Wipro energy contracts suffering as oil plunges, says CEO

New York/London: Wipro Ltd, an Indian information-technology (IT) consulting firm that counts energy companies among its clients, said some of those customers have cut back on awarding contracts amid a record decline in oil prices.

In recent weeks, Wipro has seen a drop in IT contracts linked to large capital projects in the energy sector, chief executive officer T.K. Kurien said in an interview on Tuesday at the World Economic Forum, in Davos, Switzerland. While Kurien didn’t identify the projects on hold, he said they were mostly those that hadn’t yet broken ground.

Oil prices are at their lowest in five years, partly because of increased production in the US and elsewhere. While IT projects linked to the oil industry account for about 6% of Wipro’s revenue, the company is looking to other sectors such as manufacturing to offset the effect of the current market, the CEO said. Wipro posted total sales of about $7.2 billion for its most recent fiscal year.

“Even if it goes down by half, I’m pretty sure that it won’t disturb the company too much,” Kurien said, referring to energy-related revenue. “Every market normalizes after a certain period.”

Wipro, which helps clients manage data and messaging services, meanwhile is focused on investing in boosting access to intellectual property. The company, which is based in the technology hub of Bengaluru, has more than tripled its spending on developing that portfolio in the past year.

“If there are customers who want to give up intellectual property that they have certain processes behind, those we would buy,” he said.

Wipro Technologies (Wipro Ltd)