Wipro Ltd, India’s fourth-largest information technology services company, is still being resolved by their founder chairman. Azim Premji expresses dissatisfaction with the company’s leadership and growth trajectory. This discontent is not solely attributed to recent underperformance but also stems from concerns about cultural shifts, falling growth, profitability, and a string of executive departures.
1) Leadership Dynamics:
Azim Premji, Wipro’s founder and majority owner, has reportedly voiced his displeasure with the current leadership, including executive chairman Rishad Premji and CEO Thierry Delaporte.
The dissatisfaction is linked to Wipro’s recent underperformance and concerns about the company’s strategic direction and cultural changes.
2) Financial Performance:
Wipro anticipates a lack of incremental growth until at least June of the following year based on the current order book and internal hiring estimates.
The company expects a revenue decline of up to 3.5% in the October-December period, signalling stagnation compared to the same period in the previous year.
3) Founder’s Concerns:
Azim Premji, who owns 73% of Wipro, conveyed his disappointment to CEO Thierry Delaporte in a private meeting ahead of the October 18 board meeting.
Cultural changes, falling growth, and underperforming stock are cited as reasons for Premji’s discontent.
4) Share Price Performance:
Despite Rishad Premji defending Delaporte’s leadership, Wipro’s shares have returned 90% between July 2020 and December 2023, lagging behind competitors such as Infosys, HCL Technologies, and Tech Mahindra.
Wipro’s shares had underperformed rivals in the three-and-a-half years before Delaporte joined.
5) Leadership Style and Executive Exodus:
Delaporte’s leadership style, marked by bringing in external talent for a fresh perspective, has led to many executive exits.
Over half of the 750 executives ranked general manager and above have left the company under Delaporte’s watch.
6) Financial Metrics:
Wipro’s sequential revenue growth has been the worst or second worst among the Big Five in five of the last six quarters.
Operating margin has also suffered, falling from 19% in June 2020 to 16.1% in September 2023.
7) Future Decision-Making:
Despite Azim Premji’s concerns, it is emphasized that decisions regarding the future of CEO Thierry Delaporte will be made by the board and executive chair Rishad Premji.
Rishad Premji is described as the decision-maker, and it is up to him and the NRC to determine the CEO’s future.
Summary
Wipro finds itself at a critical juncture as founder Azim Premji expresses dissatisfaction with the company’s leadership and performance. The clash between cultural shifts and growth challenges poses significant hurdles that Wipro must address to regain momentum and stake its claim in the competitive IT services landscape. The decisions made in the coming months, particularly regarding leadership, will likely shape Wipro’s trajectory in the evolving technology market.
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