Wipro

Wipro — Attrition-Driven Margin Compression and Recovery in IT Services

Published Mar 9, 2026

Wipro, a Large Enterprise IT Services & Consulting company, achieved measurable value creation through Talent and Capability. - **Attrition reduction**: Voluntary attrition (trailing twelve-month) fell from a peak of 23.

Company	Wipro
Industry	IT Services & Consulting
Company Size	Large Enterprise
Primary Lever	Talent and Capability
Key Result	- Attrition reduction: Voluntary attrition (trailing twelve-month) fell from a peak of 23

What was the challenge?

Wipro Limited, an Indian IT services company with over 250,000 employees and IT services revenue of $11.2 billion in FY2023 (fiscal year ended March 31, 2023), was hit by a severe attrition crisis during the post-pandemic technology talent war. Voluntary attrition on a trailing twelve-month basis peaked at 23.3% in Q1 FY2023, meaning Wipro was replacing nearly one in four employees annually. In IT services, where labor costs represent the majority of the cost base, each point of excess attrition creates a cascade of costs: replacement hiring (recruiter fees, signing bonuses), training and ramp-up time (new hires are unbillable for 2-4 months), project disruption, and client dissatisfaction. The attrition spike coincided with industry-wide wage inflation as TCS, Infosys, HCL, and others competed aggressively for the same talent pool.

The financial impact was direct: Wipro's IT services operating margin compressed by 205 basis points year-over-year to 15.7% in FY2023, despite IT services revenue growing 7.8% to $11.2 billion. Revenue growth was consumed by the cost of replacing and training employees at an unprecedented rate. The challenge was structural: how to stabilize attrition, recover margins, and right-size the workforce without damaging delivery capability.

What did they do?

Between FY2023 and FY2025, Wipro executed a multi-lever talent stabilization and workforce optimization program:

Compensation correction: Implemented targeted salary increases for high-demand skill sets and critical-to-retain talent bands to close the gap created by competitors' aggressive wage offers during the talent war.
Workforce right-sizing: Reduced total headcount from over 250,000 (FY2023) to 233,346 (Q4 FY2025), a reduction of approximately 17,000 employees, primarily through natural attrition management (slowing replacement hiring for non-critical roles) rather than mass layoffs.
Utilization improvement: Increased net utilization (excluding trainees) to 84.6% by Q4 FY2025 by reducing bench strength and improving workforce deployment efficiency. Higher utilization means more employees are billable, directly improving margins.
Skill-based workforce planning: Invested in internal reskilling programs to redeploy employees from declining legacy technology practices into higher-demand areas (cloud, AI, cybersecurity), reducing the need for expensive lateral hiring.

Sources

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Large deal focus: Pursued larger, longer-duration transformation deals ($5.4 billion in large deal bookings in FY2025, up 17.5% year-over-year) which provide greater workforce planning visibility and reduce the bench volatility caused by short-cycle project work.

Important context: The attrition normalization was partly industry-wide. All major Indian IT companies saw attrition spike in FY2022-23 and moderate by FY2025 as technology hiring demand cooled. Wipro's actions accelerated the recovery but cannot be fully separated from market-level normalization.

What were the results?

Attrition reduction: Voluntary attrition (trailing twelve-month) fell from a peak of 23.3% (Q1 FY2023) to 19.2% (Q4 FY2023) to 15.0% (Q4 FY2025), a reduction of 8.3 percentage points from peak. At 15.0%, Wipro approached the industry benchmark of sub-15% attrition.
Operating margin recovery: IT services operating margin expanded from 15.7% (FY2023) to an estimated 16.2% (FY2024) to 17.1% (FY2025, full year) and reached 17.5% in Q4 FY2025 — its highest level in twelve quarters. The 140 basis point improvement from FY2023 to FY2025 reversed the majority of the 205 basis point compression caused by the attrition spike.
Net income growth: Net income grew 18.9% year-over-year to $1,537 million (₹131.4 billion) in FY2025, significantly outpacing revenue, which declined 2.7% to $10,512 million — demonstrating that margin recovery from talent stabilization was the primary earnings driver.
Headcount optimization: Workforce reduced from 250,000+ to 233,346, a ~7% reduction, while maintaining delivery capacity through higher utilization (84.6%) and selective hiring in growth areas.
Large deal momentum: Large deal bookings of $5.4 billion in FY2025 (+17.5% YoY) indicate that a stabilized workforce improved Wipro's ability to win and deliver complex transformation engagements.
Revenue headwind acknowledged: IT services revenue declined from $11,160 million (FY2023) to $10,805 million (FY2024, -3.2%) to $10,512 million (FY2025, -2.7%). This is NOT a revenue growth story — it is a margin recovery and earnings growth story driven by talent management.
Timeframe: FY2023 through FY2025 (April 2022 through March 2025).

What made it possible?

People-intensive cost structure: In IT services, labor costs represent 55-65% of the cost base, making attrition the single most powerful margin lever — both in compression (when attrition spikes) and recovery (when it normalizes).
Scale of workforce: At 233,000+ employees, even small changes in attrition rates translate to thousands of avoided replacement hires, each saving $5,000-$15,000 in direct recruiting costs plus 2-4 months of unbillable ramp time.
Industry-wide normalization: The cooling of technology hiring demand from mid-2023 onwards reduced competitive poaching pressure across all Indian IT firms, creating favorable conditions for retention improvement. This is a macro tailwind that cannot be attributed solely to Wipro's internal actions.
Variable cost structure: Wipro's ability to right-size headcount by ~17,000 without mass layoffs — primarily through controlled attrition and selective replacement — demonstrates the flexibility of the IT services labor model.
Honest limitation: The case study cannot isolate Wipro-specific initiatives from industry-wide attrition normalization. The 8.3 percentage point attrition reduction reflects both company actions and market conditions.

(earnings)

· 4/17/2024

Wipro Announces Fourth Quarter and Year-End FY2023 Results — Press Release (delivers record total bookings)(press release)· 4/27/2023

- **Attrition reduction**: Voluntary attrition (trailing twelve-month) fell from a peak of 23