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Thierry Delaporte, IT major Wipro’s CEO find - bought in four years ago to get the lagging company out of the rut, resigned a year before his term ends, on April 6. His exit, although abrupt, isn’t a shocker, as the Frenchman, saddled by macroeconomic conditions, was largely unable to get ahead in the race.
Wipro under Delaporte only excelled in the very beginning of his tenure, as the tailwinds provided by Covid-19, pushed the entire sector into a high-growth environment. In tandem, Wipro too reaped the benefits at the time. However, as the demand environment has dampened, Wipro, in comparison to its peers has been lagging persistently.
In the last quarter(Q3) for instance, the company reported a 12 per cent year-on-year (y-o-y) profit decline at ₹2,694 crore. While Infosys reported a a 7.3 per cent profit decline y-o-y at ₹6106 crore, TCS reported a 2 per cent y-o-y profit growth at ₹11,058 crore and HCL Technologies, reported a 6 per cent y-o-y profit growth at ₹4351 crore, for the same period. In Delaporte’s captaincy, Wipro slipped from its position as third largest IT services provider in India, too.
Tech downturn
The headwinds brought on by a possible slowdown in the western economies have resulted in weak tech spending, creating a tougher demand environment. In this market, Wipro has not seen meaningful topline conversion of its deal pipeline. Analysts have noted that the company has been lacking ability to execute. Weakness in consulting business, has become an added blow too.
The weakness in consulting businesses has also brought the underperformance of acquisitions made under Delaporte under the radar. In his pursuit to transform, the executive had made costly bets, with the acquisition of Capco and Rising. Capco was the company’s largest acquisition at $1.5 billion.
Pareekh Jain, Founder of Pareekh Consulting, notes that Thierry’s resignation was only a question of when and whether he will complete his five-year tenure. Underperformance resulting in resignations is seemingly being seen more with similar situations at Cognizant and Tech Mahindra in the recent past. “Even though it is a bad market to judge the performance of changes made, there is uncertainty whether his changes will pay off even in the future, as the market is again constantly pivoting with the advent of GenAI.”
In Delaporte’s defence, he did believe the shots he called would pay off well eventually when the market improved. The last time businessline spoke with Delaporte, he had said he remains steadfast in his belief to transform and the occasional quarters where Wipro lags behind its competitors will not derail the long-term trajectory of the transformation journey and it will alter the course for the better in the long run.
“Wipro is progressing and taking steps in the right direction. Given that it is a massive organisation the transformation wouldn’t happen overnight as it is not just superficial but deep. We remain ambitious, persistent, resilient and patient and are growing stronger by the day,” he had said.
Delaporte is also reported to have not lived up to the liking of the company’s founder Azim Premji. Reports in the recent past had suggested that Premji was dissatisfied with how Wipro’s turnaround journey has been hampered by broad cultural changes, declining growth and profitability, constant senior-level exits and underperforming shares. However, Chairman Rishad Premji has always publicly backed Delaporte.
When businessline had asked, given that historically, the average tenure of a CEO in Wipro is about five-years, halfway through how confident he is of re-appointment, Delaporte had shrugged off with a laugh, and said, “It’s very simple on that. I am focused on my mission. And I will focus on my mission as long as I’m in charge.”
Multiple changes
Laser-focused on transformation, Delaporte in his term had made multiple changes. His recent moves included reshuffling its business units under four broad categories termed as global business lines (GBLs) and changing the reporting structure. He also made changes to the Chief Growth Office.
Industry watchers have often indicated that Delaporte’s transformational moves were probably unnerving and did not sit well with senior-level executives in the company, resulting in exits. Under Delaporte’s leadership, have seen double-digit exits. Last year saw over 10 exits, including senior leaders Jatin Dalal, Stephanie Trautman and Ranjan Kohli, among others.
Jain interestingly notes that, even historically, any newly appointed outsider CEO, who has tries to change the status quo in the short term, has had to pay a high price, when situation failed to pan out as planned. He presents the example of the outcome of Infosys’ Vishal Sikka trying to make changes, in contrast to current CEO Salil Parekh’s much more stable approach.
The company has now appointed Srinivas Pallia to succeed Delaporte, a company veteran, who has been with Wipro for almost three decades. He was previously serving as the CEO for Americas 1. Jain notes, “After the appointment of two outsiders - Abidali Neemuchwala and Thierry Delaporte has not worked out well, the company is looking to get an internal candidate at the helm, with Pallia, to bring in more internal alignment. Given the employer brand has taken a hit, multiple senior level exits have taken place, and internal unrest has been caused, Pallia faces a tough challenge as he takes over.”
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