Wipro cuts mid-level jobs to improve profitability
BANGALORE, INDIA — Indian IT services giant Wipro has reportedly begun laying off hundreds of mid-level employees, primarily expensive onsite staff.
The workforce reduction aims to cut costs and improve Wipro’s relatively low-profit margins.
For the December 2022 quarter, Wipro posted an operating margin of just 16%, lagging behind its rivals Tata Consultancy Services (TCS), Infosys, and HCLTech, which reported margins of 25%, 20.5%, and 19.8%, respectively.
According to a report from The Economic Times, the layoffs particularly target highly paid mid-level employees at the recently acquired consulting firm Capco. Despite recovering growth, Capco remains insufficiently profitable to justify expenses.
Wipro CFO Aparna Iyer has been tasked with urgently demonstrating margin expansion this quarter. Sources say layoff notices began going out in early January, numbering a few hundred so far.
The job cuts represent the latest phase of Wipro’s broader “Left-Shift” strategy. This involves transferring responsibilities handled by senior staff to more junior employees, with the ultimate goal of automating entry-level roles.
While financially prudent given slowing market demand, the significant layoffs underscore Wipro’s ongoing struggles to integrate the $1.45 billion Capco deal from 2021 successfully — CEO Thierry Delaporte’s largest bet yet.
High senior attrition and declining employee morale present additional headaches for Delaporte. However, Wipro maintains that recalibrating talent and strategic priorities is essential to keep pace with evolving industry dynamics.
TCS, Infosys, HCLTech, and Wipro were included in the 2023 Time Doctor OA500, the first objective index of the world’s top 500 outsourcing companies. The 2024 edition of the OA500 will be released next month.
Read more here.
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