AYUSHMAN BARUAH :
Wipro Ltd may have a tough task at hand to fill the void left by the exit of its chief executive officer (CEO) and managing director (MD) Abidali Z. Neemuchwala, who cited “family commitments" as the reason for his departure.
“The board of directors has initiated a search to identify the next chief executive officer. Abid will continue to hold the office of CEO and managing director until a successor is appointed for a smooth transition and to ensure that business continues as usual," the company said in a filing to the stock exchanges on Friday.
Analysts said it’s not going to be easy for the IT services company to quickly find a suitable person to fill Neemuchwala’s shoes.
“Finding a new CEO for a company as large as Wipro is going to be a Herculean task, especially given the challenges the company is going through," said Sanchit Vir Gogia, chief analyst, founder and CEO at Greyhound Research. “Having said that, Wipro has made a course correction over the past few years. Abid has done a phenomenal job in taking Wipro forward."
Gogia said it’s critical that the incoming CEO is “new-age, understands digital, and can bring in more elements of IP (intellectual property) assets". He added: “The person should ideally have a mix of services and software background as they can’t be doing services alone. It has to be IP first."
Neemuchwala’s exit comes four years after he was elevated as Wipro’s CEO on 1 February 2016. Earlier, since April 2015, he was the group president and chief operating officer.
The company didn’t respond to an email query on whether it has appointed any headhunters for the CEO’s search.
With more than 25 years of experience in the IT services industry, Neemuchwala, however, failed to deliver on his ambitious target of turning Wipro into a $15-billion company with operating margins of 23% by 2020.
Wipro’s revenue was a little more than $8 billion in FY19.
“We clearly see no business risks for the company as the exit seems to be on genuine grounds and not part of any exigency. I am sure the company would have identified some candidates who would join in due course of time," said Arup Roy, research vice president, Gartner Inc.
Industry experts say the incoming CEO will have to fast track revenue growth and operating margins, as well as build on the strong digital business, which grew 22.8% year-on-year and contributed more than 40% to Wipro’s total revenue for the third quarter ended 31 December. Operating margin stood at 18.4% in Q3.
In the past few years, the company has been witnessing sluggish and lower-than-average industry growth. For instance, HCL Technologies Ltd has surpassed Wipro to become the third-largest Indian IT services exporter by revenue. So, the new CEO will have his task cut out to propel the company to industry-leading growth.
However, the company has traditionally been strong in its engineering heritage, which has gained further traction from its growth in the digital business, said Roy of Gartner. “In addition to this, Wipro has made some strategic acquisitions in the past. The incoming person could further take it ahead," he added.
Wipro chairman Rishad Premji said in a statement: “Over the last four years, Abid helped build a strong execution mindset, drove key acquisitions and scaled our digital business globally."
On Friday, shares of Wipro ended at ₹236.80, down 1.7%, on BSE, while the benchmark Sensex lost 0.47% to close at 40,723.49 points.