Wipro underperforms again, joint CEOs resign

Wipro underperforms again, joint CEOs resign

New Delhi: Wipro Ltd has once again performed at or around already low market expectations for the third quarter and joint CEOs Girish Paranjpe and Suresh Vaswani have resigned, making way for T.K. Kurien as the CEO of the IT business and executive director of the company.

Wipro Ltd consolidated numbers, which also include its other businesses like consumer care, show an increase in net profit to Rs1,319 crore, up 3.36%, and a revenue increase to Rs7,829 crore, an increase of 1.26 % sequentially. Operating margins remained flat at 22.2 %.

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Consensus numbers for revenue were around the Rs8,000 crore mark. Dollar denominated global IT revenues rose 5.6% to $1.34 billion (QoQ).

“The operating margins for IT services business was flat, despite lower working days and drop in utilization," Suresh Senapaty, executive director & chief financial officer said.

For the fourth quarter of FY11, Wipro expects IT services revenues to go up by 3-5% to $1.38-1.41 billion (QoQ).

IT products constituted 11% of total revenue and IT services constituted 76% of total revenue in the third quarter.

Azim Premji chairman of Wipro said, “The joint CEO structure was one of the key factors that successfully helped us navigate the worst economic crisis of our times. With the change in environment, there is a need for a simpler organization structure. Over the last 10-year, Kurien has been instrumental in building and scaling our businesses. Kurien’s track record makes him uniquely positioned to lead Wipro through the next phase of growth."

Vaswani and Paranjpe have been with Wipro for 20-year. “They have made significant contributions in the critical years of expansion and played a stellar role in the success of the IT business."

In a phone interview Girish Paranjpe, one of the joint CEOs of Wipro, who put in his papers on Friday along with Suresh Vaswani said that the model of joint CEO was adopted to deal with the global financial crisis. Now with things stabalising, there was need for a simpler organization structure.

He denied that internal rivalries or elevation of Premji’s son in the company was the reason behind it. He also the two had decided to leave several months ago and the board finally took a decision last week. It was a consensual decision. He ducked the question whether Premji suggested any way in which both of them could have stayed in different roles.

While Kurien will take over from 1 February, Vaswani and Paranjpe will work together till 31 March, 2011 to ensure a smooth transition.