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Wipro: ‘Obsession for Growth’

With a new Chairman appointed 15 months ago and a new CEO in place for the last four, Wipro has seen a significant changing of the guard – much has been made of the fact that Thierry Delaporte is Wipro’s first non-Indian CEO appointment. The announcements made in a recent event for financial analysts (its first such event in five years) reveal some major shifts happening within the company. Some of these are course corrections, others are more radical changes: all are initiatives that we believe will help improve Wipro’s competitiveness over the next few years.

Each of the initiatives discussed below is designed to support what Chairman Rishad Premji highlights as a new ‘obsession for growth’ at Wipro:

  • Nurturing new culture
  • Change in operating model to improve client proximity: structure, the GAE
  • Prioritizing (and de-prioritizing) target markets
  • Formalizing approach to large deals
  • Increasing M&A.

Culture Change

Admitting publicly that you are looking to drive a major shift in culture, while of course retaining core values (the ‘spirit of Wipro’) is brave, as it acknowledges that changes need to be made. It is not appropriate to comment here on perceptions of the legacy culture at Wipro, but the success of this new drive to nurture a culture that has more of a growth mindset is arguably critical to Wipro’s future success. In its attempts to drive cultural transformation across the company, Wipro has elected to adopt a top-down approach, appointing a Chief Culture Officer at SVP level, and encouraging its leaders to be advocates by exhibiting five ‘habits’ in action.

The five habits to be espoused by all Wipro employees are:

1) Being respectful

2) Being responsive

3) Always communicating

4) Demonstrating stewardship of the company (rather than focusing on individual priorities)

5) Building trust.

In sum, the application of these attributes should have clear benefits. For example, internally, it should lead to less of a hierarchical feel within teams and units, more consistency in work practices across the organization, stronger communications and teamwork, and also help with global diversity. And in relationships with clients, it should support Wipro’s ambition to be regarded more as a champion challenger by them, rather than being judged just on its abilities in execution.  

Like all the major IT services players, Wipro has been assiduously rolling out talent re-skilling programs for some years now. These efforts will continue and be intensified. In addition, and reinforcing the ambitious culture change, we should also expect to see much more diversity at Wipro, including (and presumably not limited to) nationality and gender. Having a more diverse workforce, which will require changes in hiring practices and HR policies, will be a critical element in Wipro’s efforts to improve client proximity and reinforce portfolio development, and, importantly, become an employer of choice.

Change in Operating Model: ‘Simplicity over Perfection’

In short, Wipro is introducing a much simpler operating model, with effect from January 1.

The primary P&L will be four strategic market units (SMUs):

  • Americas 1, organized by sector and covering all of Wipro’s major target verticals. Headed by Srini Pallia (was President, Consumer business vertical)
  • Americas 2, also organized by sector, including BFSI, manufacturing, hi-tech, E&U. Headed by Angan Guha (was head BFSI vertical)
  • Europe, organized by region: UK & Ireland, Switzerland, Germany, Benelux, Nordics, Southern Europe. Head to be announced
  • Asia Pacific, Middle East & Africa (APMEA), also organized by region: Australia/ New Zealand, India, West Asia, South East Asia, Japan, South Africa. Headed by NS Bala (was President E&U vertical).

So, what is Wipro looking to achieve by moving away from a vertical-led operating model to a geography-led one, just as Accenture has done recently (also following the arrival of a new CEO)?

Firstly, the move to this model is intended to improve client proximity, particularly outside the U.S. Delaporte acknowledges that one challenge Wipro is facing (one that we have noted for years in our Key Vendor Assessments on the company) is that its revenue growth has remained largely dependent on the U.S. market: apart from the U.K., which accounted for around 10% of global revenues last FY, Wipro has lagged most of its peers in scaling in other key growth markets. In FY20, for example, just 8% of its global revenues (~$660m) came from Eurozone countries, led by Germany and France. Even excluding the impact of COVID-19, Wipro has underperformed in Europe in recent years: looking ahead, Delaporte is looking for Europe and APMEA to contribute around 50% of Wipro’s incremental revenues globally over the next few years.

Secondly, the new model is much simpler than the one it is replacing. A less centralized model with fewer P&Ls should mean more accountability at the local level, faster decision making, for example in deal pursuits, and more agility generally.

Thirdly, Wipro intends to be more selective in prioritizing specific sectors within its identified target markets. Delaporte cites as an example Switzerland, where Wipro’s focus will be Life Sciences, BFSI, Heavy Industries and Consumer. The SMU leads having oversight of industry sector coverage within their regions should enable a more focused approach in prioritizing specific markets at a regional and even country level. This is a move from an approach that has typically looked at sectors through U.S.-centric lenses; Europe and APMEA in particular are expected to benefit from a more regional approach to target sectors and a more intimate grasp of local markets.

The four SMUs are supported by just two global business lines (GBLs):

  • Integrated Digital, Engineering & Application Services (iDEAS), includes domain and consulting, applications & data, engineering and R&D and Wipro Digital. Headed by Rajan Kohli (was president, Wipro Digital)
  • iCORE, includes Cloud & Infrastructure Services (CIS), Wipro Digital Operations & Platforms (DOP) and Cybersecurity & Risk Services (CRS). Headed by Nagendra Bandaru (was President cloud, IT infrastructure services, and DOP).

The GBLs house Wipro’s industry domain capabilities in addition to the service line practices and delivery.

As with the go-to-market, Delaporte is introducing simplicity into portfolio management and the delivery model. (Wipro has been reporting along six industry groups and five practices).

One obvious benefit is improved economies of scale.

Moving to just two GBLs should also help in prioritizing portfolio investments, with a focus on developing integrated offerings that span different practices and are designed to address clients’ business challenges or help them in creating new digital business models: ones that are what he calls ‘at the intersection of strategy, design and technology’. This will be an important move for Wipro: our perception is that Wipro Digital was not well integrated with the rest of the company, limiting the company’s ability to position strongly to clients looking for innovation or transformation partners. Similarly, the new model should also assist efforts to target business stakeholders beyond the CIO.

Unsurprisingly, some Wipro execs are leaving, including Milan Rao and Bill Stith at the end of the year, and Bhanumurthy BM and Anand Padmanabhan over the next few months – but so far, the number is relatively low for a change of CEO and a strategic refresh. As well as new roles such as the Chief Growth Officer, we do expect to see much greater diversity in the regional leadership soon.

Formalizing Approach to Strategic Clients & Large Deal Pursuits

A move to strengthen large account management was to be expected, as Wipro has for many years been lagging its Indian-oriented peers in the number of very large accounts. While FY18 saw a big jump in the number of $100m+ accounts (up from 10 to 15, since slipped back to 13), there has essentially been no movement in the number of $75m+ p.a. or $50m+ accounts since FY18. At end Q1 FY21 (the last quarter before the pandemic began to hit), Wipro had 39 $50m+ accounts (exactly the same number as in FY18), compared with 100 for TCS` and 61 for Infosys.

Wipro’s MEGA and GAMMA accounts currently contribute around 70% of its revenue. Delaporte is looking to accelerate growth in these accounts by more formally centering the organization around the client through a new role. The Global Account Executive (GAE) not just represents Wipro in the account but, importantly, manages that account, supported by industry and technology specialists and delivery managers. Delaporte claims this to be the ‘most important pillar’ for accelerating growth at Wipro, and the GAE the most important role in the new organization. A reflection of its influence and accountability, it is just two layers below the exec committee. His target is for GAEs to constitute 25% of Wipro’s top 200 leaders within a few years.

In addition to strengthening key account management, Delaporte is looking to improve Wipro’s ability to target and land new transformational opportunities. He has acknowledged Wipro has had ‘mixed results’ in winning large deals in recent years; he hopes to improve this by setting up a large deals team that has expertise in deal structuring, including financial and commercial modelling, as well as solution development. We think this is likely to involve external hires of people with relevant experience.

Overseeing the roll out of the GAEs and the build out of the large deals team is the Chief Growth Officer, a new role, and one that is also likely to be an external hire. She or he will also have oversight of strategic alliances; unsurprisingly, there will be a push to deepen and scale existing partnerships with the likes of AWS, Microsoft, Google, Salesforce, SAP and ServiceNow. Expect to see an increase in the number of partner-centric CoEs in support of this.

M&A

Until the last few quarters, Wipro had been relatively quiet on the M&A front for a few years, since Appirio in 2016 and DesignIt in 2015. Expect to see an acceleration in M&A as Wipro looks to expand local capabilities in its target regions in platforms such as Salesforce and ServiceNow and, like Eximius Design, in engineering services in the areas of IoT, Industry 4.0, edge computing, and 5G.

Some of Wipro’s historic acquisitions had not exactly been success stories and here again there appears to be an awareness that a more structured approach is called for: it is setting up a new post-merger integration team which should help in driving synergies and in presenting a joined up face to clients and in its go-to-market.

Of the initiatives that Delaporte is introducing, some might seem on first consideration a little bold, but there is a clear design that seeks to address a range of company-specific challenges that have impeded Wipro’s growth in recent years and boost its abilities to position for the newer types of opportunities that it, and its peers, are targeting.

2021 could mark the commencement of a much stronger performance at Wipro.

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