in March.

''On one side you have salaries going up. On the other side you are always driving productivity, you are driving some improvement in pricing ... and the rupee is weak,'' said Premji, who was in Japan to meet customers and employees.

Bangalore-based Wipro, which makes software for microchips and telecoms equipment, has forecast its IT services revenues will rise 34 percent to $533 million in its fiscal first quarter to the end of June, from $397.3 million in the same period last year.

Premji said the quarter was ''going well'' and reiterated his prediction that Wipro, which competes mainly with larger rivals Infosys Technologies and Tata Consultancy Services, would outstrip the industry's estimated annual growth rate of about 27 percent.

Industry revenue for the year ended in March 2006 is expected to have surpassed $23 billion compared with $17.5 billion in the previous year as outsourcing to Asia's third-largest economy shifts to longer-term contracts from piece-meal deals.

Premji, one of India's richest men by virtue of his more than 80 percent stake in the $15 billion Wipro, also unveiled a bullish target for its business in Japan, predicting sales there will rise more than 50 percent to $90 million in 2006/07.

STRING OF PEARLS Japan and Europe have aggressively embraced Indian software services firms as companies keen on cutting costs outsource key processes such as supply chain design and payroll accounting to India's army of low-cost, English-speaking developers.

Premji, 61, an electrical engineering graduate of Stanford University in California, said Japanese firms could save up to 30 percent by outsourcing their software needs to his company.

Wipro is focused on boosting sales to existing customers in Japan rather than adding to its client list. Among its Japanese customers are electronics conglomerates Sanyo Electric Co. and Toshiba Corp.

''And once our relationship gets more intimate and they get more confidence in us, we start doing work for them on a service-level agreement basis where we commit to them certain productivity improvements year-to-year,'' Premji said.

Wipro has about 1,100 engineers working for Japanese customers, of whom 250 are based in Japan and the rest in India and China.

After the sudden death of his father in 1966, Premji took charge of Wipro at the age of 21 when the then $2 million company was making hydrogenated cooking fat.

Wipro has made a string of acquisitions in recent months, including its purchase of Quantech Global Services LLC, which provides computer-aided design and engineering services to companies in the auto, aerospace and consumer goods sectors.

Premji said Wipro, which is India's 7th most valuable company by market capitalisation, would continue to put its healthy cash pile to work in acquiring small and medium-sized firms in Europe and the United States to help drive growth.

''It is a string of pearls approach. We are not doing large acquisitions. We are doing mid-to-small size acquisitions, typically companies between $20 and $70 million,'' he said. ''We are sitting on $1 billion in cash.'' Wipro's shares, which are included in the 30-issue benchmark index, were flat at 484.95 rupees in early deals on Friday, in contrast with a 2.6 percent jump in the index.

($1=45.89 rupees) REUTERS CS KN1107