Wipro reduces client base to pursue high-margin deals and profitability

India's fourth-largest IT services firm, Wipro, aims for faster profitability ascent by cutting smaller clients and focusing on bigger revenue opportunities

Wipro, one of India's leading technology companies, is making strategic changes to boost profitability and enhance its position in the IT services industry. The company is deliberately reducing its client base and targeting deals with higher margins and greater revenue potential to improve its standing among technology leaders in India according to a report by the Economic Times.

Chief Executive Thierry Delaporte told ET that Wipro's active client base decreased by 35 sequentially to 1,444 for the quarter ending in June, despite adding 65 new clients during the same period. This move implies a net decline of approximately 100 clients, as Wipro is focused on retaining large accounts and shedding smaller ones that may not grow significantly.

Delaporte clarified that the company has around 1,450 to 1,500 clients and aims to strategically reduce this number by cutting out smaller clients that do not offer significant growth potential. He emphasised that this is part of Wipro's plan to concentrate on serving larger accounts.

Wipro, which has lower operating margins compared to other top IT companies, is determined to maintain its operating margin above 16 per cent for the current financial year.

The company aims to avoid investing resources in smaller clients with limited potential for growth. CFO Jatin Dalal confirmed that they have reduced the number of clients by approximately 100. Instead, they are focusing on providing more value-added services to their large and strategic customers.

Wipro's strategic shift is also reflected in its new organisational structure, implemented earlier this year. The company has organised its operations around four global business lines, which are centered on cloud, enterprise technology, business transformation, engineering, and consulting.

In comparison, Infosys, another major player in the IT industry, added 11 net new clients in the same quarter, while LTI and Mindtree reported minor fluctuations in their client bases.

By streamlining its client base and pursuing high-margin opportunities, Wipro is positioning itself for improved profitability and long-term growth in the competitive technology landscape.