Hello Vij,
A quick way to know where the image is located, you can right click on the image, select menu 'properties'. From the 'address', the URL and the size is given.
For example: the address is :
http://XXXXXXXX:XXXX/sap/bc/bsp/sap/thtmlb_styles/sap_skins/default/images/logo_sap.gif
The 'demension' is 59*30 pixels.
Then you will find it, for example, execute T-code SE80, display bsp application 'thtmlb_styles', then go to 'MIMEs'->'sap_skins'->'default'->'images', file 'logo_sap.gif' will be under this folder.
In order to reduce the image side, we have to edit it and resize it to make its demension smaller.
As to the detailed steps of how to change logo, please refer to following SAP KBA:
1849835 - how to exchange logo in WebUI without skin copy by using customize node "Define Icons"
Best Regards, Corrine