Three Indian Technology and Service Companies Worth Considering

By Nicholas

In the midst of global growth concerns, India's economy has been a bright spot. Annual GDP growth sped up to 7.6% in the last year, and that number is expected to hold throughout 2016 and into 2017.

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Information technology and business services have grown into a major component of the Indian economy. The industry topped $140 billion in revenue last year, nearly 10% of India's total economic output, and is expected to outpace the general economy's growth at a rate exceeding 8% each year over the next decade.

Let's take a look at three companies that canbenefit from the growing IT industryin India: Infosys Technologies , WNS (Holdings) Limited , and Wipro Limited .

Infosys Technologies

Infosys is a global information technology and consulting firm. The company offers software solutions, engineering, and outsourcing to businesses operating across multiple industries like finance, oil and energy, auto, healthcare, and retail. Infosys goalis to help its clients effectively utilize technology to streamline operations.

Image source: Infosys.

Last year, the company hired a new CEO, Dr. Vishal Sikka. When he stepped in as the new head, modernizing the business was a stated goal. In the last earnings call, Sikka stated that Infosys is still at the beginning of its transformational journey.

Combining the company's workforce of nearly 200,000 worldwide with new automation technology has helped the company simplify operations and increase efficiency for itself, and more importantly, for its clients. Infosys had a strong finish to its fiscal year that ended in March.The company's focus on efficiency helped itclose deals with a net 47 new clients in its lastest quarter, and revenue from its top 10 largest clients increased 12.3% for the year.

Going forward, the company is focused on automated and cloud-based services. Infosys is partnered with Amazon to offer IT services on Amazon's AWS web service platform. The company is also making data discovery and analytics services a priority, and has been investing in projects to further its transformation goals.

Revenue increased 9% in its latest quarter compared to the year-ago period. As its transformation continues, the company sees revenue ramping up even more. Management sees next year's total revenue growing between11.5% to 13.5% with total expenses staying the same with last years'.

WNS (Holdings) Limited

WNS is a global business process management company, which basically means it is an outsourcing provider. The company specializes in servicing a wide range of industries from finance and insurance to manufacturing and shipping companies. While the nature of WNS's business still draws fire from many in the United Stateswho are interested in protecting thedomestic job market, the global need for outsourcing services continues to grow as large corporations look for ways to cutcosts and increase efficiency.

Image source: WNS Holdings.

The company is expanding the ways in which it helps clients, investing heavily in automated systems and analytics research. Back in March, WNS purchased Value Edge Services, which provides advertising and data analytics to the pharmaceutical industry. The acquisition also comes with a large portfolio of leading global biopharmaceutical companies and expands upon WNS's existing healthcare services business.

WNS had a difficult year coping with a strong US dollar. The increase in value of the dollar against other currencies ended up being a headwind for the company as far as revenue growth goes, and the company's full fiscal year that ended in March saw revenue growing 5.6% over last year. Excluding currency exchange, revenue would have grown 11% on the year.

Despite those difficulties, WNS paid off all debt and finished its first share repurchase program of1.1 million shares during the year. In March, management authorized an additional 3.3 million share buyback programthat can be usedover the next three years.For the next year, the company projects revenue to increase between 4% and 10%, but flat year-over-year profit as the company invests in automating internal systems and integrating new services for clients.

Wipro Limited

Wipro's business is similar to that of Infosys, providing information technology and consulting for a wide range of businesses around the world. Also like Infosys, Wipro brought in a new CEO earlier this year to lead transformation efforts as the company updates its business strategies to focus on digital and cloud-based solutions.

Image source: Wipro.

For the fiscal year that ended in March, the company saw revenue and profit grow 9% and 3.3%, respectively, over the prior year. The company drove its growth byrenewing and deepening relationships with clients.

Wipro's new CEO Abidali Neemuchwala has aggressive goals for the company. By 2020,his goalis to double current revenue to $15 billion and increase the operating profit margin to 23%. Neemuchwala outlined his strategy to achieve these goals during the last earnings call.The main takeaways from the new strategy were thecompany's plan to leverage Wipro's diversified services to expand on existing client relationships, expanding into new growth markets in Latin America, Canada, and Continental Europe, investing in new software services, and mergers and acquisitions.

To accomplish the last two points, Wipro's Ventures division invests in big data and analytics, artificial intelligence, Internet of Things, and cyber security to meet the future needs of businesses.The company also has an active acquisition strategy,buying out smaller tech companies and start-ups to fill in gaps in its own lineup of services.

What investors should do

I think India has great long-term potential. The country has worked hard to build a small but thriving technology industry, andsupports itsindustrywith continued investmentinto its workforce. India's well-educated technology professionals are drawing interest from corporations worldwide, and that trend is helping Infosys, WNS, and Wipro's businesses grow.

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Nicholas Rossolillo has no position in any stocks mentioned. The Motley Fool owns shares of and recommends Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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