Wipro said it had become the latest computer service company to feel the pinch from cuts in information technology spending in slowing western economies.

Wipro, India’s third-largest IT outsourcer, and Satyam Computer Services, the country’s fourth-largest computer services group, warned of an uncertain sales outlook, as their main western clients grapple with a global economic slowdown.

The US is the largest single market for Indian IT outsourcers, though they have sought to expand to new markets, including Europe and Asia.

The two companies’ shares tumbled in an otherwise rising market. Wipro shares sank 6.5 per cent and Satyam shares dropped nearly 10 per cent, though both recovered ground later to close down 3.8 per cent and 7.5 per cent respectively.

The Indian companies provide software and back-office services for large western banks and financial services companies, which have been hit by the collapse of the US subprime mortgage market.

Other Indian software groups also fell though the Bombay Sensex rose 4 per cent.

The warnings are grim news for an industry that has been a major source of jobs for upwardly mobile young Indians.

Wipro, which also counts major global telecom equipment producers among its clients, reported a 15 per cent rise in profits for the first quarter to Rs8.14bn ($191m), from Rs7.1bn in the same quarter a year ago.

However, the company forecast that its IT services revenues for the current quarter would rise just 2 per cent from the quarter to June.

Smaller rival Satyam, which specialises in business software, reported a 45 per cent increase in first-quarter profits over last year to Rs5.08bn, beating forecasts.