Bangalore: It has been three months since T.K. Kurien was unexpectedly elevated to the role of chief executive officer of Wipro Ltd’s IT business. He has had to tackle challenges, including an organizational revamp, turbulence in markets such as the Middle East and Japan, as well as soaring attrition. Kurien said in an interview that the effects of the recast will be seen over the next few quarters even as he seeks to alter the revenue mix of the company. Edited excerpts:
Is the organizational recast complete? While a quarter is too early to judge, are you satisfied with the progress the company has made?
There are a couple of things which have happened in the recent past. The world has changed between December 2010 and April 2011. The changes in the Middle East (which along with India contributes a quarter of the company’s revenue) and the events in Japan happened. Going forward, business cycles are going to get shorter and shorter. So for organizations, things like speed, agility are going to be key. More important will be the ability to energize customers and employees. I strongly believe that the world of tomorrow will require a different set of core characteristics in every employee. Ability to handle ambiguity is going to be a virtue.
As far as the organizational (recast), it impacted just around 20 employees at the senior level. It’s not like wildebeest running across the plains of Africa. There has been a fundamental shift also in the outlook for employees. While some may have believed that Bangalore is the centre of the earth, we have (disabused) them of that. Action takes place in front of the customer, in industry verticals. (Employees) will have to understand the customer better, the industry better. We have changed the way employees are judged. Earlier, the variable compensation would be dependent on our profitability. Frankly, profitability to me is only an end indicator of customer satisfaction. So now the variable part has been tied to customer satisfaction.
And on that issue (of reorganization), it got over on 31 March. This is the biggest re-organization we have ever undergone in the history of Wipro. Many people miss the impact of the reorganization. Before this, there were seven hops between the customer and somebody who would actually do something for him. Now, that has been reduced to two. Given that environment, we have delivered more than what the Street was expecting. We also have taken some fundamental steps in trying to shape demand. The guidance has been muted because our mix of revenue is going to change. It will be more consulting-led. We expect that to translate to downstream revenue and improved margins (over a period of time). Three years from now, margin expectations would be even higher and I would be disappointed if we didn’t have a 25% margin (against the current 22.1%).
Revenue focus: Kurien says the guidance has been muted because the firm’s mix of revenue is going to change to be more consulting-led.Photo Aniruddha Chowdhury/Mint
But this consulting-led approach for downstream revenue has been tried by some of your peers in the Indian information technology (IT) industry with mixed success.
Ours will be different. We will not separate (or spin off) our consulting. Ultimately, customers buy for value add and if you are not part of the ecosystem, you are not going to make a big difference.
What verticals have been doing well for you? Are there any areas of concern going forward?
We have identified four businesses which we believe will be momentum verticals. BFSI (banking, financial services and insurance); healthcare and pharma; energy and utilities, and the fourth one would be retail and transportation. As far as these momentum verticals are concerned, we will see where the market is going and either organically or inorganically build solutions and capabilities. The offerings would be solution-led rather than merely adding bodies.
BFSI in the past has been a weak area for Wipro. So what we did, for instance, was we went out and tied up with a product vendor like Temenos and created a utility model of “pay per use” for both IT services and the BPO business, which is a pretty unique thing. Our intention is to build a Wipro today which would be relevant to customers.
Apart from the momentum verticals, we have called out certain technology areas which we believe will have a major impact, areas like mobility and data analytics. We are making a number of significant bets on platform-based solutions.
Wipro has been very aggressive in M&A (mergers and acquisitions) activity. You have executed one in the last three months. Anything more in the offing? Are there gaps in your portfolio of offerings which you think can be plugged by acquisitions?
We will continue to look for acquisitions which will add value to our customers, specially in the four momentum verticals which I outlined.
Attrition has gone up significantly. Is attracting and retaining talent for you now a challenge?
I think last quarter it did come down. But will it remain there? I think not. Over the next two quarters, you will see ups and downs and we expect it to stabilize only by the third quarter and after that we will go back to the industry average. Of course, the long-term goal is for attrition to go below industry average.
Apart from hygiene issues like growing the business, what engages you the most?
The one thing which keeps me awake at night is: How can I be more relevant to our customers? The world is changing so fast and all our attention should be towards serving our customers better.