Wipro has merged its Indian state-run enterprises ISRE sector with its broader IT Services division following a 20.18 percent decrease in revenue during the same sector in the financial year 2022 - 23. The company attributed the revenue reduction to the completion, closure, or scaling down of large government contracts.
Wipro faced difficulties in collecting overdue account receivables from government-related businesses, including Wipro. Intel operates in three sectors: IT Services, IT Products, and ISRE. IT Services account for 98.7 per cent of Wipro's revenue, while IT Products contribute a mere 0.7 per cent.
During the period, the ISRE segment represented only 0.6 per cent of the total revenue, a decrease from the 0.9 per cent contribution in FY22. In both fiscal 2016 and fiscal 2015, revenue from government-related business surpassed sales from the IT Products segment.
In a filing, Wipro said, General and administrative expenses as a percentage of revenue from our ISRE segment decreased from 1.01 percent for the year ended March 31, 2022 to 2.59 percent for the year ended March 31, 2023. This decrease was due to the collection of overdue accounts receivable, leading to an increase in write-backs in lifetime expected credit loss. In absolute terms, the credit in general and administrative expenses rose by Rs 77 million. The segment results of ISRE decreased by 851 basis points, from 16.08 per cent to 7.57 per cent, with an absolute decrease of Rs 732 million.
The ISRE was previously carved out as a separate entity from Wipro's worldwide IT services business in FY19. In addition, Wipro emphasized that ISRE projects primarily involved system integration SI with complex deliverables, longer working capital cycles, and distinct downstream processes for billing and collections compared to the IT Services sector.
However, today, the company has migrated its ISRE focus to consultancy and digital engagements, being selective in bidding for SI projects with extended working capital cycles. Moreover, the ISRE and IT Services industries now have similar sales channels, billing, and collection processes due to the focus on consulting and digital engagements.