Pace for Thekkethalakal Kurien Kurien is a habit. On a recent sunny Tuesday morning, at the 75-acre Wipro campus in south Bangalore, he strode from one block to the building where his office is located, then ran up the stairs to the fifth floor in less than two minutes.
The Wipro Technologies CEO often hops to London, finishes five meetings in a day, takes a shower on the plane back home, and returns to his Bangalore office - all in 36 hours. His schedule for four days at last week's World Economic Forum at Davos had 38 meetings.
Kurien is the man Chairman Azim Premji chose a year ago to bring back into the mojo his careworn enterprise - Wipro Technologies, the crown jewel in the eponymous soaps-to-software empire, and one that brings about threefourths of the group's $7 billion revenues.
In an unswerving sort of way, the CEO of Premji's $5.2 billion software business is driving home a message to his fellow managers: get out of your comfort zone and hit the road. Or, get out. That, he believes, is the only way the company will regain the confidence of its customers, punctured over the last many quarters.
We have got a new energy in the organisation; we are far more agile now: Azim H. Premji
The energy of the driven CEO, who is completing a year in his new role, is slowly and surely rubbing off on Wipro. After four quarters of timid growth, Wipro registered an increase of six per cent in new business in the September quarter from the preceding three months, beating peers Infosys and HCL Technologies. While volume growth, a measure of fresh revenues added over the preceding quarter, in the October-December months was a tad lower than that of its rivals, Wipro's outlook for the March quarter beats that of Infosys: Wipro says it expects sales growth of up to three per cent; Infosys has told investors to expect a flat quarter.
"We have got a new energy in the organisation, we are far more agile now," says Premji, 66, in a rare interview. (See No More Drastic Changes, We Need Speed Now
) "We are making yes-no calls. It is say and do at the same time and not just say and don't do," he adds, crediting Kurien, who has worked at Wipro for more than 10 years, with the transformation.
Wipro's share of larger customers' wallets is growing. As a percentage of overall revenues, contribution from its top five customers has grown a percentage point to 11.8 per cent in the December quarter compared to a year ago. The number of clients contracting work more than $100 million value or more has jumped to six from one.
"We even have one customer [worth] more than $200 million," says Premji, who owns 79 per cent of Wipro.
To be sure, Wipro is way behind Tata Consultancy Services (TCS), which has 14 customers with billings of more than $100 million, and Infosys (13), but growth is around the corner for the Premji company.
A global survey by Forrester Research of 1,000 technology decision makers in September 2011 says that global enterprises are likely to buy incrementally more from Wipro - 13 per cent more in the next 12 months, a rate of expansion smaller than that for TCS and equal to Cognizant's but higher than for IBM, HP, Infosys, HCL, and Mahindra Satyam.
One more dipstick on the days ahead for Wipro is how its shares have moved in the last year. The stock lost 35 per cent between December 31, 2010, and end-August 2011, falling faster than the information technology (IT) sector index - that shed about a quarter in the eight months. The stock has bounced back to Rs 417, gaining nearly 31 per cent as of January 27 since end-August, outpacing the sector index, which expanded at 10 per cent, TCS (16.5 per cent) and Infosys (24 per cent).Down, then up
A similar Forrester survey in 2010 had bluntly spelt out that all was not well with Wipro. Technology heads surveyed then said they would not increase business with Wipro. Customers were telling Premji and Wipro that the enterprise was losing their confidence. At a time when Infosys, TCS and Cognizant were aligning teams by the industries they served, Wipro was organised into multiple teams in what the company called a three-axes structure.
Several industry teams (referred to as verticals) were meshed with teams with practice capability such as technology infrastructure services and application development maintenance (commonly called horizontals) and with those looking after a country or region. Not only were the reporting structures and bonuses vaguely linked to account servicing, but team heads also often worked poorly together confusing customers.
Some even created their own power centres.
The rest of the industry was pulling ahead on strategy as well. Wipro was largely playing on the cost side, or helping enterprises lower their operational costs, at a time its peers were attacking the revenue side - helping clients grow revenues and become more efficient. Outcome-based billing, cloud computing, customised platforms, and other new models were the order of the day.
Wipro also paid the price for slower decision making under its joint-CEO structure, which lasted 33 months and which Premji ended in February 2011 by bringing in Kurien. Presentations, plans and reviews took precedence over quick execution under Suresh Vaswani, a champion of horizontals, and Girish Paranjpe, a verticals-focused veteran. "To be fair to our previous two CEOs, they were more reflective, more management by consensus. But the whole cycle of decision making got delayed. We lost time. T.K. is willing to make the big swings," Premji says.
The biggest bet that Kurien has made is on a new organisational structure, a near-manic focus on performance, and fresh blood in place at Wipro. In the joint-CEO era, Wipro went to market in a convoluted way - vertical, horizontal and geography heads all knocked on the door of the customer.
Kurien tore apart what was called the three-axes structure and now, only verticals call the shots when it comes to approaching the customer. Teams with domain specialists and horizontal skills mine large customers for more work.It's the Customer, Silly
Meet Wipro veteran and rising star, the 42-year old Sangita Singh, Senior Vice President of the health care and life sciences business. Pulling out a notepad, she draws a big square box and marks it as "CEM". Three smaller boxes follow below and those are marked delivery, domain experts and deal hunters.
CEM, in IT lingo, is customer engagement manager. Sixty-six of them, typically with 20 or more years of experience, are responsible for its biggest and most promising accounts.
Delivery, domain experts and sales report into her. CEMs, in turn, report to vertical heads. Earlier, not everybody was reporting into CEMs and this limited her ability to go at full tilt. Wipro is also now saying 'small is big', asking CEMs to manage deep and mine one customer rather than go for width. "Impact matters, size doesn't," says Singh.
Kurien is a man of few words but can get charged up - with eyes widening and nostrils flaring - talking about performance and accountability. "If you mess up on delivery, it is a sin not forgiven," he says. "If you fail, your entire team is accountable. If you succeed, the entire team succeeds.
That is the culture we are trying for." Some of that has not gone down well with Wipro's rank and file. Especially, a decision that from April 2011, a chunk of every Wipro employee's salary - in some cases as high as 30 per cent and even at junior levels 12 per cent - would be linked to customer satisfaction, growth, operating margins, and even attrition in teams.
Priority customers are happy, though. Sharad Singh, director, IT, Baxter Healthcare Corporation, and a fastgrowing account for Wipro, says that the CEM model has brought in more transparency. "Multiple people are not dealing with us any longer. It is one clear line of accountability. Secondly, there is more connect with Wipro at the leadership level," he says on the phone from Chicago. Baxter first outsourced to Wipro in 2009 and has since increased the scope of work across product engineering, business intelligence, analytics and social media.
Many say the firm's increasing investment in domain specialisation, people, sales and marketing is what will make it a dark horse in the future. Investments are only going into what is now defined as "momentum" verticals: banking and financial services, health care and life sciences, energy and utilities, and retail. The hiring of domain specialists is creating a differentiator for the firm and, says HR Head Pratik Kumar, between the level of vice presidents and general managers, Wipro has recruited at least 20 domain specialists in recent quarters.
Customer-facing teams have bulked up - 1,800 today versus 1,200 last year - and Kurien promises to add more muscle by budgeting two more percentage points of Wipro's revenues for sales and marketing efforts, up from 5.6 per cent. Comparable numbers are not easily available except for Infosys, which brokerage Sharekhan estimates spends 5.2 per cent of its revenues.
Executives will not name customers but industry insiders say Wipro has won a $50 million IT services deal from drugmaker AstraZeneca, a $250-million contract from a UK utilities company, and a $50-million renewal deal from Thames Water, a London water company. The retail business unit has similarly picked up a large order from UK's Premier Food. All of them had domain experts leading customer engagements.
BT spoke to a vice chairman at a large division at a bank which had awarded a $100 million contract to Wipro a few months ago. This executive did not want his or his employer's name taken. Over the past one year, he says; Wipro has won more strategic work from the bank compared to TCS and Infosys. "They are handling our most complex application, critical for our organisation's future," says the executive, without giving more details.
A new Premji?
Over recent weeks, Kurien's calls with his direct reportees in the morning, sometimes done at 5.30 a.m. when he is out jogging, show up fewer fires that need to be put out. And, his boss is happy to take a distanced view. Premji, one of India's richest men and an outlier among the country's software elite in that he owns a dominant majority of his firm, says he no longer gets sucked into business nitty-gritty and travels much less ("60 to 65 nights a year from the 100 I did earlier"), restricting his meetings with CEOs.
If Premji is beginning to put some distance between himself and the business, it is a big change, one that may actually help the company in the long run, says a person with a deep insight into Premji's working style. This person, a former Wipro senior sales executive asking to stay unnamed, says Premji's style for decades has been very "metric-driven and handson".
"You deliver and he will keep all his commitments. But, if you fail, he can be hard as nails," he says, relating it to the sudden exit of former vice chairman Vivek Paul in 2005 and, more recently, the Vaswani-Paranjpe duo.
Contrasting the nine-year stint of Sam Palmisano as IBM's Chairman and CEO with Paul's term that ran just six years, the person says the freedom that Premji is giving Kurien is a sign that the Wipro chairman is focusing more on the long term.
Part of that long-term vision, much as it sounds overly ambitious, is that Premji firmly believes Wipro can be among the top five services companies globally if it supplements organic growth with a few acquisitions.
Its 'string of pearls' acquisition strategy may have produced mixed results for Wipro - buyouts such as business process outsourcing company Spectramind have worked brilliantly; Nervewire, a Massachusetts, US-based management IT consulting firm not so much - but its stance stays unchanged.
There may be similar tuck in acquisitions around the corner. The health care and life sciences business, for instance, needs to build capability and scale quickly to capitalise on what is turning out to be a huge opportunity. Wipro may be shopping for an analytics firm as well, a space it wants to get a toehold in.
All this talk is reassuring but some are not convinced. Market watchers, for instance, think that the company's return to health is work in progress. Brokerage house Motilal Oswal believes that Wipro may not reap the benefits of the restructuring in the coming year. Sanjeev Hota, Assistant Vice President of IT research at brokerage house Sharekhan says Wipro is at least two or three quarters away from catching up with its peers.
"Their good work should start reflecting in the second half of fiscal year 2013," he says, adding that margins will continue to remain under pressure, particularly if the rupee appreciates.
If you listen to the Wipro Chairman, it may seem easing up on the margins front - 20.8 per cent in the December quarter versus 22.2 per cent a year ago - is deliberate. Referring to the plan to spend two per cent of revenues more on sales and marketing, Premji says: "We are just deciding that growth is more important that getting than two per cent extra squeeze out in operating margins."
Senior executives at Wipro, shaken up like never before in the last year, are breathing easier for another reason. The shorttempered taskmaster in Kurien (his nickname in some quarters of the company is Kolaveri Kurien -kolaveri translates into murderous rage - after the Tamil song that went viral in recent months) is easing up.
Last quarter, he took all those who directly reported to him to Goa for a break. When it suddenly rained, they all played cricket on the beach. Going by his record, he must have kept a tab on deal closures every over, while prodding his players to keep executing. "Strategy without execution is hallucination," Kurien says, quoting Thomas Edison, the founder of General Electric, a company that he cut his teeth at.
What will his place be in Wipro's hall of fame? "In our business you have to judge the boss after he leaves," Kurien says. He wants to be judged on how successful he is in building a company with disruptive services. "If this enterprise thrives and does well two years after I leave, I would say I have done my job well," he signs off.Additional reporting by Sunny Sen