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Do Wipro results indicate another terrible quarter for Indian IT?

wiproA surprisingly weak revenue growth number from Wipro has served as a grim reminder that the problems facing Indian IT have not been overcome, and that this may turn out to be another painful season of quarterly results from Indian IT companies.

Wipro first-quarter IT Services revenue grew just 0.2% in constant currency.

Indian IT companies had one of their worst performances in memory in the January-March quarter, and the Street is hoping that they have left behind ‘secular’ concerns about the sector and will outline a bounceback in April-June quarter.

However, going by the majority (2 out of 3) results unveiled so far, April-June is looking like a repeat of January-March, with both TCS and Wipro missing estimates.

For April-June, TCS reported growth of only 3.5% on quarter while Wipro has reported growth of 0.2% (stripped of currency movements). Infosys was an outperformer with growth of 4.4%.

Many experts have expressed concerns that the global IT market has turned a corner and no longer require the kind of services that Indian outsourcing companies have traditionally offered in the kind of volumes that they are used to.

They believe that automation will continue to deflate the business of outsourcing – especially areas like testing, custom application development, system integration and infrastructure management. In fact, another article in Capital Mind has stated that the Indian IT companies are in a soup.

However, leaders like TCS CEO N Natarajan have emphatically denied that such a drastic change has happened in the market.
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