India’s third largest IT services company Wipro Limited has effected a top level management change on Monday after its board approved the appointment of former TCS stalwart Abidali Z Neemuchwala as the chief executive officer and member of the board of the company.
Wipro’s incumbent CEO TK Kurien, 58, who has been at the helm of affairs for five years and is a company veteran, has been elevated to the position of executive vice-chairman. Both appointments will be effective from February 1, 2016, read a statement issued by Wipro to the bourses. Billionaire and Wipro Limited founder Azim Premji continues as the company’s chairman.
The Azim Premji-led company has been working on a slew of turnaround measures over the last three fiscals to get itself back to industry leading growth. Wipro has been underperforming compared to its larger rivals TCS and Infosys as well as the industry as a whole.
In the last two years, the Indian IT industry has been growing between 12 and 14 percent, with smaller IT firms like Tech Mahindra reporting growth figures of 18.3 percent. Wipro, however, has reported revenue growth figures of between 6.4 and 7 percent in the last two fiscals.
“Wipro has been a laggard in the last few years in terms of growth and positioning. The leadership change is good at this juncture. I feel it is a good move,” said V Balakrishnan, chairman, Exfinity Venture Partners. Balakrishnan was the former CFO and board member of Infosys Ltd.
While Kurien’s new appointment is for a one-year period, Neemuchwala’s new role is for a period of five years. Both appointments are subject to shareholder approval.
“Over the past five years, Wipro has been transforming into a next generation technology and consulting company with defining differentiators in the market place,” said Azim Premji, chairman, Wipro Ltd, in the company statement. “TK (Kurien) will enable Abid by leveraging his deep relationships with customers and chart out a new technology roadmap for Wipro,” added Premji.
This high-level management rejig at Wipro comes over a year after its cross-town rival Infosys effected a leadership change, bringing on board Vishal Sikka as its chief executive officer and managing director. The new leadership at Wipro also signals Premji’s intent—at least for now—of having an outsider run the company instead of handing over the reins to his son Rishad, who is presently the chief strategy officer and member of the board.
Rishad joined Wipro in 2007 and has since played a key role in the company’s strategy building, and driving its mergers and acquisitions play. Last year, Wipro appointed Rishad to its board. The Premji family, as per data made available on the website of the Bombay Stock Exchange, holds around 74 percent stake in Wipro Ltd, which has a market capitalisation of Rs 1,37,834.25 crore ($20.69 billion).
Forty-eight year-old Neemuchwala joined Wipro as group president and COO in April last year, after having spent 23 years at India’s largest IT firm TCS. He has been credited with a track record of building and scaling businesses.
But, given the changing dynamics of the Indian IT landscape, Neemuchwala will have the unenviable task of putting Wipro back on a high-growth trajectory. While Infosys, under Sikka’s leadership, has shown growth in key parameters, Wipro has been falling short of market and analysts’ expectations, making some like Balakrishnan to label the Premji-led company as a laggard.
“For the new CEO, the challenge now would be to build a new team that would look into key areas of sales, marketing and execution. In the changing landscape of the Indian IT industry, the new leaders need to connect well with customers,” added Balakrishnan.
Shares of Wipro closed at Rs 557.95, marginally up 0.28 percent on the Bombay Stock Exchange on Monday. The sensitive index, Sensex, ended the day down by 2.05 percent.