To change an organization, you have to bring in new talent: Wipro's Delaporte

Dressed in white JM Weston sneakers, blue jeans, and a white shirt, Delaporte appeared unfazed by the exits and defended his leadership style. Wipro is in the middle of a ‘tough’ transformation and people not aligned with the company’s objectives leave, he said. The CEO maintained that the company will bounce back once market conditions improve—the IT services sector, overall, has slowed down. Fears of a looming recession in the US and Europe have made Fortune 1000 companies hold back from starting new tech projects, hurting homegrown technology services firms.

Wipro ended 2022-23 with revenue of $11.2 billion. Many analysts expect the company to lag larger rivals this year. Kotak estimates Wipro’s full-year revenue to slip 0.3% while Goldman Sachs stated that revenue from its IT services business could fall up to 1.9%. Wipro’s operating margin, meanwhile, has slipped from 19% at the end of June 2020 to 16% at the end of June 2023.

So, what exactly is the company’s plan? Here’s what Delaporte told Mint. Edited excerpts:

You started well. In the first 18 months of your tenure, Wipro hardly got anything wrong. But over the last five quarters, growth and profitability have started declining amid senior executive departures, giving the impression that the buzz or energy has fizzled out…

That is not right. Look at all the changes we have undertaken. Tell me about another company in this industry that has so dramatically transformed its systems and processes, brought in talent from outside, and made significant acquisitions. We are transforming the company with a 5-10-year horizon. A market slowdown has made everyone slow down, including us. But we’re not deviating from our strategy on how to be more efficient. Let me give you an example of the transformation we have undertaken. When I arrived three years back, I realized that our IT infrastructure was not supporting our business. We were running a very large-scale organization with very, very, very outdated tools. So, we undertook a massive SAP migration project (Project Quantum). It was a very bold step. A lot of leaders wouldn’t have done it. They would have said, ‘too much risk…why expose myself?’

But Project Quantum started under your predecessor, Abidali Neemuchwala?

But it was not going anywhere. We were throwing millions into the project and it was not going anywhere.

Do you believe you have undertaken a large transformation exercise in a short time and will it be fair to say that you are a man in a hurry?

Absolutely.

But then you need to take the rest of the 250,000 people along with you...

I’m driven by my ambition for Wipro. I don’t want Wipro to be considered a low-cost company. I want Wipro to be considered as a company that drives true value for clients. Transformation is hard. We are in an industry where speed matters. I was aware of the fact that we needed to catch up with competition on multiple fronts and so, we had to move fast. So, yes. I’m someone who’s always looking at ways to go faster.

In a large firm, not everyone can keep up with the pace and some leave. Doesn’t that create further challenges?

Before I joined Wipro, people told me that many employees in the company were comfortable and that I needed to make a lot of changes. That meant I had to bring in talent. The fact that people leave is okay. Now, we have not lost a lot of top talent. We are retaining the talent we need to retain. For me, I’m always happy if one member of my team is going. Because everybody must progress in their career. My obsession is to build a team for the next 5 or 10 years. So, we need to rejuvenate or re-energize the teams.

But if senior leaders continue to leave the firm, how do you build a stable team for the future?

The exodus is of leaders that have been in the same role for many years. I think it’s important to bring new ideas. Look at the time of Jack Welch at GE. If you want to change an organization, you have to bring in new talent. There’s no way applying the same recipe to the same people will deliver different results. We feel we are maintaining the right balance between transformation and stability to drive the performance.

Today, the CFO resigned…

Jatin is a great CFO and he’s done a lot of good things. He’s been in the role for eight years. He is still young. He wanted to progress and do something different. I respect that. I had identified Aparna (Iyer) as the successor. We have been grooming Aparna for the last two years.

What are we missing? We don’t see the fruits of the transformation. Your profitability has declined the most among all your large rivals…

When you compare my margins with say a Tata Consultancy Services (TCS), yes, my margins are lower. But now look at the trend. Our margin profile has been stable despite the acquisitions.

But Wipro’s profitability has fallen more in the last three years than compared to TCS…

But look at the margin pre-covid. In the years before the pandemic, it was never over 17%.

That is not correct. But is the transformation complete? And if the market condition improves, can one expect Wipro to do better?

Our sales engine capabilities are stronger. Our leadership team is stronger. So, there is no doubt that when the market rebounds, we’ll get back to a great level of growth.

There is an old Wipro and a new Wipro comprising all external recruits. Do you agree with this perception?

Your question is legitimate. What you are expressing is not felt by the greater number of people but certainly felt by some disgruntled people. I joined Wipro three years back. I don’t think I’m new. So I tell the people that after six months, you are not new. I am not looking at whether people have been here for X years or not. In my eyes, there is no new and old. Now, we have been extremely careful to protect the culture which is having a client mindset, a sense of purpose, and a culture of humility. I believe we’ve brought in more women at leadership levels. To summarize: We have a better focus on performance than before. Finally, when you’re driving such a transformation, some people are struggling and end up leaving the company. That’s okay. Because I believe that if you want to transform, you need to have people that are aligned around the objectives.

You are a CEO stationed out of Paris. How do you feel when some senior leaders reach out to the executive chairman citing problems working under you?

I’m a person of conviction. I’m completely driven by the mission to build a strong Wipro for the future. Rishad Premji (executive chairman) and I are working on it in the best environment. Rishad and I have our weekly calls where we spend 90 minutes every Friday morning. I get support from Rishad. He has access to my team or can speak with anyone. So, if some people feel that they need to share something with Rishad, they should do it. I have no problem with that.

How much time does Azim Premji spend?

Azim Premji (AHP) is not involved on the operations side. He knows this company inside out and is very aware of what is going on. Now, I’m a very transparent person and so, I send stuff when he wants to read— something about what we are doing in the cloud (business) or with any acquisition. Every time I visit Bengaluru, I spend time with him. He is not interfering at all. From the governance standpoint, the reading is very clear. Rishad is the chairman, I’m the CEO, AHP is a shareholder.

The founder chairman is just a shareholder?

A shareholder.

From what we have gathered, AHP has expressed some disappointment regarding your leadership…

I have learned one thing in life and I repeat again. Transformation is tough. So when you are embarking on a journey like this, you need to have a thick skin. You need to focus on what you have to do and not get derailed by the noise. I’m incredibly unemotional about these kinds of things. I know what I have to do. And I’m following our strategy.

If you look back, what are your hits and misses?

First, I always want more growth. The second is when we are disappointing a client—it’s something I want us to work on. Third would be some of the deals that we should have won and we haven’t. Those are the three misses. The energy, the level of engagement, and the commitment of the teams are what I would call hits. We are a different company now. I’m the kind of person who is never satisfied. I will constantly push the teams to do more.

How do you see Generative AI and AI tools impacting the revenue and profitability of IT services companies in the short term (12-18 months) and the medium term (18-36 months)?

First, clients are expressing a high appetite for engaging with us on defining their strategy around Gen AI, across sectors. So, a lot of consulting or advising work comes to us. This is not big in volume. But it’s game-changing as you can have a very different discussion with clients. Second, it would take at least two years for Gen AI embedded work to be of any material scale. In the short term, Gen AI may impact growth but it will accelerate margins. In the medium term, Gen AI will significantly improve the revenue too.