In the winter of 2011, thousands of Wipro employees warmed up to some motivational talk from a serious-looking, lanky 51-year old man who would occasionally break into a laughter. To some, his messages trumpeted the Obama presidential campaign chant, ?Yes, we can?.
Wipro was in the middle of a shock wave this January-end. After a series of less flattering results, joint CEOs Suresh Vaswani and Girish Paranjpe went out of the company in a jiffy. Both of them had spent more than two decades in the firm and their super fast exit raised eyebrows, especially among long-time executives. Low morale and uncertainty took a firm grip over Azim Premji?s $5 billion IT empire.
So new CEO TK Kurien, known for his turnaround skills, started out with endless meetings and employee communication. ?We are not as agile as the competition. But we can do it. Together, we can achieve. Whatever it takes, we should do it,? he reassured a group of worried employees, soon after getting a pulse of the hot seat on February 1.
It has been seven months since. Has Kurien achieved what he thought he could in February? Has the company woken up from its slumber? Is it matching peers in agility and more importantly, winning deals?
If Wipro was a picture posted on Facebook with a ?like? button, very few investors would click it at the moment. During these months, the firm has seen a structural shakeup, senior level exits, promotions, hikes, dip in realisations and poor volume growth compared to peers. After lagging both TCS and Infosys in revenue growth in FY10 and FY11, the firm had a poor start to FY12?during the June quarter, the firm could only grow its dollar revenues 0.5% to $1.41 billion. Indian brokerage house Sharekhan said that while Wipro has not been impacted by vendor consolidation in the marketplace, it has lost market share amongst the top five Indian IT firms.
Rival Cognizant has nearly caught up and is likely to displace Wipro from its No. 3 position in the IT industry?s pecking order this year. When Premji announced Kurien as CEO on January 21, the stock closed at R456. On September 23, when this article was being written, the stock was trading at R347. That?s a hammering of almost 24%.
Nonetheless, company executives, all of whom did not want to be identified, said that a lot of Kurien?s work, already visible within the company, is not so obvious to people outside. The company is on a revival track. Comparable growth with peers should return in a couple of quarters as deal pipelines, back to healthy levels off late, get converted into wins. The sales engine, which had rusted towards the end of the joint-CEO regime, is being oiled.
Decision making, which almost always suffered under the convoluted structure of Wipro before Februray, is now faster?Kurien does not wait for endless analysis to be over before taking a decision. The new CEO hasn?t tinkered much with the strategy laid out by former chief strategy officer KR Lakshminarayana; the focus on a more simplified structure, new technologies such as cloud, mobility and analytics as well as new growth areas like healthcare continue. Kurien has implemented some of these strategies more vigorously.
Efforts are now underway to increase the firm?s wallet share in the important banking segment. The bread and butter sector of the Indian IT industry currently generates just 27% of Wipro?s revenues compared to 44% of TCS and 42% of Cognizant.
?Wipro did not lack strategy; what it lacked was execution. This is Kurien?s focus,? an executive who has worked closely with the CEO for many years said. Kurien oversaw an enterprise-wide restructuring that did away with the service lines, making the verticals more powerful?similar to what rival Infosys did to become more agile and customer-centric. At Wipro, services lines gained in power during Suresh Vaswani?s time. Vaswani was a champion of horizontals having run testing, technology infrastructure services and enterprise application services before he became joint-CEO. ?Giving more power to service lines may have killed the firm?s sales structure while creating a lot of conflict. Disbanding the service lines was the correct thing to do,? the executive noted.
In the first few months of his reign, Kurien cleaned up the firm?s deal pipeline. After a re-look at the qualification of the pipeline, he reduced it drastically because he felt that some of the deals were not worth chasing. Then he rebuilt it. The pipeline, insiders said, is now back to a healthy number. ?If you get the win rates now, the firm should start growing again. Kurien has been able to map what customers he wants to chase in which segment,? another executive said. For instance, the CEO had identified about 60 major accounts that could be mined better. However, in a new service offering like business consulting where the firm is not known globally and often braces up to stiff competition, Wipro only targets 20 of these clients for business development.
Meanwhile, the firm?s sales engine is getting better because of two factors. First, there has been some amount of churn in the sales team and as people left, new people with hardcore sales kind of a profile were added into the system. Second, Kurien himself has been leading the sales efforts. A senior executive, in Wipro for more than a decade, said that Kurien is on the field meeting customers much more than any other CEO he remembers. ?Perhaps, Vivek Paul ( 1999-2005) came closest to him. Not just generic relationship meetings, he gets involved in deals,? he said. Early traction in the larger deal front has been encouraging?during the first quarter ended June, the firm reported winning two deals that has a total contract value of $500 million.
There are fresh go-to-market initiatives as well. In one such move, Wipro is starting a private equity (PE) business where it would create a platform for shared services and use a PE firm?s influence to break into its portfolio companies. Kurien has mandated the company?s former head of global sales Martha B?jar to structure the approach for successfully growing the PE business in partnership with other business units.
Insiders noted a new emphasis on better account management, not a Wipro strong point. Influential technology advisory Forrester calls Wipro?s account management approach uneven and inconsistent. ?Inconsistent account management is one reason that Wipro struggles with customer satisfaction. Forrester often sees Wipro trailing TCS, Infosys, and Cognizant from a quality and customer satisfaction perspective,? analysts Stephanie Moore, Chris Andrews and Kelsey Stone wrote in a reported released on August 30 this year.
If Kurien has his way, this impression might change. To crack the execution whip, he does weekly review calls with all employees who report into him. ?The weekly reviews were last seen in Vivek Paul?s time. There are three-four parameters Kurien wants to look at any point in time. He has a different rhythm; an action-oriented style,? an executive added. His style makes people either like or dislike him. No other CEO in the firm elicited such an extreme reaction. Many people within and outside the company don?t agree, and are often critical of his people management practices. They point to the exodus of senior leaders soon after Kurien took over.
?Kurien has only stirred the system, not shaken it,? an executive who recently quit Wipro noted. ?Many of the business heads have not changed. As part of the restructuring, he has positioned his people in strategic places. That way, he will not be able to bring in significant change. In the last six months, no new business leader has been recruited from the market. Kurien doesn?t have the right kind of lieutenants to make things happen; the fresh talent who can infuse new ideas,? he said. Existing business leaders, he feared, would continue to do what he calls perception management?manage the boss for the next few quarters and hope he gets used to their style.
Some analysts and market watchers, however, are not worried at the lack of big bang lateral hires. Some attrition in senior leadership is natural after any top management change; any new CEO affects them to disrupt power centres within the company, rationalise costs and simplify the structure.
TR Madan Mohan, managing partner of consulting firm Browne & Mohan said that on the cost and right sizing side, Wipro has made good progress in the last six-seven months. ?By initiating a group on analytics, Kurien is also exploring an high growth area. The sales engine has become lean and more grounded,? he noted. Aniruddha Mehta of brokerage house IIFL feels that while there is no senior management level hiring from the market, the company is slowly but surely improving on its domain expertise. ?In the banking vertical, Wipro has been hiring a lot of domain experts from the market as well as consultants from other consultancy firms. They are trying to beef up expertise in areas where they were lacking,? he said.
One such area in business consulting? close to Kurien?s heart since it can help the firm get a toehold in the customer?s organisation and help cross sell volumes of technology services. Consulting has seen heartening traction and Wipro has been hiring partners with strong customer relationships, Forrester said in a recent report.
?In consulting, one challenge was obtaining internal respect and cooperation. To some seasoned Wipro executives, management consulting represented a low margin, low revenue business since engagements are smaller and shorter in duration, and consultants are exorbitantly expensive and not usually based in India. Despite the fact that Wipro made some high-priced acquisitions (NerveWire), Wipro management allowed the acquired consulting employees to leave, and the business died of starvation,? Forrester noted. ?The good news for Wipro consulting today is that TK Kurien, the architect and former head of the current iteration of consulting, has been promoted to CEO and has said that consulting is a critical component of Wipro?s future success,? the report added.
Kurien believes that consulting can raise the brand awareness and image of Wipro as a worldclass firm. If that happens, Wipro should be able to claw back some of the marketshare it has gifted away over the past few quarters; Kurien?s occasional laughter could be heard more frequently by his employees over weekly calls.