Wipro, TCS not impacted by GM’s bankruptcy filing

Wipro Technologies does not see significant negative impact coming from the bankruptcy filing of its client General Motors (GM).

In a communiqué to the stock exchanges on Wednesday, the Bangalore-based firm said, “GM accounts for less than one per cent of Wipro’s IT services segment revenue, and our assessment is that a substantial portion is expected to continue.”

Auto major General Motors filed for bankruptcy on Monday, becoming the latest victim of the struggling US auto industry.

Wipro’s account receivables as of date of the bankruptcy filing is under $8 million. “Based on our current assessment, we do not expect significant adverse impact on account of this development. GM is a valued client, and we have a long-standing relationship with them. We are in constant dialogue with them to monitor and assess the situation,” the company added.

India’s third largest IT services exporter had posted a 31 per cent growth in revenues to Rs 19,166 crore for fiscal 2008-09. One percent contribution of this amounts to about $40 million for the year.

The firm had signed a fresh $300 million five-year deal with GM in 2006. This deal was in addition to the work that Wipro was already doing for GM.

Apart from Wipro, GM also outsources to TCS and Satyam. A TCS spokesperson told Financial Chronicle, “GM is not a significant client and our exposure is not substantial.” He added that GM is not among TCS’ top 20 clients.
While the big IT firms, which count many of the US auto majors like GM, Ford and Chrysler as clients have been impacted, others focusing on European auto-makers say things are stable. MindTree CFO Rostow Ravanan said, “Since things with European auto firms are still stable, the company has not been hit in this segment. Automotive segment accounts for almost 20 per cent of our revenues, with Volvo being our biggest customer in this space.’’