What dragged down Wipro growth? Find out here

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Updated: June 18, 2016 8:33:32 AM

A new CEO, lofty 2020 target, recent large acquisitions and senior hires could kindle turnaround hopes, with Infosys' case study...

wiproA new CEO, lofty 2020 target, recent large acquisitions and senior hires could kindle turnaround hopes, with Infosys’ case study. (Reuters)

A new CEO, lofty 2020 target, recent large acquisitions and senior hires could kindle turnaround hopes, with Infosys’ case study.  However, underlying problems are different — weak client mining, exposure to energy, telecom and weaker portions of tech has dragged growth, something that is unlikely to change soon.

The new CEO’s initial strategy seems to mirror Infosys’ — hiring senior management from his previous firm; acquisitions totaling $750 million in the past 12 months; announcing an ambitious 2020 target, implying a steep acceleration in revenue growth along with expansion in margins ($15 billion in revenue, 23% EBIT).

The problems with Wipro’s business are more structural in our view.  Growth has lagged peers for most of the last decade; Exposure to energy, telecom and weaker portions of tech has hurt; Larger verticals have lagged, with growth driven by smaller verticals putting questions on sustainability; Margins have been under pressure despite currency benefits; Account mining has been an issue, reflected in lackluster client metrics; Lack of clear differentiation due to leadership changes and M&As through the decade.

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