T.K. Kurien: Wipro plans to create a subsidiary for cloud computing services

Wipro’s CEO speaks about challenges facing the company, changes in IT industry and a separate subsidiary for cloud computing in the medium term

Wipro CEO T.K. Kurien. Photo: Bloomberg
Wipro CEO T.K. Kurien. Photo: Bloomberg

Bangalore: On Friday, India’s third largest software services exporter Wipro Ltd posted better-than-expected results during a seasonally soft quarter, raising investor hopes of a revival in the fortunes of the Bangalore-based firm.

Wipro is making a massive push towards automating more parts of its commoditized information technology (IT) businesses and planning to boost its on-site efforts by hiring more people at client locations that feeds into its de-centralized organizational structure.

In an interview on Saturday, Wipro chief executive T.K. Kurien, who’s just completed three years at the helm of the firm, spoke about the challenges that Wipro has faced over the last three years, changes in the IT industry in the backdrop of automation and also the possibility of creating a separate subsidiary or business unit to focus specifically on cloud computing services. Edited excerpts:

You’ve just completed three years in the hot seat. A lot has changed in the industry during that time, both at Wipro and in the industry. What are some of the important milestones that stand out for you?

If you look at where we started, the organization itself had gone through a fairly traumatic kind of change because the joint CEOs moved out pretty quickly, within three days. I think the organization was really in shock. And then we moved our entire focus onto performance and when that happened, a large part of the organization didn’t understand what performance meant for people.

I think over the past couple of years the organization has re-adjusted itself—three years ago when I talked to people about priorities, the first thing I would get from people would be, “we have to take care of our people”. Now if you ask people about priorities, it’s about winning in the marketplace.

What are some of the things that could have been handled better?

Firstly, I think I could’ve focused on our people a little faster. That is one thing I didn’t do in the beginning. Because at that point the focus on the market was much more than the focus internally. The second thing is we could’ve gone back to some of our core values and used that as a means to enthuse people in the middle management. Those were the two misses we had.

The last couple of quarters have been steady for you, but the general feeling is that you should’ve gotten here much earlier.

Absolutely. It could’ve happened earlier and it probably should have happened earlier. But the trauma and the change that the organization went through to adapt to a new environment, both in terms of the market as well as the internal metrics, was a big change for the organization to take. So I think we’ve done a fabulous job. Again, I don’t want to overstate it, but I think there’s still a lot of work to be done. It’s far too early to call this a turnaround; I’m not calling it that nor is my management team.

Have you set a target for yourself as to when you see Wipro returning to industry level growth rates?

I think we’ve got an internal time frame which we’ve set for ourselves—it’s a pretty tight time frame. And the way we measure it is two fronts—growth in terms of topline and in terms of EPS (earnings per share).

While we continue to grow topline, we also have to make sure that the cost structure of the company gets re-adjusted to the realities of the market. So, we’re going to invest much more on the front end of the business, and in the delivery side where people sit in India and people costs are our biggest costs, I think we are going to make sure that we use tools and processes to do the same work more efficiently.

So there’s a huge focus on efficiency.

What’s this internal time frame?

We haven’t shared this internal time frame with anyone. Each of our verticals has different time frames on when they should fire. At the end of the day, the only way we can change the game is by grabbing market share.

Can you also give us a glimpse of your near-term strategy and big bets you’re making?

The next big thing we see is cloud services coming in—everything as-a-service is going to become a reality at some point. We may decide to create a separate structure to manage as-a-service, outside of our current business. While we sell to the same client base and go after the new client base, as-a-service will become a critical component for us. So in the next 5-10 years when as-a-service takes over, the current Wipro organization will transition into it.

Is there a plan to create a separate subsidiary or business unit focusing on cloud services?

Medium-term, yes, we are going to go there. Absolutely.

A lot of your commentary this quarter has centred on automation and the role it will play in the future. You seem to be making this push towards automating commoditized businesses a lot more aggressively than some of your other peers.

Our skill sets are going to become more like an hourglass—it’s not going to be like a standard pyramid…automation is a reality and we are going to find a lot more of that happen. The question people keep asking then is, what happens to employment? It’s a significant question.

The other big step we’ve taken is, which will get announced in the next couple of months—we’re de-linking your grade versus the numbers of years you’ve spent.

What we’re saying is, if you have a certain skill, you’ll get paid and slotted into a grade. If you have a certain skill level that is extinct, you can actually go back in terms of grade…at the end of the day, we’re in the customer service business, not in the “employ more” business.

At a certain stage what happens is, if you have more people, the internal dissentions within the organization become so big, that we necessarily can’t manage scale. And I don’t think we have the capability of managing scale.

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