Changes stir hopes of stability at Wipro

The top rung at Wipro's IT business has never been too stable; recent changes suggest that a clear succession plan is in place

Last month, Suresh Senapaty, perhaps the longest serving senior executive of Wipro, retired from the Bengaluru-based company where he spent nearly 35 years. During his last interaction with the media as the chief financial officer and executive director of Wipro, Senapaty talked of how the company had experimented with the management structure in 2008 when it decided on two chief executives because the top post was transitioning from Azim Premji, who was both chairman and CEO at the time. Since 2011, he pointed out, Wipro has had a single CEO, and last month, another rejig created the post of chief operating officer (COO) to support the CEO.

The continual changes in the top echelons of the company, feel experts, are clearly aimed at finding a stable senior leadership to take Wipro into the future. "Wipro is in the middle of a change in terms of how it delivers services to clients. This reorganisation is a part of that continual transformation," says R "Ray" Wang, principal analyst & founder, Constellation Research. He, like other industry experts, believes that more restructuring is likely.

CEO’S SINCE 1981

• Ashok Narasimhan: Founding CEO & president of Wipro's IT business —Wipro InfoTech and Wipro Systems (software business)
• Ashok Soota: Joined Wipro Infotech in 1984 as president and then became CEO of Wipro Systems in 1991
• Vivek Paul: Joined Wipro in 1999 after Ashok Soota left the company to start Mindtree. Led the company for six years till 2005
• Azim Premji: Chairman and CEO from 2005 to 2008
• Girish Paranjpae & Suresh Vaswani: Took charge as joint CEOs in 2008 and ran the company for almost three years
• T K Kurien: Assumed the post of CEO in Apri 2011

Last month's change brought in Abid Ali Neemuchwala as COO, a position seen as second only to CEO T K Kurien. Alongside, Wipro promoted two senior leaders - G K Prasanna, chief executive of Global Infrastructure Services, and Bhanumurthy B M, chief executive of Business Application Services - as presidents. Both Prasanna and Bhanumurthy have spent over two decades each with Wipro.

While Wipro is yet to acknowledge that Neemuchwala is indeed going to succeed Kurien, Bendor-Samuel, founder and CEO of Everest Group, is quite confident that the new executive is "clearly the heir apparent, with TK (Kurien) having 12 to 18 months left on his contract as the CEO". Kurien has said in media interviews that he is not "running away" from the company "so quickly" and that all those who report into him have an equal chance of ascending to the top.

Even if the elevation of Premji's elder son, Rishad, to the Wipro board is imminent, industry experts believe that time may be running out for Kurien who has got around a year before his current contract concludes. "If you look back, the tenure of previous CEOs has been in the range of 4 to 5 years each," explains Lakshmikanth. "Also, the company has seen much lower growth in the last four years under Kurien than in the previous three years when the joint CEOs were at the helm. These reflect that his time in the company is perhaps coming to an end."

The average growth of Wipro's IT business (including IT services and products) in the three-pear period under joint CEOs Girish Paranjpae and Suresh Vaswani was around 17 per cent. This is largely similar to what the company reported in the last three years under Kurien. However, in April 2008 when the joint CEOs had taken over, the entire IT outsourcing services industry had been in a turmoil owing to shrinkage in demand following the global economic slowdown.

Most experts, however, feel that the changes indeed represent a succession plan at Wipro. "Premji is already 70 plus. The present developments, including the expansion of the group executive council, are part of a succession planning," says Kris Lakshmikanth, chairman and CEO of executive search firm Headhunters India. "Premji will also have to induct his son as the chairman of the group and build a team around him."

Chopping and changing
The top rung at Wipro's IT business has never been too stable since the birth of the computer hardware company in 1981. Ashok Narasimhan, who initially started the hardware business, subsequently started Wipro Systems, the software business, but did not stay with the company for long. Ashok Soota who succeeded him left in 1999 to found Mindtree and was replaced by Vivek Paul, who is still considered Wipro's most aggressive CEO ever. Paul left the company in 2005. Premji took over as CEO in addition to his role as chairman for three years before handing over the baton to the joint CEOs.

The current set-up at Wipro that came into effect from April 1 is expected to give the CEO room to focus on executing the company's short-term strategies in addition to setting the tone for future plans. By reducing the number of people who report to him by almost half, this rejig has greatly reduced the burden on Kurien.

"The rationale for a COO lies in supporting the CEO and the management team in determining the optimal strategy for the future and then helping to implement it. Specifically, we are looking at consolidating service lines making it an integrated play, drive focus into under-penetrated and emerging markets, bring in efficiencies in internal business processes apart from enhancing market visibility and brand positioning," the company had said while explaining the role of the new COO.

Along with making leadership changes, the company is also trying to catch up with industry peers such as TCS and Infosys in harnessing the next wave of opportunities in the digital space through new units. For instance, Wipro has announced it will set up a new business line called Wipro Analytics to replace the Advance Technologies & Solutions service line. It will also set up an independent business unit to be called Wipro Digital to focus on opportunities in the digital space. It has aligned the banking services part of its BFSI vertical along geographical lines to bring more accountability for the unit, which is yet to catch up with those of industry peers.

However, the success of the new leadership model will depend on several factors, including how Wipro manages the incumbent senior team that includes people such as Anand Padmanabhan, chief executive and president of Wipro's energy, natural resources and utilities business unit, who has been a star performer. Under him, the unit, which accounts for over 17 per cent of Wipro's overall revenues, has shown steady growth for many quarters and even clinched its largest ever outsourcing contract of around $1.1 billion with Canadian logistics and utilities firm ATCO.