Wipro Ltd. has a long way to go to attain a balanced position in the global tech markets, indicated Peter Bendor-Samuel, founder and CEO of Dallas-based Everest Group.
The global analyst in an interaction with The Hindu said the Bengaluru-based tech firm did not keep pace with its peers as the company has positioned itself as a low-cost provider over the decades while its peers remained more balanced and focused on value.
20 years of decline
“Wipro has had a slowly deteriorating market position for almost 20 years,” Mr. Samuel said. He observed that Wipro’s focus on providing low-cost services ha been at the expense of investing in capabilities and assets that help clients get value.
But he added that Thierry Delaporte, the French CEO of Wipro’s who recently resigned a year ahead of his five-year contract at the country’s third largest tech firm, put it on a path of transformation and rebalance by increasing its focus on value. “To summarise, at this time Wipro does not successfully compete in the value-added part of the market. Unfortunately, being too focused on the cost-saving part means, that it is more difficult for it to grow. To their credit they are undergoing a transformation and putting significant investment into new capabilities. But, there is still a long way to go,” he said.
Mr. Samuel added that Srinivas Pallia, who replaced Mr. Delaporte on April 6, “must continue the transformation journey that Delaporte began.”
New CEO’s task
“Srini is faced with continuing the transformation of adding higher value services at Wipro, and getting Wipro back to a high level of performance. His biggest challenge in the immediate future will be the poor tech and tech services macro environment,” Mr. Samuel observed.
Fortunately, the new leader will have at least a year’s leeway, as investors are likely to give him some time and it is likely that by that time the macro environment will begin turning around, anticipated Mr. Samuel.
“Srini’s longer-term issues will be to continue the transformation Thierry began. He will need to continue to add new capabilities, continue to add new talent and run a lean-focused firm,” he opined.
Thin profit years
However, Mr. Sameul added, “this transformation would not come cheap for Wipro because if the tech firm is looking to successfully reposition itself as a leader in a new and changed marketplace, it would have to make market investments over several years and likely would need to keep profit margins below industry norms until this transformation is finished.”
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