In response to excess middle-level staff and sluggish growth, Wipro, Bharat’s fourth largest IT firm, has initiated a downsizing process affecting hundreds of employees. This move aims to enhance the company’s margins and align its business with evolving market dynamics.
Wipro emphasized the importance of adapting its business strategy to the changing market environment to build a resilient organization. Analysts have pointed out that a significant portion (43.2%) of Wipro’s workforce falls within the 30-50 age group, compared to 38% at Infosys, a key competitor in the IT industry.
Traditionally, IT companies rely on a pyramid structure, with a broad base of younger employees forming the foundation. Wipro’s pyramid structure has become less optimized over time, with the percentage of employees below 30 decreasing from 60% before FY17 to 53% presently. Conversely, mid-level employees, who typically occupy the middle tier of the pyramid, have seen an increase in their proportion, reaching about 35% during FY17.
Pareekh Jain, founder of Pareekh Consulting, attributed Wipro’s slow growth partly to limited fresh hiring in recent years compared to its peers. While Wipro pursued growth through acquisitions such as Capco and Edgile, these additions inflated the middle level of its pyramid, straining margins.
Acquisitions also led to an increase in Wipro’s onsite headcount, comprising predominantly experienced employees. This shift further contributed to margin pressure, as experienced staff typically command higher salaries. In contrast, Infosys boasts the highest percentage of employees under 30, standing at 60%, indicating a more optimal pyramid structure relative to competitors.
Aparna Iyer, Wipro’s CFO, highlighted the company’s focus on maximizing revenue performance, realizing savings through structural improvements in its pyramid structure and fixed-price productivity, and reducing discretionary spending. These efforts have helped Wipro maintain resilient margins despite market challenges.
The downsizing of mid-level staff underscores Wipro’s commitment to adapting its workforce to meet evolving market demands and improve profitability. While the move may lead to job losses for some employees, it is seen as a necessary step to streamline operations and enhance competitiveness in the IT sector.
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