The Rupee Raps Wipro

Like its rivals, Indian consulting firm Wipro (NYSE: WIT  ) has had a rough time this year. The rupee has spiked, wages are rising, and employee turnover continues to be a problem. Despite all the problems, Wipro continues to grow at a healthy clip.

Late last week, Wipro announced its first-quarter results. Revenue increased 34% to $1.03 billion and net income was up 16% to $175 million. The company snagged 39 new customers, of which nine were Fortune 1000 companies. Wipro customers include biggies such as GM (NYSE: GM  ) and Nokia (NYSE: NOK  ) .

There was strength across key areas like financial services, telecom, manufacturing, media, and transportation. Wipro also snagged a $130 million five-year contract with a major U.K. utility.

To combat the rising costs, Wipro has steadily increased the pricing on its contracts and has focused on improving operational efficiencies. Competitors like Infosys (Nasdaq: INFY  ) , Tata Consultancy Services, and Satyam Computer Services (NYSE: SAY  ) have taken similar measures, and the strategy seems to be working.

Over the years, Wipro has made a variety of acquisitions, and some of them are starting to hit critical mass. On the earnings conference call, the company mentioned that it will likely ramp up acquisitions in areas like Europe. There may also be some deals in low-cost regions so as to avoid some of the cost pressures in India.

While the rupee has been surging, it will certainly slow down at some point and provide some relief for Wipro. More importantly, its long-term prospects are still promising, and the company is likely to expand its footprint in foreign markets. So for Foolish investors looking for a long-haul play on Indian outsourcing, Wipro is still one worthy of a closer look.

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Fool contributor Tom Taulli, author of The Complete M&A Handbook, does not own shares mentioned in this article. He is ranked 2,419 out of more than 60,000 iparticipants in Motley Fool CAPS. Satyam is a Motley Fool Stock Advisor recommendation. The Fool has a disclosure policy.


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