W Power 2024

Why Wipro is returning to its roots with new CEO Srinivas Pallia

India's fourth-biggest IT services company has never had a professional chief executive complete two full terms at the helm

Harichandan Arakali
Published: Apr 8, 2024 11:50:15 AM IST
Updated: Apr 9, 2024 12:03:32 AM IST

Why Wipro is returning to its roots with new CEO Srinivas PalliaSrinivas (Srini) Pallia was named chief executive and managing director of Wipro, with immediate effect on April 6. Pallia will replace Frenchman Thierry Delaporte; Image: Shutterstock

Wipro has a new CEO. One more time. Srinivas (Srini) Pallia was named chief executive and managing director with immediate effect on April 6, according to a press release from India’s fourth-biggest IT services company.
 
Its ranking at number four is one way to tell the story, after first Cognizant Technology Solutions and then HCL Technologies overtook the iconic Bengaluru IT company, and surged ahead, over the last 15 years or so.
 
If one were to include Cognizant, a US headquartered and Nasdaq-listed company, but with deep Indian heritage as they say in the industry, Wipro would be lower another position at number five.
 
Pallia (55), joined Wipro in 1992 and never left, starting out as a product manager and rising through the ranks to become the boss of what Wipro calls Americas 1 business (basically the US), its biggest market by far.
 
That’s another way to tell the story, that by and large, foreign CEOs are a very tough sell in Indian companies, where big culture and organisational overhauls led by such CEOs are unlikely to succeed. Markets analysts are expecting Wipro to be probably the only top Indian IT company to report a revenue shrinkage when the IT companies report their fiscal fourth-quarter and full-year earnings starting with Tata Consultancy Services (TCS) on April 12.
 
Pallia will replace Frenchman Thierry Delaporte, ending Wipro’s four-year experiment with a foreign CEO, who put the company through a couple of difficult re-orgs, even as Covid was raging. Most recently a growth office he’d created to land big contracts was shut down and top exits included the somewhat shocking departure of CFO Jatin Dalal, in September 2023, who until then was seen as Wipro lifer.
 
“It is very hard for a non-Indian to run a large Indian firm,” Peter Bendor-Samuel, CEO of tech services consultancy Everest Group, says. And the macroeconomic conditions that he had no control over made Delaporte’s job that much harder.
 
He undertook a significant transformation of Wipro, invested in consulting, reorganized, and upgraded the talent with the goal of raising Wipro to become a provider of higher value-add technology and tech services, Bendor-Samuel says.
 
Ray Wang, principal analyst at Constellation Research echoes this: “Thierry attempted to make Wipro a more global company, but the macro conditions required different business models.”
 
Delaporte did indeed bring in some high-calibre people. For example, Wang points out the appointment of Jason Eichenholz in August 2021 as the head of global partnerships. With Eichenholz’s help, “they were able to expand presence and grow into new device lines with acquisitions,” Wang says.
 
Eichenholz had exemplary credentials, with a career that includes Deloitte Consulting, where he was a senior leader running the company’s cloud business. Indeed, just around the time Eichenholz joined Wipro, the company had launched Fullstride, its comprehensive suite of cloud solutions. Delaporte had announced a billion dollars in further investments to expand these services.
 
Stephanie Trautman too, the newly created head of Wipro’s growth office by Delaporte, and to whom Eichenholz reported to, had an impressive CV. She was previously a managing director at the much larger rival Accenture and in charge of that company’s work for some of its biggest clients. She resigned in December 2023, with the shutting of the growth office.
 
Had he succeeded, Delaporte would have positioned Wipro as a leader in the new “post digital services era which is just now emerging,” Bendor-Samuel says. The advent of generative AI along with the post Covid tech pull back happened while Wipro was in the middle of its own re-org. This contributed to its performance lagging that of its peers, he says.

Also read: Wipro GE HealthCare to invest $1 bln to boost manufacturing in India

 
“As a European it was difficult to win the hearts and minds of a traditional Indian IT services firm and this undoubtedly also contributed to flagging morale,” Bendor-Samuel says. Delaporte, despite the upheaval at the company, is leaving it better positioned with the start of a strong foundation, but didn’t find a way to finish the job, he says.
 
Wipro’s Chairman Rishad Premji acknowledged Delaporte’s effort in the press release. “The changes he implemented have better positioned us for the future,” Premji said. “We have optimized our structure, enhanced our leadership, prioritised partnerships, and improved our overall efficiency. This provides a strong foundation for Srini to effectively build upon.”
 
“The cultural change was too much for many,” Wang says. “It takes an outsider to make massive change and it takes an insider to bring back the core of the culture. Srini is the right internal choice.”
 
In Srinivas Pallia, Wipro is returning to a company insider who’s spent his entire three-decades-plus career with it. “Wipro is still a good franchise with good people, it has lost its way. It is important for both Wipro and the industry that he succeeds,” Bendor-Samuel says.
 
“Srini is an ideal leader to lead Wipro at this pivotal moment for our company and industry,” Chairman Rishad Premji said in the press release, adding that the incoming CEO’s “commitment to Wipro's values, make him the perfect fit” for the next stage of Wipro’s evolution.
 
While, as an insider and an Indian executive, he’s likely to raise morale, the market remains unforgiving both in terms of the state of the global economy – while America avoiding a recession and the resilience of its economy brings cheer – and the unprecedented rate of change of technology today.
 
“There are massive forces at play from AI arbitrage to a merging compression market that are weighing on all services firms,” Wang says.
 
The analyst points out that the new CEO has been through the changes that his predecessor put in place. Therefore, he would know what worked and what didn't, and he now has an opportunity to build on the parts that worked and fix the ones that did.
 
Pallia is faced with continuing the transformation of adding the higher value services to Wipro and getting Wipro back to a high level of execution, Bendor-Samuel adds.
 
“His biggest challenge in the immediate future is the poor tech and tech services macro environment,” he says.
 
Fortunately for him, everyone understands that he’ll need time and at least for the first six months to a year, people will give him that – investors and employees alike.
 
In this time, if the macro conditions start turning around, Pallia’s job becomes easier to that extent. He can focus on building on the strengths of what is still a formidable tech services powerhouse with a long history of delivering great projects, and a company unafraid to bet on big acquisitions.
 
Pallia’s longer-term challenge will be that Wipro must indeed transform itself to meet the age of AI. This transformation will not come cheap, Bendor-Samuel says. If Wipro is to successfully reposition itself as a leader in this new market it will need above market investments over several years and will likely need to keep profit margins below industry norms until this transformation is finished, he says.
 
Pallia holds a Bachelor’s degree in engineering, and a Master’s in management studies from Indian Institute of Science, Bengaluru. He graduated from Harvard Business School’s Leading Global Businesses executive program, and the Advanced Leadership Program at McGill Executive Institute. He will be based in New Jersey and report to Chairman Rishad Premji. Delaporte will remain till May 31 to help with the transition.
 
“We have the right strategy, and tremendous people and capabilities throughout the organization,” Pallia said in the press release, of the $10 billion revenue company with 2,40,000 employees.
 
Bendor-Samuel asks: “The question is, will he be given the time and the investment to pull it off.”
 

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