As Abidali Neemuchwala takes over as CEO of Wipro from February 1, he is faced with the arduous task of turning around a company that still relies a lot on traditional outsourcing services and not enough on new age technologies such as automation and cloud computing.
Wipro currently seems to be where Infosys was in 2012. Quarter after quarter, Infosys numbers were unpredictable and the strategic direction of the once bellwether company was not seen clearly.
Wipro, by all counts, seems to be in the same boat and this could be the third consecutive year of single-digit growth, considering its tepid revenue guidance of 7.4-7.9 per cent for Q4.
Compare this to the recent performance of Infosys, which is starting to see a turnaround since Vishal Sikka took over.
Indian exporters are still relying in excess of 40 per cent of their revenues from business that requires maintaining and updating IT systems of Fortune 500 companies. While that may look good, this business is seeing commoditisation, much like what is happening in the computer server market.
Clients are increasingly asking for differentiation as cost takeouts are a given, says Srikar Reddy, CEO of Sonata Software.
As an example, he cited software testing, which used to be a gateway for projects, which is not being carved out separately but getting included as a part of a larger project by clients.
Wipro acknowledges this change in the way deals are being parcelled out, and Neemuchwala had told BusinessLine recently that the company was now eying deals wherein clients could see the impact of technologies on their business.
To achieve this, management has been reshuffled, and new unit called Marketing, Innovations and Technology has been created. Add to this, Neemuchwala has made it a point that each business unit head be responsible for the delivery of software, in addition to managing sales.
Wipro is faced with a challenge similar to what Infosys faced before NR Narayana Murthy took over and restructured the company. “Infy was better placed when Vishal Sikka took over. Wipro has got a bigger challenge,” says Urmil Shah, IT analyst at IDBI Capital. The challenge that Shah refers to has to do with a couple of things.
Challenges aheadThe company is seeing huge stress amongst clients in verticals like energy and utilities, telecom, and media & entertainment, which contribute 40 per cent to revenues, with four of the top 10 clients in the energy vertical, who are reeling under falling crude oil prices.
“There is a need to acquire more clients in financial services, manufacturing and healthcare, which will help to offset slowdown in other verticals,” says Shah.
Another challenge has to do with re-skilling a large part of its workforce, get them to think and execute projects differently, something which Infosys is doing with ‘Design Thinking’.
“Pure play services mindset won’t help; there is a need to have new offerings around current themes such as digital, mobility, etc, and Wipro’s sales force needs to be aggressive around that,” opines Kris Lakshmikanth, CEO of Headhunters India.
To be fair, Wipro has new offerings around analytics (called Holmes) and has acquired companies to help customers with new design experiences. It has partnered with start-ups in areas it does not have the capability.
Also, Neemuchwala has identified sales effectiveness as a key focus area to drive effective client mining.