Bengaluru: Wipro Ltd is looking to make each of its six business unit heads responsible for the delivery of software in addition to managing sales, as it aims to emulate the model that powers industry leader Tata Consultancy Services Ltd (TCS).
The move is aimed at arresting any fall in profitability as clients seek lower prices from software services firms, and at cross-selling services.
Wipro plans to move about 30,000 people, or a fourth of its total workforce working on the delivery side of the business, across six business units such as banking and financial services and energy and utilities, according to three Wipro executives familiar with the matter.
“For any rebids, clients want at least a 20-25% discount. How do (our) client-facing teams offer services (at prices) that the delivery engine can keep up with? It also helps to better cross-sell service line offerings,” said one of the executives quoted above. He did not want to be named as he is not authorized to speak to the media.
The synergy is not possible under the company’s current structure.
Others have tried the model before, and it seems to have worked for them.
Wipro is essentially replicating the model adopted by its larger Mumbai-based rival as part of its restructuring, led by former TCS veteran Abid Ali Neemuchwala, who was named Wipro’s chief operating officer in March.
Two others cited above said the company plans to put this new structure in place as early as next month, although a fourth Wipro executive said the plan is still “in early stages of discussion”.
Under the current structure, many back-end software processes are overseen by B.M. Bhanumurthy, chief executive and president of business application services. Post the restructuring, Bhanumurthy will continue to oversee the large teams which roll out business software such as SAP and Oracle for over 1,000 customers across all six verticals. The other large service offering, managing a customer’s IT infrastructure, too, will continue to run as a “horizontal” or a common team under G.K. Prasanna, head of the infrastructure practice.
India’s $146 billion outsourcing industry is facing perhaps the most challenging period in the last decade as pricing pressure for commoditized outsourcing deals, which includes maintaining back-end computer systems for clients, is eating into the margins of IT vendors. A changing technological landscape is also making many of the poster boys of the industry invest in new age technologies such as automation and artificial intelligence, and take on more data scientists, so they can strengthen their offerings in the digital, or social, mobility, analytics and cloud computing, space.
When completed, Wipro will have an organizational structure that will resemble its larger rivals, TCS and Nasdaq-listed Cognizant Technologies Solutions Corp. Earlier in February, Wipro’s cross-city rival Infosys Ltd decided to make its delivery side work as “seven horizontals” and offer solutions to customers across five industry segments such as banking and financial services, retail and consumer.
This, according to two analysts, is because Infosys, unlike its rivals, is ready to forgo margins in the short term to boost sales growth.
Ray Wang, founder of Constellation Research, a technology research and advisory firm, said the shift underlines Wipro’s desire to “better cross-sell service line offerings”.
“Customers want to see one Wipro, not different parts of the business,” said Wang.
Wipro has already mandated its sales executives to sell at least three of the five service lines the company offers to existing clients, as it seeks to improve its ability to generate more business from existing clients, Mint reported in its 8 May edition.
“Alignment with sales is also good because this gives you the ability to deliver on vertical areas. You will still need some broad horizontal teams but vertical alignment can help in accelerating delivery for clients,” said Wang.