Indian IT services provider Wipro added more new employees than rivals TCS and Infosys in the most recent financial quarter, despite the fact that its revenues grew the slowest of the three.
Wipro revealed today that the number of people employed in its IT services division (the company also sells IT products and lighting equipment) grew by 4,854 to 112,925 during the three months ending June 2010, a 4.5% increase “We added the highest number of billable employees ever,” said company chairman Azim Premji. TCS and Infosys, meanwhile, added 3,721 (0.9%) and 1,026 (2%) employees respectively.
That headcount growth was out of step with the companies’ respective revenue growth rates. Wipro’s IT services division grew revenue by 14% year-on-year to $1.2 billion during the quarter, while TCS and Infosys both grew by 21%, to $1.8 billion and $1.4 billion respectively.
Interesting Links
Accenture broke “gentleman’s agreement” on hiring, say Indian rivals TCS and Infosys among those to claim US outsourcing provider broke NASSCOM rule on recessionary hiring practises, newspaper reports
Outsource evolution Demand for clearer value is driving diversity in IT services
But Premji said that Wipro is seeing “strong demand environment across our industry verticals despite macro challenges.”
It is a crude measure for a number of reasons (see below), but Infosys lead the pack in terms revenue per employee during the quarter, with $11,827 for every worker. This compares to $10,959 at TCS and $10,493 at Wipro’s IT services unit.
Each company reported profit for the quarter slightly differently, so a direct comparison is not possible. Wipro’s IT services division reported earnings before interest and tax of $291 million, up 26% from the first quarter of last year. TCS reported profit after tax of $403 million, up $29.3% year-on-year, while Infosys’ net income after tax was $326 million, an increase of just 4.2%.
When it came to the companies’ appraisal of their own performances, TCS was the most confident. “This has been a quarter of complete outperformance,” said CEO N Chandrasekaran. “While we remain alert about changing macro dynamics in many markets, our customer-centric business model is very relevant and helps us participate in the ongoing recovery.”
Infosys CEO S Gopalakrishnan sounded more cautious in his prognosis. “The challenge for the industry is to enhance the investment to grow the business, given the uncertainty in the environment,” he reflected.
Meanwhile, the company’s CFO V Balakrishnan warned of the potential impact of currency fluctuations on future performance. “The volatile currency environment is a concern for the industry,” he said.
Comparing the financial performance of the three giants of Indian IT is further complicated by the fact that Infosys and Wipro have adopted the International Financial Reporting Standards, but TCS has not.
When asked whether this made a material difference, a spokesperson for TCS added yet another complexity: “Wipro’s figures are not comparable with either TCS of Infosys because they show their (currency) hedging gains and losses in their topline.” Many Indian companies ‘hedge’ foreign currencies to protect themselves from currency fluctuations.
The table below therefore carries a number of caveats. Broadly, though, it shows how the global recession slammed the breaks on the Indian IT industry’s previously rapid growth, and that industry cannot be said to have fully recovered.
Similar Posts:
- Wipro CEOs quit after luke-warm results
- Japanese IT giants in Patni takeover talks, report says
- Infosys “distressed” by US senator’s ‘chop shop’ jibe
- HP and Dell report solid figures, but uncertainty looms
- Hewlett-Packard sales up by just 3%
Post Comment