Pallia took over as Wipro CEO on 6 April, replacing Frenchman Thierry Delaporte before the culmination of his term.
Srini, as he is popularly known, is aiming to bring the country’s fourth-largest software exporter to the era preceding that of Delaporte. Unlike his predecessors who banked on big-bang changes, Pallia is relying on the basics, including imbibing cost discipline and having much more open and transparent conversations with the rank and file of the company, at least six senior officials Mint spoke to said on the condition of anonymity.
Earlier this month, over a three-day period, Wipro had a leadership meeting at Prestige Golfshire, a hotel in north Bengaluru, where more than 180 leaders – vice-president and above – got together to discuss the company’s business and the road ahead.
Under Thierry, these meetings would take place in marquee hotels across Paris, Dubai, and London. A key takeaway from the meeting is Pallia’s drive to make Wipro fiscally prudent, one that does not spend as much as the company would in the past, and prioritising operating margins.
Wipro’s travel costs increased marginally last year. The IT services company spent ₹1,510 crore in travel last year, which makes up 2% of its overall expenses.
Executive leadership meetings and team offsites, while still common, are being shifted to the virtual mode. Under former CEO Delaporte, Wipro’s executive council and board executives used to meet in foreign locations every quarter.
On the margin front, Wipro is now prioritising profitability. Generally, the company is not looking to sign or renew new deals below profitability. “The company will look at deals on an individual basis and not adopt a one-size-fits-all approach,” said one of the company officials cited earlier.
“Srini, since taking over, has been looking to drive growth and that too profitable growth. There is a bigger drive to run consulting-led conversations than just responding to project proposals,” said a second official.
While the company is looking to boost its margins, it will not come at the cost of growth.
“Of course, one of the reasons why we believe that we will hold margins in a narrow band with an upward bias is also because we want to make sure that we are having enough room for us to invest for growth and you can be assured. We won’t hold back on our investments for growth, that remains the number one priority,” said Aparna Iyer, Wipro’s chief financial officer, in a post-earnings interaction with analysts on 19 July.
Wipro ended the three months through June 2024 with $2.64 billion in revenue, which is a sequential drop of 1.1%. Its operating margins gained 10 basis points to 16.5%.
Another rejig is in the form of getting rid of the image of the Paris office serving as the nerve centre of the company. Mint has learnt from at least two company officials with knowledge of the matter that the Paris office has been relocated to a smaller space. Also, at least a dozen executives stationed abroad have been called back.
“The Paris office operations have moved to a co-working space now and a lot of the Indian sales guys who would work closely with Thierry in Paris have been called back,” said a third official with knowledge of the matter.
Wipro is not just recalling employees based in Paris and elsewhere, but also beefing up its leadership in India as the company does not want non-client-facing, unbilled executives to be based out of client locations.
Sanjeev Jain, who took over as the company’s chief operating officer a little after Pallia took the reins, is based out of Bengaluru. Until the start of the calendar year, Wipro’s former COO Amit Choudhary, was based out of New York. Ajay Bhaskar, the company’s chief strategy and transformation officer, who was based out of Paris, has also been asked to return to India.
Analysts cautiously optimistic of Pallia’s moves
Analysts are cautiously optimistic of Pallia’s moves to revamp the company.
“In Wipro’s case, these measures taken by Pallia are precisely what the firm needs. The key has been to unearth the talent that built the company over many years, which had been suffocated by outsiders brought in by Thierry Delaporte. For a firm needing to go back to its roots, this is a terrific template for rebooting the firm,” said Phil Fersht, chief executive officer of HFS Research.
However, Fersht maintained caution.
“These changes will only prove effective when the firm returns to revenue growth and retains stable margins,” said Fersht.
Then, changes have come about even in terms of fresher hiring. Under Pallia, business lines have more autonomy over the personnel they want to hire.
Wipro is sending global business line (GBL) heads and tech panelists from those GBLs along with the HR team to hire freshers from campuses. “Earlier, Wipro would hire as one unit but now, the GBLs are having more say in the talent they require for their respective business lines,” said a fourth executive with knowledge of the matter.
Wipro has had eight CEO changes over the last two decades and each of the CEOs introduced their own vision. But what is different this time around is that Pallia, who has been in the company longer than each of the CEOs before him, has stayed away from big-bang changes and is focused on the basics, instead.
What is evident is that old timers, Srini being one of them, are not living with unease of getting sacked. When Thierry was CEO, at least 750 senior executives ranked general manager and above, many of whom were company old-timers, left the company. This exodus stoked fear among Wipro’s old hands that they would be asked to leave. Now, this fear does not exist as Pallia maintains a camaraderie with his peers, many of whom have evolved within the organisation with him.
Pallia has been able earn the trust and confidence of his employees, helping him shuffle the company’s top order and place his trusted lieutenants in leadership positions without causing anxiety among the others.
There have been five changes to Wipro’s senior management personnel since Pallia took over, the latest being that of Subha Tatavarti, who was brought in by Thierry and resigned as the company’s chief technology officer last month only to be replaced by Sandhya Arun.
However, the story for now is that Wipro might take some time to grow with a new boss at the helm. The start is encouraging, but how the company negotiates disruptive technologies such as generative artificial intelligence (GenAI) and how seamlessly it integrates AI into its software offerings will potentially determine its future growth. And with major central banks like the US Fed cutting interest rates, clients are likely to boost tech spending.
“Srini Pallia is a well-regarded leader in Wipro and is deal-driven. Strengthening execution is the key priority. Other key priorities are developing AI-integrated solutions and achieving better integration of Capco and Rizing,” wrote Kotak analysts Kawaljeet Saluja, Sathishkumar S, and Vamshi Krishna in a note dated 18 June.
“The company will strive for pricing increases in pockets. Wipro will not lower investments in sales and marketing,” wrote the Kotak analysts.
Shareholders have reacted favourably to this change in guard. Since Pallia took over on 6 April, the company’s shares have gained nearly 10% until Friday’s close.
The company got an immediate boost when it signed a $500 million five-year deal with an unnamed US-based communications services provider in June 2024 to provide managed services for its products.
Wipro at one point of time used to be bigger than city peer Infosys Ltd, which is India’s second-largest software services company, but is now behind Noida-based HCL Technologies Ltd. Whether Pallia orchestrates another change in Indian IT’s pecking order will be based on whether he capitalises on the strong start.
