Will the new COO rewrite Wipro’s growth strategy?

With the appointment of a new COO, IT services company Wipro is preparing the ground for one last push to race ahead of its peers before Chief Executive TK Kurien calls it a day sometime next year.

The appointment of Abid Ali Neemuchwala as COO comes at a time, with company veteran, CFO Suresh Senapaty, set to retire at the end of March.

“He (Senapaty) was the man who marshalled the company and in effect was in charge of operations to a large extent,” said a former Wipro top executive, who declined to be named.

Industry watchers believe Neemuchwala has been tasked with bagging transformational deals and will simultaneously look to reskill the existing workforce so that they can operate efficiently. “His job will be to build the business, increase operational efficiency and enable Kurien to focus on Wipro’s longer-term growth strategy,” said Amy McLaughlin, analyst at TBRI.

Fortune 1000 focus Also, with his two-decade-long stint in TCS, Neemuchwala has built relationships with clients and like Infosys CEO Vishal Sikka or Cognizant CEO Fransico D’Souza, he prefers to be close to Fortune 1000 clients. Therefore, in some ways, the role of Wipro’s COO will be quite different from that of Infosys COO Praveen Rao.

Wipro will continue to invest in onshore sales, digital sales, marketing and domain consulting, particularly in North America, said McLaughlin.

“It will help Kurien to focus on acquisitions and new business models,” added Sanchit Gogia, an analyst at Greyhound.

The need for this reboot is due to a combination of factors. In the third quarter, Wipro, for the first time, reported better numbers than its cross-town rival Infosys and India’s largest exporter TCS — a first for Wipro after more than 16 quarters.

This was not the case in the past. For example, in the first quarter of this financial year, which tends to be a strong quarter for IT exporters, Wipro reported numbers that were behind its peers Infosys and TCS (in the subsequent three quarters, it caught up with the top three).

Disappointing growth The company is expected to post annual growth of 8 per cent, lower than Nasscom’s 13-15 per cent growth projected for the industry as a whole.

Client acquisitions are looking up as can be seen from the largest-ever deal that Wipro has signed: $1 billion with ATCO. However, this has taken longer than expected as Wipro’s offerings had to be realigned, according to Hitesh Shah, analyst with IDFC Securities. At the same time, client ‘mining’ or getting more from existing large multi-million-dollar clients, which grew in the first half of 2014, slowed down in the second half due. At the end of the third quarter of the 2015 financial year, Wipro got 37.5 per cent of its revenues from its top 10 customers, less than the 40.9 per cent that these customers contributed in 2014.

Further, there seems to be a changing trend wherein power in some IT companies is moving from the CFO to the COO.

“After the financial crisis in the US, there has been a toggle for power between them and now companies are more confident and believe that operational rather than cost efficiency will drive growth forward,” said Sanjoy Sen, Doctoral Researcher at Aston Business School.

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