Will reshuffle bring back growth at Wipro?

In a massive top-level reshuffle last week, Wipro, India’s third-largest IT services firm, announced the exit of Anand Sankaran who was handling a major chunk of the company's overall business. 

Sankaran was senior vice-president, heading the company's India and West Asia business, apart from the global infrastructure services operations.

Additionally, Wipro reallocated and added to the portfolios of some key officials including Shaji Farooq, Soumitro Ghosh, Jeffery Heenan Jalil, GK Prasanna and Bhanumurthy BM.

These appointments will come into effect from January 1, 2014.

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Even though the management overhaul is being seen by industry observers as a “meaningful” step, most of them would rather wait and watch before giving their thumbs up to the Bangalore-based IT services company.

While experts believe that the reshuffle will help Wipro bring in fresh perspective, uncertainty is likely to persist for some more time before a serious turnaround can happen.

“Execution is the key. It is easier said than done because ultimately you are dealing with human beings, which is a variable,” says Arup Roy, research director at Gartner, referring to the management reshuffles and organisational restructuring by Indian IT companies over the recent past.

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“It is good that some companies are restructuring and realigning, but they will have to ensure that the transition happens smoothly.” 

To be sure, the organisational overhaul at Wipro started two years ago when the company decided to move away from its joint CEO model and made Kurien the sole chief executive.

In April 2008, the company had shifted to a joint CEO model and elevated Suresh Vaswani and Girish Paranjpe to those positions.

The move caused a lot of heartburn among some senior executives and the company saw several exits, including that of P R Chandrasekar (who subsequently joined Hexaware), Sudip Banerjee (left to join L&T Infotech) and Sudip Nandy (who joined telecom software maker Aricent).

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Since Kurien took over as CEO, Wipro has undertaken several steps to combat its shrinking market share. In 2011, it realigned its organisational structure in order to make itself a simplified, industry-domain-led business.

Earlier this year, it demerged its non-IT businesses into a separate entity to focus on its core IT business. 

Over the past few years, many Indian IT companies have restructured themselves to ensure relevance in a changing market environment. For example, Infosys too changed its top-level management recently. While reshuffling may bring in some uncertainty in the near-term, most believe it is a positive move. 

“Some management churn is good for a company as it helps to bring in fresh perspective and makes the company future-ready,” says Manish Bahl, vice-president, Forrester Research. 

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In an email to employees, CEO TK Kurien said: “As the US and European economies look set to get back to growth, the financial services industry presents significant opportunities. Both India and West Asian geographies present great opportunities, even amidst a challenging social-political climate. In order to better address these opportunities, we are making the organisation changes.”

Meanwhile, there are several theories doing the rounds on what prompted the reshuffle. Many industry observers believe it had nothing to do with Wipro's long-term growth plans. Calling it a “forced reshuffling”, analysts claim that the company may have had to take the decision in an attempt to split the large portfolio that Sankaran was handling. 

However, not everyone agrees. They claim that the resignation of one individual cannot prompt such a large-scale move. There is also a belief that the management reshuffle may have prompted Sankaran’s exit.

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“This kind of plan cannot be drawn out overnight, so it has taken longer than we would think,” says a senior analyst at a domestic brokerage house “In fact, it is a possibility that under this rejig, Anand was given a portfolio that he did not approve of and decided to move out. Also, Wipro had to give people like Shaji Farooq larger portfolios than what they had earlier. So it seems to be a part of a well thought-out strategy.”

Industry observers say the names that have come up after the reshuffle do inspire a lot of confidence in Wipro's future. “Most of the people who have been named in the restructuring are known to investors and are credible individuals,” says a Mumbai-based analyst with a foreign brokerage. 

Among others, observers say that the appointment of Farooq as the global head for the banking and financial services vertical is a good move by Wipro. Farooq was earlier heading advanced technologies & go-to-market transformation of the company. 

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