Wipro has the lowest margins amongst the four largest India-listed IT services companies. For the December quarter, its margin came in at 16%. Tata Consultancy Services, Infosys and HCL Technologies reported margins of 25%, 20.5% and 19.8% respectively.
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“The intimations started being sent earlier this month. Hundreds of mid-level executives onsite are being let go,” said a source informed of the job cuts.
“They have very expensive resources onsite in Capco, and even though the growth is coming back, it is not enough. Aparna (Iyer – Wipro Chief Financial Officer) has been tasked with showing better margins this quarter,” the source added.
Wipro had acquired consulting firm Capco for $1.45 billion in 2021, making this CEO Thierry Delaporte’s biggest bet. However, as post-Covid growth fell and world economies cooled, the consulting business slowed down as customers curbed spending.
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“Aligning our business and talent to the changing market environment is a critical part of our strategy as we look to build a resilient, agile, and high-performance organisation,” a Wipro spokesperson said in response to questions from ET Prime. The spokesperson added that Wipro was ‘committed to investing in our people, processes, and technology to drive better client and employee experiences and enhance productivity and agility across our organization to meet fast-evolving client and market needs.’
A second source with knowledge of the job cuts said it was part of a ‘Left- Shift’ strategy. “The work of a level 3 employee is shifted to a level 2 employee, who is given appropriate tools. A level 1 employee does the level 2 work, and the idea is that the work of a Level 1 employee is automated,” said the second source.
The job cuts come even as Delaporte is faulted for losing senior talent and impacting employees’ morale. He also has a tough job of trying to balance the margin and growth, which are conflicting goals.
“Wipro still has both a talented workforce and leadership team. However, execution is an issue and Wipro continues to underperform against its peers. I believe Wipro is trying to do too much too quickly. It is trying to address its margin and profitability at the same time it is attempting to regain its growth leadership and market differentiation,” says Peter Bendor-Samuel, CEO, IT consultancy Everest Research.