Wipro 'Aligning Talent' With Changing Market Amid Reports Of Mass Layoffs

Wipro Ltd. said it's “aligning business and talent” to a “changing market environment”, amid reports that India's fourth-largest IT services firm was undertaking mass layoffs to shore up profitability.

“We are committed to investing in our people, processes, and technology to drive better client and employee experiences and enhance productivity, agility across our organisation to meet fast-evolving client and market needs,” a Wipro spokesperson replied to NDTV Profit over email, when asked to comment on reports of mass layoffs at the firm.

“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.”

Wipro is in the process of cutting “hundreds” of mid-level roles onsite in an attempt to improve margin, ET Prime reported on Wednesday, citing two people with knowledge of the matter. The Bengaluru-based IT services firm has sent intimations to employees who are “very expensive resources onsite at Capco”.

The move is significant, for it comes nearly three years after Wipro acquired U.K.-based IT consultancy Capco Inc. for $1.45 billion—its biggest acquisition till date. That bet has yet to pay off meaningfully as a pandemic boom in the consulting and outsourcing space has gone bust amid sustained macroeconomic headwinds in the U.S.

Aparna Iyer, who took over as Wipro's chief financial officer less than six months ago, has now been tasked with showing better margins in the January-March quarter.

Exits, And More Exits

Bengaluru-based Wipro is no stranger to an exodus—except this time, it's reportedly the handiwork of the management.

Wipro has been a revolving door of sorts for its senior personnel ever since Chief Executive Officer Thierry Delaporte took the helm in July 2020 and effected large-scale restructurings and acquisitions to make the company nimbler and competitive. Those moves haven't played out as planned.

As many as 10 senior-level exits took place in 2023, topped by the resignations of oldtimer CFO Jatin Dalal and Chief Growth Officer Stephanie Trautman, who was handpicked by the Frenchman to drive dealmaking at the IT company. Not one large deal was struck during her tenure. Now, Delaporte has kept the “growth office” to himself.

The Margin Play

To be sure, Wipro is in a way justified in its efforts to cut employee costs to shore up profitability.

The company was beset with the lowest operating margin among peers. In the December quarter, its margin stood at 14.71% as compared with 19.84% at HCL Technologies Ltd., 20.50% at Infosys Ltd., and 25.01% at Tata Consultancy Services Ltd. Even smaller rival LTIMindtree Ltd. performed better on the profitability front.

The top line itself has shrunk for four straight quarters now.

“Our investments in people, processes and business operations are continuing to pay off,” Delaporte had said after the company's third-quarter earnings. “We are starting to see early signs of a return to growth in consulting as shown by the double-digit growth in order bookings in our Capco business.”

If ET Prime's report is anything to go by, those growth signals may just be a smokescreen.

On Wednesday, shares of Wipro rose 1.14% to Rs 477.80 apiece on the BSE, even as the benchmark Sensex ended the day 0.86% higher at 71,752.11 points.