How Neemuchwala broke the jinx at Wipro

Under Neemuchwala’s digital-first vision, Wipro has accelerated investments in automation, analytics, cloud and cognitive technologies over the past three years, says Ayan Pramanik.

As Abidali Neemuchwala completes six quarters as the chief executive of India’s third largest IT services firm, he seems to have figured out a way to break the jinx of sluggish growth that the company has seen for years.

Last month, Neemuchwala said Wipro has “crossed all internal milestones”, putting itself firmly on the path to higher growth in the future.

Industry analysts give Neemuchwala, who was poached from larger rival Tata Consultancy Services in 2015, a thumbs up for his strategy in an otherwise bleak IT services market.

During the initial four quarters of Neemuchwala’s leadership, Wipro disappointed investors with its results, because of global uncertainties and slower growth in new contracts.

But, Neemuchwala is taking a leaf out of crosstown rival Infosys’s strategy of digital-first to set Wipro on the path of growth once again.

Under Neemuchwala’s digital-first vision, Wipro has accelerated investments in automation, analytics, cloud and cognitive technologies over the past three years.

“He has established clear lines of responsibility and placed able executives in leadership roles.

"Another very important aspect of his leadership is that he has revised the earnings expectations for Wipro downwards, giving himself and the firm necessary capital and margin flexibility to drive the digital transformation.

"This alone separates him and Wipro from competitors, who uniformly are trying to maintain high margins while driving the rotation to digital,” says Peter Bendor-Samuel, chief executive, Everest Group, a global IT researcher.

Wipro’s two key acquisitions last year -- HealthPlan Services and Appirio -- to strengthen health care services and cloud-based offerings were worth around $1 billion.

The uncertainty over Obamacare has hit Wipro’s plans to expand its health services.

However, with companies shifting globally from building traditional IT infrastructure, buying expensive licences and managing them towards renting applications that is hosted on the Internet, Appirio has emerged as a right fit.

Since Neemuchwala took over as CEO, Wipro has been aggressive in buying small companies to add digital technology capabilities.

According to analysts, Appirio was a “great decision”, given the cloud expertise it offered. Appirio has started contributing to the company’s revenues since Q4 of 2016-17.

Wipro, however, has a long way to go before it can be out of the woods completely.

About 78 per cent of its businesses still constitute legacy software maintenance services.

Analysts say it will still take a while for the transformation to be complete, and for the change to translate into visible results.

“It is still early in his tenure to see the results of this aggressive posture; it will take at least another year to fully bear fruit.

"However, there are many good signs that his strategies are starting to pay off,” says Bendor-Samuel.

While more businesses in the US -- largest of the $117-billion export market for Indian IT industry -- seek digital technology-based services through pay-as-you-use model instead of traditional long-term contracts, firms such as Infosys, Wipro, TCS and others are still not considered “truly digital” like Accenture.

“Abid (ali Neemuchwala) has worked quietly in the background to organise the team for the disruption ahead.

"We have seen some great results with DesignIt, Topcoder, and Appirio.

"The acquisitions have changed the buyer mix and types,” says Ray Wang, principal analyst and founder of Silicon Valley-based Constellation Research.

“You are seeing more involvement with business leaders and non-IT buyers.

"This has helped in deals and more importantly this has helped clients see Wipro as a co-innovation partner (and) not just an operational play.”

What has contributed to Neemuchwala’s success, analysts say, is the free hand founder Azim Premji has given him in running the business.

This has helped him move quickly to acquire other companies.

“While there is always more to do, Wipro has managed to keep one step ahead of its clients when it comes to addressing the shifts in the market to technology such as Internet of Things, Artificial Intelligence, Big Data and Cloud.

"The acquisitions have helped with the business shifts,” says Wang.

Yet, notwithstanding Neemuchwala’s steps to make the firm more agile, he has “more to do”.

“The two key goals before him are aligning the company’s operations from digital perspective and making it an employer of choice, given the need for new talent,” says Sanchit Vir Gogia, founder and chief executive, Greyhound Research.

Neemuchwala’s focus on digital-first is in line with market demand, says Bendor-Samuel.

But, he still has to prove Wipro’s capabilities to clients.

“He faces an uphill battle to convince Wipro’s clients and the broader market that the company is the natural digital partner of the future.

He is using investments in Innovation centres, the venture investments as well as the companies he is acquiring to help make this case.

However the market is sceptical and it will take sustained efforts to shift this perceptions,” adds Bendor-Samuel.

Photograph: Abhishek N Chinnappa/Reuters.