Wipro’s Bet On Srini Pallia Also A Test For Rishad Premji

IN THE EVENING of April 6, Bengaluru-headquartered Wipro Technologies announced the resignation of Thierry Delaporte, naming Wipro veteran and CEO of its U.S. operations, Srini Pallia, as the next CEO and MD with immediate effect. Srini was elevated as CEO for the Americas in a business rejig last year.

“Srini is an ideal leader at this pivotal moment for our company and industry. Over past four years, Wipro has undergone a major transformation under the most challenging external conditions. Srini has been an integral part of this journey. His client-centric approach, growth mindset, strong execution focus and commitment to Wipro’s values make him the perfect fit as we enter the next chapter of growth and profitability. Thierry will continue to be a part of the organisation until the end of May,” Rishad Premji, executive chairman, Wipro, said while announcing the decision.

Industry experts, however, feel the writing was on the wall for Thierry. His departure comes well ahead of time; his five-year term was to end on July 2025. This is the second time under Rishad’s chairmanship that a CEO’s tenure has been cut short.

WIPRO’S TROUBLES

In 2020, when Thierry Delaporte joined Wipro from Capgemini after nearly two-and-a-half decade with the company, Rishad hoped for a turn of fortune. Thierry’s predecessor, Abid Ali Neemuchwala, who had joined Wipro from TCS BPO in 2015 as COO and was later elevated as CEO, had also seen his term end before the contracted period. The highest-paid CEO of an Indian IT company at the time of his joining, Thierry had laid out his vision for transforming Wipro, which under Abid had struggled to match the growth of its peers. In July 2020, during the company’s earnings call, even as the world was moving to work from home due to Covid, Thierry had stated that “profitable growth” was his most important agenda. However, it remained elusive.

In a post on a professional networking site after his resignation, Thierry defended himself against the narrative that non-performance was behind his shortened tenure, wrote, “I’m proud of what we’ve achieved over the last four years, growing revenues by 35%. We’ve generated 25% more profit in the last four years than in the previous four-year period, and the value of our stock and market capitalisation has grown 2.5x since 2020.”

The company, however, lost out on the pecking order of home-grown IT services companies when HCL overtook Wipro as the third-largest in revenues in 2022.

SENIOR EXITS

That is not all. Under Thierry, Wipro made one of its biggest-ever acquisitions, London-based Capital Markets Co. (UK) Ltd. (Capco), for nearly $1.75 billion in March 2021. Even then, analysts had said that the success of the acquisition would depend on a smooth integration. Analysts have been expressing their apprehension around integration of Capco. However, in the company's latest earnings call, Pallia said the company had started seeing green shoots with Capco registering 6.6% growth last quarter. “For us, Capco, in the context of BFSI, is going to be the tip of the spear,” he said, adding, the rest of the Wipro can leverage Capco’s strong CXO connections.

Thierry had implemented a “reorganisation/simplification” of structure and created geography business units with P&L responsibilities. He also hired fresh talent across the globe. However, the company was unable to stem the exits of several senior-level executives, including old-timers such as Jatin Dalal, Rajan Kohli and Angan Guha. Even those who Thierry hired, such as Stephanie Trautmen (brought from Accenture to lead a dedicated team to chase large deal) also quit recently.

While reports had been pointing out for a while about the discord between the chairman and the CEO's office on the company’s growth trajectory, Rishad had always backed Thierry’s plans in public. Even at the company's previous annual general meeting, he had stated that the company's board fully supported Thierry.

In a note dated April 7, analysts Abhishek Bhandari and Krish Beriwal at Nomura said revenue growth recovery for Wipro will be slow and is unlikely to change significantly due to a new CEO at the helm.

Srini’s biggest challenge would be to bring back the lost revenue growth momentum and stemming attrition among senior management.