Wipro is actively implementing tech layoffs, slashing ‘hundreds’ of mid-level roles onsite to enhance profit margins. This move follows CEO Delaporte’s major bet with the $1.45 billion acquisition of Capco, aligning with the ‘Left-Shift’ strategy. Wipro grapples with conflicting goals and underperformance, making strategic adjustments in the competitive Big Tech industry. Recent reports highlight Wipro’s commitment to addressing its profit margins, currently the lowest among the top four IT services companies in India.
Wipro Margin Challenge and CFO’s Mission to Boost Profitability
Wipro, lagging behind with the lowest margins among the four largest India-listed IT services companies, reported a margin of 16% for the December quarter. In contrast, Tata Consultancy Services, Infosys, and HCL Technologies boasted margins of 25%, 20.5%, and 19.8%, respectively.
A source familiar with the matter revealed that intimations of tech layoffs for hundreds of mid-level executives onsite started earlier this month. The source explained,
“They are letting go of very expensive resources onsite in Capco. Despite the return of growth, it’s not sufficient. Aparna Iyer, Wipro’s Chief Financial Officer, has been assigned the task of demonstrating improved margins this quarter.”
Wipro’s $1.45 Billion Capco Acquisition Faces Challenges in Post-Covid Economy
In 2021, Wipro made its largest move under CEO Thierry Delaporte by acquiring consulting firm Capco for $1.45 billion. However, with post-Covid growth slowdown and global economic cooling, the consulting business faced a decline as customers tightened their spending.
In response to inquiries from ET Prime, a Wipro spokesperson emphasized,
“Aligning our business and talent to the changing market environment is a critical part of our strategy as we aim to build a resilient, agile, and high-performance organization.”
The spokesperson further stated Wipro’s commitment, asserting,
“We are dedicated to investing in our people, processes, and technology to drive better client and employee experiences, enhancing productivity and agility across our organization to meet fast-evolving client and market needs.”
Wipro’s ‘Left-Shift’ Strategy
A second source, knowledgeable about the tech layoffs, revealed that they are part of a ‘Left-Shift’ strategy. According to the source, the work of a level 3 employee is shifted to a level 2 employee equipped with appropriate tools. A level 1 employee then handles the level 2 work, with the ultimate goal of automating the tasks of a Level 1 employee.
Despite this strategy, Delaporte faces criticism for losing senior talent, impacting employee morale, and the challenging task of balancing conflicting goals of margin and growth.
Peter Bendor-Samuel, CEO of IT consultancy Everest Research, commented on Wipro’s situation, stating,
“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, addressing margin and profitability while attempting to regain its growth leadership and market differentiation.”