NEW YORK ( TheStreet) -- Shares of India's Wipro (WIT - Get Report), a provider of information-technology outsourcing services, haven't been spectacular this year, but they may have some big upside as the company tries to capitalize on a fasting-growing IT market at home, while gaining more business from its existing customers.
Wipro should benefit from its home market in a couple of ways. India provides low-cost, highly skilled workers for Wipro's workforce and suppliers, and companies in the country are consuming more IT services themselves.
The company encourages sourcing from the local economy. About 79% of Wipro's suppliers are based in India, which keeps the company's costs low and helps its reputation locally because it is providing jobs to Indians.
Wipro is established in the U.S. and Europe, but it is also trying to gain traction at and near home. The company generates only 9.7% of its IT-services revenue from India and the Middle East, but its revenue is growing by about 20% in those markets.
Source: Wipro investor relations
The National Association of Software and Services Companies, an Indian trade group, estimates that the revenue this year for the IT-business process management industry based in India will rise 13% to $146 billion from last year. The domestic market accounts for around 18% of the total business of the Indian IT industry, and is expected to grow 14% this year, a faster rate than exports.
That is why Wipro is recording strong revenue growth in the domestic market. The trend could continue as the company is trying to tap the growing digitization of India. Digital technology has been a key trend in IT services in the past few years, and Wipro has been investing significantly in that area.
Digital technologies such as cloud, mobility, analytics and big data are reshaping the traditional Indian IT-services industry as outsourcing companies are providing higher-value services to customers. Thus, it's at and near home where Wipro's double-digit growth will come from.
Meanwhile, generating demand from new clients is difficult, and so Wipro is trying to gain more business from its existing customers by providing a range of services, including cloud computing, business applications and analytics.
On the other hand, Infosys is focusing on getting new clients and trying to land orders that generate more than $100 million in annual revenue. Last month, the company reported that revenue for its fiscal first quarter ended on June 30 rose 4.5% from a year earlier, but that its net profit for the period declined 1.3% from a year earlier and dropped 4.5% from the previous quarter as it invested in client acquisition.
For its part, Wipro last month reported a 4% increase in its second-quarter earnings on an 10% increase in revenue, solid growth numbers for a company whose shareholders should benefit from that growth.