In response to global economic challenges post-Covid, Wipro, the Indian IT services giant, is undergoing a substantial restructuring, targeting the elimination of ‘hundreds’ of mid-level roles at its onsite locations. The move is part of Wipro’s strategy to enhance profit margins, particularly significant as the company faces pressure due to the lowest margins among the top four India-listed IT services firms.
With a December quarter margin of 16 per cent, Wipro lags behind TCS (25 per cent), Infosys (20.5 per cent), and HCL Tech (19.8 per cent).
This pressure, coupled with a post-pandemic slowdown in its consulting business, particularly after acquiring Capco – for $1.45 billion in 2021, a major investment initiative by CEO Thierry Delaporte – has forced the company’s hand.
The restructuring primarily focuses on mid-level executives stationed onsite, with termination notices issued earlier this month.
Wipro’s ‘Left-Shift’ strategy aims to streamline operations by delegating tasks traditionally handled by higher tiers to lower ones, leveraging automation and optimising efficiency.
In response to queries, a Wipro spokesperson emphasised the company’s commitment to aligning business strategies with the evolving market landscape. The spokesperson stated that Wipro is investing in technology and talent to enhance client and employee experiences.
Despite the necessity for cost optimisation, CEO Thierry Delaporte faces criticism for the loss of senior talent and the potential impact on employee morale. However, the company remains committed to a strategy that balances margin improvement and sustainable growth.
Wipro, while acknowledging the need to adapt to a changing market, emphasises its commitment to both clients and employees through investments in technology and talent development.
The company’s restructuring marks a critical juncture in its journey. The success of its ‘Left-Shift’ strategy and its ability to balance margin improvement with sustainable growth will determine whether this move paves the way for future success or stumbles under the weight of employee discontent.
In a broader context, Wipro’s move reflects a global trend in the tech industry, where companies, including global peers like SAP, Alphabet, Microsoft, and PayPal, are implementing job cuts to improve profit margins.
Recent financial results showed a decline in Wipro’s total headcount for the fifth consecutive quarter, reporting a net reduction of 4,473 employees during the October to December quarter of 2023. However, the attrition level eased, reaching a 10-quarter low of 14.2 per cent for the third quarter of the financial year.
Wipro’s cost-cutting measures are indicative of IT solutions firms globally, reducing headcounts as they invest in artificial intelligence (AI) to maximise profits. The strategic restructuring aligns with Wipro’s vision to build a resilient, agile, and high-performance organisation in a rapidly evolving market environment.
