3 years on, Wipro CEO has several hits, and misses too

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    BENGALURU: As Wipro chief executive Abidali Neemuchwala completes three years at the helm, he lists out his hits and misses: the push towards digital, cloud and localisation have been hits, while transformation of Wipro has taken longer than expected.“Health business (due to HPS) has been unfortunate because of the Obamacare issue,” Neemuchwala told ETin a recent interview. “ Otherwise the investments we made are paying off. Our investments in cloud, digital and consulting have been well taken. Localisation has been successful… now everyone else is doing it and our investment in reskilling has worked very well. Our contracting cost is not going up.”During the nine months to December 2018, Wipro grew 5.7%, more than double the growth of 2.7% in fiscal 2018. This pace, however, is slower than larger rivals Tata Consultancy Services at 12.1% and Infosys at 10.1%.Indian IT service providers are winning large deals as clients look to expand beyond pilot projects to embrace the newer digital capabilities across their organisations. It means stitching legacy software applications that is used in desktop computers to one that can be accessed on smartphones. Some of these deals come with taking over existing employees of clients like that of Alight Solutions by Wipro and Verizon by Infosys.Neemuchwala, a soft-spoken IT services industry veteran who joined Wipro from larger rival TCS, has made efforts in areas such as automation, acquiring capabilities and talent in cloud computing-led services since he took charge in February 2016.Wipro, under Neemuchwala, however continues to lag behind its peers, a trend that it has seen from its past chief executives in the last decade. Wipro chairman Azim Premji had sacked co-CEOs Suresh Vaswani and Girish Paranjpe within three years in 2011 after Cognizant overtook the company. TK Kurien’s five-year performance was also below its peers and Neemuchwala saw HCL Technologies pip it to the third spot.Now, Neemuchwala says the company needs few more quarters to fix issues with India restructuring, health care and manufacturing vertical before faster growth.“Abid(ali) has had a lot of internal issues to deal with and resolving these has put a drag on earnings and growth relative to its peers,” said Peter Bendor-Samuel, chief executive of Everest Group, a technology researcher. “Having said that, Wipro is emerging with a strong portfolio of digital assets and looks to be closing the gap.” In 2016, the company made two acquisitions— HealthPlan Services (HPS) and Appirio—totalling nearly $1 billion to strengthen healthcare services and cloud-based offerings.67731117

    HPS, however, has been dragging its profit numbers for more than six quarters owing to uncertainty of the Affordable Care Act (ACA), since Donald Trump took over as president of the United States.Appirio has been best bet so far, said analysts. “Appirio has been a better acquisition by Wipro as it has kept a lot of the talent in place, hasn’t smothered the culture and is benefitted from the Topcoder and SaaS (software as a service) skills it brought to the table,” said Phil Fersht, chief executive, HfS Research.The early acquisitions helped Wipro position itself in new industry segments, but HPS got into trouble as Wipro got its timing wrong and the market shifted soon after the deal closed.“Wipro is emerging with a strong portfolio of digital assets and looks to be closing the gap with its peers. There is little doubt that the major challenge for Wipro and Abidali is and has been to accelerate growth. It appears to have the assets although it will need to continue to acquire new ones,” said Bendor-Samuel.Since Neemuchwala joined as chief operating officer in April 2015, Wipro has spent nearly $1.1 billion in four crucial acquisitions—Designit, HealthPlan Services, Appirio, InfoSERVER.His highlight was the closure of the $1.5-billion Alight Solutions deal, which helped him break the impression that Wipro was not in the big deals game, while larger peer TCS closed over $6 billion in few months.“Not only has he stabilised modest growth and financial performance, he has improved the culture and perception of moving up the value chain,” said Fersht.Neemuchwala also consistently looked out for startups that can add value in its core services and in the new areas and made minority investments in these firms. Wipro created Top Gear on the lines of Topcoder for its internal employees keeping in sync with the evolving style of work for technology professionals.Analysts believe more investments in digital is needed for faster growth.

    Read more: economictimes.indiatimes.com

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