Wipro in process to layoff "hundreds" of mid level roles to improve margins

Wipro is in the process of cutting ‘hundreds’ of mid-level roles onsite as it attempts to improve its margins, as per ET Prime. Wipro has the lowest margins amongst the four largest India-listed IT services companies. For the December quarter, its margin came in at 16 percent.

“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,” said Peter Bendor-Samuel, CEO at IT consultancy Everest Research.

Tata Consultancy Services, Infosys and HCL Technologies reported margins of 25 percent, 20.5 percent and 19.8 percent respectively. “The intimations started being made earlier this month. There are hundreds of mid-level executives onsite who are being let go,” said a source informed of the job cuts.

“They have very expensive people sitting onsite in Capco, and even though growth there 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 said it would buy consulting firm Capco for $1.45 billion in 2021, making this CEO Thierry Delaporte’s biggest bet. But as post-Covid growth fell and world economies cooled, consulting was the first business to slow down as customers curbed spending.

“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 organization,” says a Wipro spokesperson in response to questions from ET Prime.

As per the ET report, this was part of a strategy called ‘Left- Shift.’ “The work of a level 3 employee is shifted to a level 2 employee, who is given appropriate tools. The level 2 work is done by a left level 3 employee is shifted to a level 2 employee, who is given appropriate tools. The level 2 work is done by a level 1 employee, and the idea is that the work of a Level 1 employee is automated. All companies do this but it is getting very important,” said the second source.