If two heads are proving better than one, what should one be doing with another rapidlymaturing one? More so, if the third head stands on young shoulders and is also the proverbial chip off the old block? That could well be the poser that Azim Premji, Chairman, Wipro, is wrestling with.
It’s doubtless a delightful poser to be grappling with—one that would be the envy of more than a few promoters. Consider: On the one hand Premji’s elder son Rishad is on the rise at Wipro, earning a significant promotion at the beginning of July and seemingly on track to take over the reins (although later than sooner). On the other hand, the one-yearyoung joint CEO structure is working swimmingly, with the efforts of the two dovetailing beautifully most of the times to yield visible results. Premji Senior, it would seem, has a problem of plenty when it comes to choosing a successor.
To be sure, it would be premature to anoint Rishad as Crown Prince. Yet, the way he’s being groomed suggests that he could well be Wipro’s next Big Cheese. On July 1 this year, Rishad, a 32-year-old graduate from Harvard Business School who has cut his teeth at GE and consulting giant Bain & Company before joining Wipro two years ago, was promoted from business manager in the financial services business to general manager for treasury and investor relations at the soaps-to-software company.
This move may have seemed like a routine exercise to some, although people who’ve tracked Wipro closely see this as another attempt to give Rishad broader exposure to the company he is expected to inherit. While his father inherited a creaking vegetable oils firm as a 21-year-old who was yet to complete his electrical engineering degree at Stanford, Rishad’s ascent has been much more measured.
He’s spent a couple of years under one of the joint CEOs of Wipro’s IT business, Girish Paranjpe, who used to earlier run financial services. Now, Rishad is getting exposed to another—and insiders claim equally important—facet under the guidance of a new boss, Rajendra Kumar Shreemal, who is Vice President, Treasury and Investor Relations.
The two-CEO structure is working well...
|Decision-making is hastened, with only two executives required to take a call, compared to 14-15 earlier|
|Both CEOs have complementary skills and personalities, which helps make either a quick decision or well-informed one|
|Mid-level managers get more face time with either CEO|
|Ability to draw best practices from across the company to aggressively target new businesses|
|For example, the Unitech and Aircel deals won leveraging expertise from global practices|
...even as Rishad is being groomed in different functions
|Educated at Wesleyan University and Harvard Business School|
|Has done stints at General Electric and Bain and Co.|
|Joined Wipro in 2007 as a Business Manager|
|Recently elevated as General Manager, Treasury & Investor Relations|
|Only 32, and would be in no hurry to shoot up the ladder|
Despite claims to the contrary— the Senior Premji accuses media of mixing up ownership and management— insiders say one path for Rishad would be to become Vice Chairman, if not directly Chairman. “Rishad hasn’t been given the job straight away… He is being groomed in different functions,” says Bala Balachandran, J.L. Kellogg Distinguished Professor of Accounting and Information Management, Northwestern University.
Perhaps Balachandran is ideally placed to comment, having undertaken multiple mentoring sessions with Wipro’s top managers and having even advised Rishad on his choice of management school. Others BT spoke to within and outside Wipro claimed that Rishad had already begun meeting key customers in the financial services business across Europe and North America. Wipro wouldn’t confirm this development. “In my view he has integrated well and enjoyed the roles he has performed,” points out the Chairman.
Yet, the Senior Premji doesn’t seem to be in a hurry to relinquish his hold overnight. In the IT business, which earns 80 per cent of the company’s revenues, Premji has put in place a much-debated joint CEO structure, by appointing Wipro lifers Girish Paranjpe and Suresh Vaswani to run the $4 billion (Rs 19,200 crore)-plus business.
“It will be a mistake to assume that it is an easy structure to pull it off. We were fortunate that we had two individuals who knew Wipro and each other extremely well. This model has given us greater breadth and depth to leverage all opportunities because of the force of two,” says Premji. “We used to have decision-making by democracy,” adds Wipro Technologies’ CFO Manish Dugar, referring to the previous management structure which had 14 or 15 business and support function heads reporting to the Senior Premji. Earlier, business unit heads had to go before a committee when they wanted to pitch for a large contract or consider an acquisition to drive growth.
Previously, Wipro had five different Vice Chairmen in a clear second-incommand role, as Rishad earned his stripes in the US and Europe. It was the departure of the last of these Vice Chairmen—the high-profile Vivek Paul—that saw Premji put in place a muddled top management matrix for Wipro’s IT business. This lasted just a couple of years and was replaced by a more efficient, but also more contentious, joint CEO structure.
While there have been many welldocumented flameouts of the joint CEO model (Goldman Sachs, Citigroup, Unilever), Wipro seems to have lasted at least one year with its structure. Co-CEOs Paranjpe and Vaswani, who are on the surface very different—one listens to carnatic classical music and the other to rock—have managed to harness their complementary skills to steady Wipro’s fortunes in a tough market. “Suresh likes to take a quick, impulsive decision, but Girish prefers to step back, give it a second thought and then take a call,” points out Dugar.
The CEOs have indeed managed to work together at several critical junctures. Example: A few months ago, they jetted off to Europe to meet an important prospective financial services client. At stake was a multimillion dollar deal, which saw most of the top brass personally flying in to steer the pitch for Wipro. To try and convince the financial services giant, Wipro had Paranjpe, the former head of the firm’s financial services unit, discuss new forms of derivatives and settlement, new laws such as the Patriots Act influencing their outsourcing plans and the new world order in the industry with this firm’s top managers, even as Vaswani could detail his firm’s process and competency expertise to swing the deal.
Wipro’s joint CEOs have managed significant growth in a tough market. Rather than try to chase down business in the West and mature industries such as financial services, Wipro decided to focus on its strengths in the domestic and emerging markets, and on remote IT infrastructure management and software testing.
In the domestic market, Wipro won large deals with Unitech and Aircel— beating IBM in the domain it knows best—and today gets around $1 billion (Rs 4,800 crore) from emerging markets alone. Paranjpe and Vaswani have also continued Wipro’s inorganic growth streak—the firm acquired Citigroup’s captive IT business for $127 million (Rs 610 crore at current rates) in December 2008—to sustain growth.
However, critics point out that unlike its local rivals TCS and Infosys, Wipro isn’t among the top three players in markets such as financial services and telecom, which are the largest spenders on IT. Premji and the joint CEOs have tried to address this shortcoming by poaching Martha Bejar, the head of Microsoft’s communicatons business, to be the global sales head for the IT business.
A couple of quarters ago, Wipro decided to walk away from campus recruitment and instead focus on raising its utilisation (percentage of employees billable to customers) rate from 65 per cent to 70 per cent in four or five quarters. “Our peers who continued to hire on campus are now saddled with a bench of 15,000-20,000 employees, even as volume pressure mounts,” says Pratik Kumar, Wipro’s HR Head.
Organisationally, too, the joint CEO structure has been beneficial to Wipro; Kumar says that the model was used to refresh its upper and middle management structure. “Only four of the 27-28 direct reportees have been kept in their old role,” says Kumar, “This role refreshment was great for Wipro to get new ideas, explore new businesses and kick-start growth.”
While some people contend that Vaswani—often seen as Premji’s blue-eyed boy—could be made the sole CEO of Wipro’s IT business, the majority consensus seems to be that Premji would prefer to keep two power centres to prevent either one from getting too comfortable. Meanwhile, heir apparent Rishad could in the forseeable future be given a broader role across Wipro, perhaps as Vice Chairman.
The Senior Premji is exasperated with such conjecture. “The speculation on either the structure or individuals is misplaced here. We don’t arrive at a structure with an ‘expiry date’ label on it. We allow it to take its own natural course and put our full weight in making it work. Please do realise that every such change creates a big churn and we don’t do it unless we are completely convinced,” explains Premji, whose family owns nearly 80 per cent of Wipro.
It is unlikely that Rishad will take over the top job immediately. Besides understanding the nuances of Wipro’s changing IT business—a new vertical like healthcare, for instance, is a $250-million (Rs 1,200-crore) unithe may have to come to grips with non-IT initiatives (everything from soaps and furniture to bulbs and hydraulic gear) as well.