Wipro reported a strong growth in its IT services revenue for the quarter ended March 31, indicating that it is benefiting from a recovery in demand for offshore IT services. The business environment is returning to normal, the company said, but it reported a significant increase in staff attrition.

Its competitors, Tata Consultancy Services and Infosys Technologies, also reported growth in revenue and profits this month. The two companies have stepped up hiring in anticipation of a larger demand for their services.

Wipro, which is India’s third largest outsourcer, said that its IT services revenue in US dollar terms was $1.17 billion, up 11.5 percent from the same quarter last year. IT services revenues for the fiscal year ended March 31 was $4.4 billion, an increase of 1.6 percent over last year, and accounted for 75 percent of total revenue in the year ended March 31.

The company added 5,325 staff net in this business in the quarter ended March 31, taking the total number of employees working on IT services to 108,071 as of March 31, 2010. The company’s IT services business added 27 new clients in the quarter.

But Wipro saw voluntary turnover of IT services staff soar to 17.1 percent in the fourth quarter, compared to 13.4 percent in the three months before, noted Anthony Miller, managing partner at analyst house TechMarketView. He said this was "the biggest jump in attrition for quite some time", and compared badly against the 13.4 percent at rival Infosys.

Nevertheless, with the improved outsourcing business environment, and employees "once again" looking for new work, he said, it indicated that "confidence really is returning to the Indian offshore services industry".

But most of the expenditure on outsourcing is still aimed at cutting costs, rather than at investments in new technology for revenue growth, said Siddharth Pai, a partner at outsourcing consultancy firm, Technology Partners International (TPI), earlier this week.

Leo King also contributed to this report.