Business Today

Stick over carrot

Wipro Chairman Azim Premji gets cracking as his leaders miss the mark - for the fourth time. Having junked the joint CEO model, Premji hopes a single person in charge can spark Wipro's revival.

Rahul Sachitanand        Print Edition: Feb 20, 2011

In early December last year, Wipro veterans of two decades Girish Paranjpe and Suresh Vaswani, then co-chief executives of the firm's tech business, sensed their unusual partnership was in trouble. Azim Premji , the firm's 65-year-old chairman had made public his displeasure at the underperformance of his information technology business and wanted a quick turnaround. Wipro junked the joint CEO model (and Paranjpe and Vaswani) in favour of a single CEO in T.K. Kurien on January 22.

Wipro chairman Azim Premji
Wipro chairman Azim Premji
Since the duo took over as joint CEOs in April 2008, in an arrangement unique in the Indian IT industry, Wipro Technologies, the company's outsourcing business, had struggled to keep pace with its peers. Bigger rivals Tata Consultancy Services and Infosys Technologies lengthened their lead over the No. 3 player and Cognizant Technology Solutions, a late entrant into the game, was fast catching up. Analysts expect Wipro to drop to No. 4 in the next two or three quarters at most.

"Internally and externally people were taken by surprise," says Pratik Kumar, HR chief for Wipro of the change. "As we discussed this internally, at the board level, we decided we needed a new structure to be more nimble and agile." Kumar says new CEO Kurien, a Wipro veteran of ten years, was the only internal candidate considered.

Paranjpe and Vaswani did not foresee the economic turnaround, which its rivals were able to exploit. TCS hired 20,000-odd people in the last quarter, while Wipro's workforce grew by barely 3,000. Wipro's inability to crack the financial services business - a mainstay for its large rivals - has also been a sore point.

The two-CEO model has rarely worked globally but Wipro watchers say this could also be just another instance of Premji losing his patience with underperformers. Earlier, Premji had clashed with high-profile Vivek Paul, who was widely off the mark in his bold plan of taking Wipro to $4 billion in revenues by 2004. In fact, the firm only got halfway there. Others such as Anurag Behar, the former head of Wipro's infrastructure engineering business, were shunted out to the Azim Premji Foundation, his philanthropy fund.

What Wipro's former CEOs are doing

Ashok Narasimhan
Ashok Narasimhan
Why he left: Some say Premji backed software rather than hardware, which was Narasimhan's bet, leading to a fallout
What he is now doing: Founded Runa, a company which helps online merchants improve realisations

Ashok Soota
Ashok Soota
Why he left: To found his own start-up MindTree. Took a few Wipro colleagues with him, too
What he is now doing: Trying to reignite its growth. Has handed over day-to-day operations, though

Vivek Paul
Vivek Paul
Vivek Paul
Why he left: Failed to reach self-set revenue target. Highprofi le personality overshadowed Premji
What he is now doing: Started KineticGlue, which provides social media platforms to enterprises

Girish Paranjpe
Suresh Vaswani

Girish Paranjpe and Suresh Vaswani

Why they left: Failed to drive growth, with larger peers easily outgrowing Wipro and upstart Cognizant snapping at its heels. Did not read the economic upturn correctly
What they are now doing: Both are expected to get CXO level appointments in the outsourcing market. Fast-expanding multinationals may be interested in hiring either

Chief Financial Officer Suresh Senapathy, too, was considered for the sack, say industry insiders, but this is strongly denied by Kumar. "The chairman doesn't decide… the board took a final call," says Kumar, referring to Kurien's appointment.

Former senior managers say Premji does not get swayed by anything when it comes to performance. "Growth is paramount for Premji and he's not afraid to lose high-profile names or loyalists when they lose their focus," says one former senior manager, who quit soon after the joint CEO model was unveiled.

Neither does Premji hesitate to get his hands dirty, as he did when Paul quit. He put together a complex organisational matrix, with several senior managers reporting directly to him. The man himself took a more central role in leadership back then and he may reprise this, as Kurien takes the helm.

Premji's style of management is different from other top-tier firms, where chairmen keep away from day-to-day management. For example, at HCL Technologies, Founder and Chairman Shiv Nadar is practically invisible, leaving the spotlight to CEO Vineet Nayyar.

At TCS, leadership transition is a gradual process, with current CEO Natarajan Chandrasekaran spending years under predecessor S. Ramadorai before being promoted in late 2009. Infosys believes in predictability in its corner suite as much as it does with its revenues. S. Gopalakrishnan, its current CEO is widely expected to be succeeded by co-founder and COO S.D. Shibulal.

"We have been a founders-driven company, but we also have a strong leadership pool … we think we have 100-odd executives who could be CEOs of mid-tier companies," says T.V. Mohandas Pai, a board member who runs HR and administration. Some observers of the soaps to software firm say Premji is clearing the decks for his elder son Rishad, now Chief Strategy Officer. He is trying to "remove the deadwood and bring in fresh legs" is how one senior manager put it. HR chief Kumar hotly contends this angle. "He has zero role in the whole thing," he retorts.

"Rishad will be measured like any other senior manager at Wipro." Having taken the decisive call, Premji will hope a single person in charge sparks Wipro's revival.

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