Wipro at Crossroads: The Failed Dual CEO Structure
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Case Code: BSTR433 Case Length: 28 Pages Period: 2000-2013 Pub Date: 2013 Teaching Note: Not Available |
Price: Rs.500 Organization: Wipro Limited Industry: Information Technology and Consulting Countries: India Themes: Management Structure, Turnaround strategy, Organizational Restructuring, Managing external and internal challenges |
Abstract Case Intro 1 Case Intro 2 Excerpts
Introduction
In April 2013, Bangalore-based information technology, consulting, and outsourcing company, Wipro Limited (Wipro), reported the weakest sales growth compared to its peers in the Indian Information Technology (IT) industry for the Financial Year (FY) ended March 31, 2013. While Wipro recorded an increase of 16 percent in FY 2013 revenues, its peers such as Tata Consultancy Services (TCS) and Infosys Ltd. (Infosys) posted an impressive revenue growth of 29 percent and 19.6 percent respectively. Wipro also experienced a sales increase of only 5 percent for the FY 2013 against the industry growth of over 10 percent.
The company attributed its underperformance as compared to its peers, to its portfolio mix. Wipro, the third largest player in the Indian Information Technology (IT) industry, had traditionally focused on investment banking in the Banking, Financial Services, and Insurance (BFSI) vertical, and on the telecom sector. Both these segments had reportedly taken a beating in recent years. While the investment banking segment had reported muted growth, the fact that clients in the telecommunications sector, especially in Europe, were reducing their technology spend had also negatively impacted Wipro's performance. In addition to this, the company's dual CEO structure adopted in April 2008 did not yield the expected results. This, according to analysts, was because the two CEOs - Girish Paranjpe (Paranjpe) and Suresh Vaswani (Vaswani) - did not focus on key segments that helped Indian IT companies recover growth post the global financial crisis . Thus, Wipro lagged behind its peers such as TCS and Infosys.
To arrest the decline in sales and profitability, Wipro's founder and executive chairman, Azim Hasham Premji (Premji), scrapped the dual CEO structure in January 2011, to make way for company veteran and head of the Eco Energy Business, TK Kurien (Kurien), to take over. In a bid to turn around the company, Kurien restructured the organization to make it nimbler and focused on key segments such as the BFSI and consulting to chase growth. Moreover, the single CEO model was also adopted to ensure that Wipro retained its position in the top three club in the Indian IT industry along with TCS and Infosys. This was because new players such as Cognizant Technology Solutions (CTS) were increasing their presence in the Indian IT industry...
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