Wipro Tech pares 10-35% costs in a year

Written by Rachana Khanzode | Mumbai | Updated: Aug 4 2009, 07:26am hrs
India's third largest IT services and business process outsourcing company, Wipro Technologies, said it reduced its overall operational expenses by 10%-35% in the last one year. Reductions were largely in the areas of power, construction, IT and travel. Wipro's various operational parameters helped the company to improve margin expansion by 0.6% quarter-on-quarter and 1.5% year-on-year to 22.3% in the IT services segment in the first quarter ended June 30, 2009.

Laxman Badiga, chief information officer at Wipro Technologies, said, "For about a year now, Wipro has been working on various operational efficiencies and we have improved it from 10%-35% in different areas like power, procurement and virtualisation." The firm has an annualised spent of more than $1 billion. The largest spent, category wise, is personnel (salary) expenses for its 98,521 employees.

"Going ahead, the firm plans to continue with various initiatives to cut costs. We are also looking at the 'work from home' concept, especially in the area of business process outsourcing, considering the costs and security aspects. As of now, more than 100 people in the areas of HR and marketing in Wipro work from home," said Badiga.

He added that the firm needed to work on the legal and infrastructure challenges to get this strategy implemented that will ensure huge cost savings.

According to Badiga, the company reduced its power consumption by 20%. Other high-cost reduction areas where travel, construction costs and IT. "We have jumped our utilisation and have brought in operational efficiency in the existing infrastructure. We have also drastically reduced our cost of construction and stopped IT investments that have low RoI (return on investments)," he added.

Operational efficiencies adopted by large IT companies had an impact on their bottom line in the last quarter. Wipro's overall profit after tax improved by 12% to Rs 1,016 crore for the quarter ended June 30, 2009, against Rs 908 crore in the same quarter in the previous year. Most analysts view that the real improvement from the business side is expected to come by the second quarter of next year.