Wipro failed to call the rebound in the global economy and underperformed its rivals in software outsourcing. Azim Premji held the co-CEO model responsible
Nothing had prepared the 30-odd senior-most executives at Wipro Technologies for what they were about to hear. They had been asked to come for a meeting with the joint CEOs at 8 a.m. on January 21. When they arrived at Wipro’s campus at Electronic City, Bangalore, it soon became apparent that this wasn’t just another review meeting. They were split into two rooms, depending on which CEO they reported to. And then, Girish Paranjpe and Suresh Vaswani, both lifers at Wipro, broke the news: They were quitting.
There was stunned silence. And then questions began to come thick and fast: Why were they quitting? Some people even offered to resign, saying that they had let down their bosses. Paranjpe and Vaswani then switched rooms and did the same routine all over again. By which time, it had become apparent that the format wasn’t working. So they brought everyone together into one room. Emotions were running high. Several executives, including Vaswani, had tears in their eyes.
It was an awkward end to a three-year-old experiment which was put in place by Azim Premji himself because he felt the IT business was too complex to be run by one CEO.
But the die had been cast six months ago, say insiders. At a stormy meeting to discuss the second quarter (July to September 2010) results, the directors on the board, led by Azim Premji, chairman and 75 percent owner, had expressed their strong displeasure at the financial performance of the IT business. Since then, Premji himself had kept the pressure on the two leaders through constant performance reviews.
But the pressure hadn’t yielded results. Even for the next quarter, Wipro’s performance continued to lag behind its peers, Infosys and TCS. And if the current momentum continued, even the fourth placed Cognizant would be all set to overtake Wipro in the last quarter (January to March 2011).
“Premji and the board’s view was that execution had badly faltered. There was nothing fundamentally wrong with Wipro’s strategy,” says an insider.
The decision to dismantle the co-CEO model had become inevitable. By common consensus, the model was slowing things down, even as the market had begun to rebound. On January 21, at a press conference at his company headquarter in Bangalore, Premji said, “I don’t think we should be making excuses. We have underperformed relative to competition, and relative to our potential as a company.”
The board could have picked one or the other. But Vaswani and Paranjpe had themselves made it clear that they would both resign, accepting joint responsibility for their performance.
Yet the suddenness of the move, especially Vaswani’s exit, took almost everyone by surprise. Vaswani had been mentored by Premji himself and was known to be very close to the owner. Till the very end, both he and Paranjpe were company men. “Which is why the news of their sacking caused a lot of anxiety and concern among lifers inside the company,” says a senior executive. (Despite repeated attempts, Vaswani and Paranjpe chose not to comment on any issues.)
Enter T.K. Kurien, the man chosen by the board to head the IT business. He is known to be an uncompromising, tough-as-nails manager. He had done stints in General Electric and has strong C-suite relationships at several large global 100 firms. A strong corporate sales guy, Kurien has the experience in sewing up large deals. He had turned around Wipro’s BPO business and delivered results. When Vaswani and Paranjpe were picked to head Wipro, Kurien had offered to resign. In June last year Premji moved him to head the new Eco Energy business.
Yet, inside Wipro, Kurien is still seen as an outsider. He is related by marriage to the owners of the Malayala Manorama group, is already wealthy and the only reason he continues at Wipro is his passion for the work. In Wipro’s senior IT team, there are plenty of people who are uncomfortable with the board’s choice, given Kurien’s penchant for decisive actions.
An insider with knowledge of the workings of the board says it has a simple mandate for Kurien: Do all that it takes to quickly clean up the mess, bet on good people, get rid of some bad ones if you have to — and then go hell for leather for growth. “Once you go through this kind of announcement you are not going to be expecting everybody to be nice and happy, but they need to go back and focus on results,” said Kurien at the press conference.
(This story appears in the 11 February, 2011 issue of Forbes India. To visit our Archives, click here.)