Wipro sees no sign of US downturn
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(Adds acquisition details, comments, background, share movement)
BANGALORE, Dec 7 (Reuters) - Wipro Ltd (WIPR.BO), India's third-largest software services exporter, sees no indication of a downturn in the U.S. economy hurting its business, but a firmer rupee was a concern, its chief financial officer said.
"I do not think it is crystal clear at this point in time that shorter-term the US economy will get into a recession," Suresh Senapaty said at the Reuters India Investment Summit in Bangalore on Friday.
He added that the U.S. subprime mortgage crisis would have minimal impact of less than 1 percent on its business and the U.S., which contributes to more than 60 percent of its revenue, would continue to be a large part of its growth plans.
Many banks and financial companies have been hit hard by a credit crisis sparked by sub-prime lending and face huge losses that may cut into their IT spending, which investors fear may hit Indian software services exporters.
Alleviating such fears, Senapaty said ... "Even if the technology spending does not go up, the advantage for Indian manufacturers and Indian vendors continues to be higher and that would mean more sourcing from India."
RUPEE CONCERNS
Senapaty also said that the rising rupee was a concern and that a 2 percent to 3 percent currency appreciation was tucked into the company's business model.
The rupee INR=IN has risen about 12 percent against the dollar this year, hitting a near-decade high of 39.16 in November.
"We may have quarter-to-quarter blips but medium to longer term you'll see much more sustainability to margins," Senapaty, who has been CFO for almost 13 years, said.
Analysts estimate every unhedged 1 percent rise in the value of the rupee against the dollar shaves 30 to 50 basis points from the margins of India's export-driven software services firms, which get more than half of their revenue from the United States.
EUROPE EXPANSION
Senapaty said Wipro, which was started in 1945 in the western Indian state of Maharashtra, is looking for higher growth in under-penetrated areas in Europe that have a lot of IT spending.
In absolute terms, the company is not seeking to lower its growth in the United States, he noted.
Countries like Germany and France, with high IT spending, were not tapped enough and that Wipro planned to address those markets aggressively through organic and inorganic growth, Senapaty said.
"The driver for us for an acquisition is not whether a particular thing is available cheaply," Senapaty said, adding that Wipro's focus was to absorb a deal fast and show results.
Senapaty also said that captive BPO operations "were of interest to us."
Indian software services firms, including No. 2 Infosys Technologies (INFY.BO) (INFY.O) and Satyam Computer Services (SATY.BO) (SAY.N), are eying foreign firms to access new markets and skills.
Bangalore-based Wipro, which counts telecom equipment makers Cisco (CSCO.O) and Nortel NT.N NT.TO among key clients, has development centers in Brazil, eastern and western Europe, China, Mexico and Canada.
New York-listed Wipro (WIT.N), which provides IT solutions and services such as system integration, software application development said the U.S. featured "very high" in its plans given the market's contribution to the company's revenue and profits.
Shares of Wipro, which is majority-owned by Chairman and CEO Azim Premji, were trading up 1.5 percent at 501.15 rupees in the afternoon session on the Mumbai market .BSESN.
The company's shares have fallen 18.39 percent year-to-date, compared with a rise of 43.16 percent in the benchmark index.
(Additional reporting by Anant Vijay Kala and Hezron Selvi; Editing by Bernard Orr)
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