Wipro, India's third-largest software services exporter, behind Tata Consultancy and Infosys, expects more stability in volumes and pricing in an improved demand evironment, chairman Azim Premji said.

The company forecast a robust quarter as it won new outsourcing deals and pricing pressure eased, sending its stock up four per cent.

India's $60 billion outsourcing sector has been hit by the global downturn as core financial clients cut technology spending but the industry is looking up after bigger firms won large deals recently and said demand for price cuts had reduced.

'In the subsequent quarters, Indian IT firms will see higher volume play on a stable pricing plane. This should return companies to report sequential growth over the next 4-6 quarters,' said Deven Choksey, CEO of KR Choksey, whose wealth management unit handles $120 million in assets.

'The only challenge is how the dollar behaves. On that front Wipro and TCS with about 40 per cent of their receivables hedged are better placed than Infosys,' he said.

By 0443 GMT, shares in Wipro, valued at about $19 billion, were trading 3.8 per cent up in a weak Mumbai market, after having risen as much as 4.5 per cent. New York-listed Wipro also runs consumer care and lighting businesses.

Wipro, which counts Citigroup and Cisco among its clients, expects IT services revenue to rise 3.8-5.7 per cent in Oct-Dec from the preceding quarter to $1.09-$1.11 billion.

It posted a 1.9 per cent sequential rise in July-Sept IT services revenue.

Analysts say while the worst could be over for IT firms, a sharp growth revival is unlikely in the near term due to sluggish business from sectors such as telecoms and manufacturing though financial firms were seeing stability.

Global information technology spending is on track to mark its worst year on record, but will likely return to growth in 2010 rising 3.3 per cent to about $3.3 trillion, technology researcher Gartner said last week.

Infosys, Wipro and Tata Consultancy are expanding in markets such as Europe and the Asia Pacific to cut their dependence on the U.S. market, which brings in more than half the sector's revenue but has been badly hit by economic and market turmoil.

India's IT sector faces rising competition from major players such as IBM and Accenture and new rivals from a wave of M&A in the global technology sector.

Beats forecast

Wipro, which integrates IT systems, develops software applications and manages call centres, said July-Sept net profit rose to INR11.71 billion ($252 million) under international accounting rules, from 9.70 billion a year ago.

Total revenue rose 6 per cent to INR69.18 billion as it added 37 new clients in the quarter.

A Reuters poll had forecast a net profit of 10.41 billion rupees for the firm, which counts Citigroup, Cisco and Credit Suisse among its clients.

Last month, oil and gas major BP chose Wipro and four other outsourcers, as part of a drive to consolidate the number of its services providers.

Shares in Wipro, majority-owned by billionaire Premji who turned the family's ailing vegetable oil business into an IT services group, soared 59 per cent in July-Sept.

The stock outperformed a 39 per cent rise in the sector index and an 18 per cent in the main index. – Reuters