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Slicing And Dicing, The Kurien Way
Photo Credit :
Wipro's decision the previous Friday to move from the dual-CEO structure to a single CEO, when her mobile phone sought her attention. T.K. Kurien, the week-
old CEO of the $4.39-billion Wipro Technologies, was on the line. "I'm trying to create a new business unit, which will have pharma along with it. You should
take it up," was his short and crisp offer.
What was left unsaid was that the call meant that Singh was already put in charge of the pharma, health sciences and services vertical. Just back from the
World Economic Forum in Davos, where he went barely two days after taking charge, Kurien had made one of his earliest moves to reinvigorate Wipro: a new
vertical created, a new vertical head appointed.
Twenty four hours before Wipro chairman Azim Premji was to scrap the dual CEO structure on 21 January, he had invited Kurien for an early morning meeting to
make him the offer. The joint CEOs had been talked to earlier in the day. His first reaction, he says, was "caution". But the ball was set rolling days
before the D-day. Premji had been seeking advice from his senior professionals on how to re-energise the company. Kurien was among those consulted but,
"(there was) no discussion in terms of giving me the role", he says. It wasn't until that Sunday evening that the jigsaw was to come together for the entire
top brass. All of Kurien's 26 direct reportees were on board for an evening meeting at his Electronic City office in Bangalore when he unveiled Wipro's new
Jobs of seven of the eight geographical heads, including president of global sales and operations, would be abolished (being relocated into different jobs).
Eight verticals (focus sectors) had been compressed into six. Vertical heads will now run their businesses as CEOs of strategic business units (SBUs) with
full responsibility for sales, delivery and service, and their own profit and loss account. All of the firm's service lines — such as delivery, product
engineering, BPO, consulting, analytics and business applications — will have to take a lesser role of supporting the verticals, horizontally. "Up to now,
Wipro had profit and loss (P&L) targets for verticals as well as service lines. This created conflict of interest with service lines," notes Rohit Chordia,
analyst at Kotak Institutional Equities Research, in a report in February.
Greater empowerment meant decisions will have to be taken within two hops (any decision will, at best, go through two discussions or people. No more). "The
challenge for us is to move the decision-making to a level where people lower down take decisions. The ability to give people the rope to take decisions and
allow them to make mistakes will be the real defining factor as far as change is concerned," says Kurien. And customers will deal with One Wipro, rather than
multiple Wipros trying to break into his business.
And yes, all of them would have to report progress on a weekly basis at reportees' Thursday call, named the Quick Management Information — the GE way (Kurien
was managing director of GE X Ray). In the call, the business units will have to commit revenue, headcounts, etc. "It brings the firm to a weekly rhythm.
It's fairly granular. The quarter is broken into weeks. It is not (about) how I will do just this quarter, but forecast-versus-performance for every week,"
says Soumitro Ghosh, group vice-president and global head of financial services.
There are proven advantages of a verticalised SBU structure in terms of ownership, accountability and decision making. It is more customer-centric as the
customer will have to deal with only one person from Wipro — who is totally empowered and accountable for his decisions. In return, the IT firm can mine its
clients far better, focusing on them and by building relationships. "In IT, you have to keep innovating models. What worked five years ago may not work
today. Structural changes may be needed at times," says Ambarish Dasgupta, executive director at PricewaterhouseCoopers India. But surprisingly, what Wipro
is putting together is already an industry standard, propagated by TCS and Cognizant for years now. Infosys has tried verticalised structure off and on. To
that extent, Wipro is pretty late to the party.
Ironically, more than a decade ago, Wipro was among the first IT firms to create verticals. But vertical heads, five of whom reported to Suresh Vaswani and
two to Girish Paranjpe in the former regime, were never given full charge of P&L account and sales, delivery, operations, consulting all together. That
hampered decision-making and diluted responsibility and accountability. Wipro used to prepare P&Ls for verticals, horizontals as well as geographies, while
now only verticals will be responsible for P&Ls.
Fractured Egos, Broken HopesThough HR head Saurabh Govil refuses to put a number to it, the restructuring has affected thousands of the 118,000 Wiproites. It has literally shaken up the
company ("Woken it up," says Kurien). "They are going through a lot of turmoil within the organisation," says Ankita Somani, research associate at Angel
Elimination of the job of a geographical head has rankled the most. As has the move to ask the service lines to work with verticals, rather than dealing with
customers directly. "There were people who thought they were masters of billions of dollars of business (geography heads), whose jobs were eliminated. It
didn't leave them pleasant," reveals a mid-level executive at Wipro. But the firm, whose attrition is already higher than its peers', has geared up for
worse. The recent across-the-board salary hikes might help check the exits. "There are others who have hit the end of the runway and they shouldn't be with
you for the long term," says Kurien, who is the highest-paid executive in the Indian IT services segment.
Even his worst critics admit that Kurien, who carries a reputation for slicing and dicing structures and reputations ruthlessly, has reined in his natural
instinct and has been forthcoming to the extent of over-communicating at the senior level to avoid any surprises. Every direct reportee was sat through to
explain the impact.
And Kurien made sure the timelines he had set for effecting changes — such as two weeks for the new organisation structure — were fast and furious. He
reached out to people directly through email and microsite and responded to thousands of mails within days. "It is important to do it with a sense of
fairness. Where people who are affected also believe it is the right thing to do," says Kurien.
Gasping For GrowthUnarguably, Kurien is a man in a hurry because he is now at the helm of this multi-billion-dollar organisation that is suddenly being perceived as incapable
of growing fast enough. "It feels terrible. It felt horrible," says Singh. "The TK world is a lot about action, speed and risk-taking," says Ghosh. Wipro's
inability to keep pace with its peers has already brought down its former CEOs Vaswani and Girish. "Reporting dichotomy was confusing people," says Somani.
And by delivering quarterly revenue growth (year-on-year) of just 1.5 to 6.6 per cent, Wipro has lagged behind peers such as TCS (4 to 11.2 per cent) and
Infosys (3.1 to 7.6 per cent) over the past five quarters. "Every firm has its pride. They have underperformed for long. From capability perspective, though,
there is nothing meaningful separating them," says a Mumbai-based analyst. So, Premji has set an unambiguous agenda: "It is all about growth," says Kurien.
Wipro has identified BFSI (banking, financial services and insurance accounting for 27.3 per cent of revenue), retail (15.4 per cent), energy and utilities
(9.9 per cent), healthcare (8 per cent), and CPG (consumer packaged goods, 8.8 per cent) as its focus businesses. The company's healthcare services and
technology businesses shrank 4.8 per cent and 4 per cent, respectively, in the December quarter. Financial services grew 6.1 per cent, energy and utilities
13.1 per cent, retail 3.5 per cent and CPG 4.2 per cent.
"Margin performance has been inferior to larger peers… due to poor execution," says Yogesh Radke, in an Edelweiss report. The reorganisation and customer
focus, Wipro hopes, will help it mine clients as well as its similarly structured peers do. Especially with the new Client Engagement Managers (a variant of
which is deployed by every large IT services firm) who will act as mini-CEOs responsible for growth, relationship and delivery to focus clients ($50 million
Wipro, for instance, only earns an average $110 million from its top five clients as compared with TCS' $349 million and Infosys' $184 million. "IT
implementation becomes vacuous if there is no appreciation of the industry. Verticalisation helps in client mining because they talk their language, their
terms," says Dasgupta.
The Waiting GameKurien is giving Wipro three quarters to deliver results of the reorganisation. Failing which, he promises some hard decisions. "We will take them earlier
than later. I am not going to dither on decisions," he warns. But whatever Kurien has done so far is not surprising. It is almost as if this was the least he
should have done. Rather, most analysts wonder: Why so late? Given a chance, Kurien says he would do it differently. "If I had dummies… which I can inject
with fresh blood and DNA in the morning, I will probably have a different structure. But for now, this is what the organisation can take," says Kurien.
Not everybody is enthused about the restructuring. In its Alpha Strategy paper released on 22 March, Edelweiss Research has advised going short on Wipro and
long on Infosys. "Wipro has set high expectations by committing to deliver results of recent restructuring in the next two-three quarters. We, however,
believe it may take longer for benefits to flow, as changing client perception and mindset change (within firm) are long drawn processes," says the report.
"We are really not sure about Kurien's vision right now. He is just aligning the verticals," says Somani. "I know what we will solve and what we won't. I
also have a plan to figure out what we won't solve and how to fix it. So as long as I know what it is and the elements are within my control, I'm sure we can
do it," says Kurien.