The recent executive meet of Wipro in Coimbatore threw a light on a very important feature that CEO T K Kurien has upheld. The decision to reduce over $300 million from the country’s cost of operation in the current fiscal.
To keep an eye on the whether this task is carried out or not is the responsibility of the new COO Abid Ali Neemuchwala. The intensity of this quick decision bespeaks the rediness in the company to become capital intensive and to ease out the number of physical man force.
The figure of $300 million represents the menial percentage of 5 to 6, however, it has been perceived as an important level of cost cutting that the company is attempting.
At the recent Investor meet, Kurien has hinted this intent; where he stressed on hyper-automation thus reducing the cost of operations significantly.
“In three years, people deployment will come down by 35% for the same scope of work,” he said. Wipro calls this “the factory model of delivery.”
When interrogated about the Coimbatore discussion, Kurien said, “I won’t deny the fact that there was a number like that. The biggest opportunity we have is the NextGen initiative. Fundamentally, what we are doing is taking the artificial intelligence platforms, putting them together and actually reducing the amount of labour that is supplied for a job.”
“Wipro will need to increase its cost base in the US and EU, offsetting many of the savings. Driving further into the factory model has both advantages and challenges; the factory model holds the promise of lower cost,” said Peter Bendor Samule, the CEO of Everest Group. His view on this change is positive and quite welcoming; believing that given the increasing pricing pressures, the $300-million target is modest, and given the size of Wipro, and that CEO Neemuchwala should be able to take out more than $300 million.
“If you look at the 15%-16% attrition on a base of 1.5 lakh people, that’s 22,500 people leaving every year just by attrition alone. We don’t have to fire people to get our base down. We have to manage attrition, and our attrition will manage our headcount. But the reality is, there is no layoff planned,” Kurien told a very strong front saying this. “We are also consolidating our back office operations to make them more efficient. And we are looking at our entire procurement cost,” reassured CEO T K Kurien.
Tags: Wipro
