Indian IT services company Wipro has merged its Indian state-run enterprises (ISRE) sector with its broader IT Services segment following a decline in revenue within the same segment during the financial year 2022-23. The company reported a 20.18% decrease in revenue, attributing it to the completion, closure, or scaling down of large government contracts. Wipro also faced challenges in collecting overdue accounts receivables from government-related businesses.
During FY23, the ISRE segment accounted for only 0.6% of Wipro’s total revenue, down from 0.9% in FY22. In contrast, revenue from government-related business had surpassed sales from the IT Products segment in previous years. General and administrative expenses as a percentage of revenue from the ISRE segment increased, mainly due to write-backs in expected credit loss resulting from the collection of overdue accounts receivable.
The ISRE segment was previously separated from Wipro’s global IT Services business in FY19 and primarily focused on system integration projects with complex deliverables. However, Wipro has shifted its ISRE strategy to prioritize consulting and digital engagements and be selective in bidding for system integration projects with extended working capital cycles. As a result, the ISRE and IT Services segments now share similar sales cycles, billing, and collection processes.
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