The writing has been on the wall for some time. Exodus of senior leadership and growth behind its peers are reasons that have prompted Thierry Delaporte, the chief executive officer (CEO) of Wipro to resign, analysts said.
Delaporte, Wipro’s seventh CEO, also resigned without completing his five-year term, like his predecessor Abidali Neemuchwala decided to end his tenure prematurely in 2020.
Phil Fersht, HFS Research CEO and chief analyst believes the change in leadership was at least six months overdue.
“The morale has been sapped out of Wipro for a year now,” he said.
Delaporte took over as Wipro CEO on July 6, 2020 from Capgemini.
Since then, the firm has been undergoing restructuring, which has seen several senior-level exits. In 2023, close to 10 senior executives resigned.
The most significant ones were CFO, Jatin Dalal who joined Cognizant, and the chief growth officer Stephanie Trautman.
“He brought in many executives from outside of Wipro and neglected the loyal Wipro-ites who had built the company.
"This has resulted in many A players leaving the firm. His large deals team, spearheaded by Stephanie Trautman, struggled with internal fiefdoms that Thierry failed to address.
"It was shut down at the end of last year with Trautman, a popular figure with clients, leaving the firm,” Fresht said.
While analysts and industry watchers saw Delaporte’s exit coming, it was not expected to be this abrupt.
Delaporte ringed in several organisational changes into the company, which many believe didn’t go well with many senior leaders.
“There was a lot of initial euphoria after Delaporte took over as the CEO.
"The stock also reacted positively to his bold changes and acquisitions.
"But, gradually, the initial euphoria faded and Wipro’s financial performance could not impress the investors.
"The changes also didn’t seem to be in sync with many insiders.
"So, in a way, his exit was coming sooner or later,” an independent IT analyst said.
The other challenge that several insiders pointed to was the long-distance presence of Delaporte.
Many point out he was a Paris-based CEO and his senior counterparts were running the show of rallying the employees in India and the US.
“You can’t run an Indian-heritage business during tough economic times when you're not physically present to boost morale and represent the firm,” added Fersht.
Wipro has been lagging peers in terms of performance for several years now.
Its revenue for the December quarter declined 4.4 per cent from a year ago to Rs 22,205 crore, below consensus Bloomberg estimates.
On a sequential basis, revenue declined 1.4 per cent as key verticals like banking, financial services & insurance (BFSI), consumer, and manufacturing slowed down.
Wipro has also slipped from being the third-largest Indian IT services player to the fourth.
Delaporte’s impact was evident in the early days of the restructuring he put in, but the company has failed to pick up over the last 18 months.
Over the last four consecutive quarters, Wipro’s constant currency revenue growth has been falling.
Even the $1.4 billion Capco acquisition has not allowed the firm to catch up with its peers.
With yet another leadership change at a time when the industry faces one of its toughest periods, Wipro is set for some more challenging times.
A Wipro veteran for over three decades, Srini Pallia has been appointed the chief executive officer (CEO) and managing director (MD), with immediate effect.
While he is based in New Jersey, he is well-versed in the company culture.
Ramesh Alluri Reddy, CEO of TeamLease Degree Apprenticeship says: “With a career spanning 32 years at Wipro, Pallia brings a deep-rooted understanding of the business that is anticipated to provide them with steady leadership during a period of much-needed transformation.”
Fersht believes Wipro has to play catch-up during the toughest time facing the firm, and Pallia needs to weather more challenging quarters, and impatient shareholders.
“While several external candidates were mooted, Rishad opted for a popular internal candidate.
"Srini has the respect of the guys who built the firm (those who are still there) and liked by key partners Microsoft and SAP.
"He knows the company, he knows many of the key clients, especially ones like Este and Tapestry he led for Wipro,” he added.
Sentiments shared by Rishad Premji, chairman of Wipro as the leadership changes were announced.
“Srini is an ideal leader to lead Wipro at this pivotal moment for our company and industry.
"Over the past four years, Wipro has undergone a major transformation under the most challenging external conditions.
"Srini has been an integral part of this journey.
"His client-centric approach, growth mindset, strong execution focus, and his commitment to Wipro’s values, make him the perfect fit as we enter the next chapter of growth and profitability,” Premji added.
