Wipro at Crossroads: The

Failed Dual CEO Structure

Introduction:
In April 2013, Bangalore-based information technology, consulting, and
outsourcing company, Wipro Limited (Wipro), reported the weakest sales growth compared to
its peers in the Indian Information Technology (IT) industry for the Financial Year (FY) ended
March 31, 2013. While Wipro recorded an increase of 16 percent in FY 2013 revenues, its peers
such as Tata Consultancy Services (TCS) and Infosys Ltd. (Infosys) posted an impressive
revenue growth of 29 percent and 19.6 percent respectively. Wipro also experienced a sales
increase of only 5 percent for the FY 2013 against the industry growth of over 10 percent.

The company attributed its underperformance as compared to its peers, to its portfolio mix.
Wipro, the third largest player in the Indian Information Technology (IT) industry, had
traditionally focused on investment banking in the Banking, Financial Services, and Insurance
(BFSI) vertical, and on the telecom sector. Both these segments had reportedly taken a beating in
recent years. While the investment banking segment had reported muted growth, the fact that
clients in the telecommunications sector, especially in Europe, were reducing their technology
spend had also negatively impacted Wipro's performance. In addition to this, the company's dual
CEO structure adopted in April 2008 did not yield the expected results. This, according to
analysts, was because the two CEOs - Girish Paranjpe (Paranjpe) and Suresh Vaswani (Vaswani)
- did not focus on key segments that helped Indian IT companies recover growth post the global
financial crisis . Thus, Wipro lagged behind its peers such as TCS and Infosys.

To arrest the decline in sales and profitability, Wipro's founder and executive chairman, Azim
Hasham Premji (Premji), scrapped the dual CEO structure in January 2011, to make way for
company veteran and head of the Eco Energy Business, TK Kurien (Kurien), to take over. In a
bid to turn around the company, Kurien restructured the organization to make it nimbler and
focused on key segments such as the BFSI and consulting to chase growth. Moreover, the single
CEO model was also adopted to ensure that Wipro retained its position in the top three club in
the Indian IT industry along with TCS and Infosys. This was because new players such as
Cognizant Technology Solutions (CTS) were increasing their presence in the Indian IT
industry...
Objectives:
1. Critically analyze why the dual CEO structure failed at Wipro
2. Examine the challenges faced by the company while functioning with a dual CEO matrix
structure
3. Evaluate the strategies adopted by Kurien in turning around Wipro
4. Understand the challenges faced by Wipro in maintaining its position in the top three club
in the IT industry in India

A. Situational Analysis:
Wipro, Dual CEO structure, Single CEO structure, Organizational
structure.

B. Statement of the Problem/Formulation of the Problem:

Though Vaswani and Paranjpe were
entrusted with the responsibility of driving growth and bringing the company on a par with its
peers during the global economic slowdown, they could not adopt strategies that could drive
growth at the company.One of the major challenges with the dual CEO structure, according to
Wipro insiders, was that its dual reporting structures made it cumbersome. The agility of the
company was affected. They also felt that the dual CEO structure prolonged the decision-making
process and led to contradictory viewpoints being expressed.
Some industry insiders said that both the CEOs had shied away from adopting an aggressive
approach during the economic slowdown, preferring to focus instead on freezing of new hires,
etc. Since the BFSI vertical was the most affected due to the global financial crisis and
subsequent bankruptcy of many banks in the US, the IT sector in India was hit the hardest. It was
reported that by 2008, the BFSI vertical accounted for 40 percent of the IT industry's revenues.
Other verticals such as retail and certain manufacturing sectors were also affected to some
extent...

C. List of Critical Factors/Facts:

Political Factors that Impact Wipro Limited:

Political factors play a significant role in determining the factors that can impact Wipro Limited's
long term profitability in a certain country or market. Wipro Limited is operating in Information
Technology Services in more than dozen countries and expose itself to different types of political
environment and political system risks. The achieve success in such a dynamic Information
Technology Services industry across various countries is to diversify the systematic risks of
political environment. Wipro Limited can closely analyze the following factors before entering
or investing in a certain market-

 Political stability and importance of Information Technology Services sector in the

country's economy.
 Risk of military invasion
 Level of corruption - especially levels of regulation in Technology sector.
 Bureaucracy and interference in Information Technology Services industry by
government.
 Legal framework for contract enforcement
 Intellectual property protection
 Trade regulations & tariffs related to Technology
 Favored trading partners
 Anti-trust laws related to Information Technology Services
 Pricing regulations – Are there any pricing regulatory mechanism for Technology
 Taxation - tax rates and incentives
 Wage legislation - minimum wage and overtime
 Work week regulations in Information Technology Services
 Mandatory employee benefits
 Industrial safety regulations in the Technology sector.
 Product labeling and other requirements in Information Technology Services

Economic Factors that Impact Wipro Limited:

The Macro environment factors such as – inflation rate, savings rate, interest rate,
foreign exchange rate and economic cycle determine the aggregate demand and aggregate
investment in an economy. While micro environment factors such as competition norms
impact the competitive advantage of the firm. Wipro Limited can use country’s economic
factor such as growth rate, inflation & industry’s economic indicators such as
Information Technology Services industry growth rate, consumer spending etc to forecast
the growth trajectory of not only --sectoryname-- sector but also that of the organization.
Economic factors that Wipro Limited should consider while conducting PESTEL analysis
are -

Business cycle stage (e.g. prosperity, recession, recovery) Type of economic system in countries
of operation – what type of economic system there is and how stable it is.

 Government intervention in the free market and related Technology

 Exchange rates & stability of host country currency.
  Efficiency of financial markets – Does Wipro Limited needs to raise capital in local
market?
 Infrastructure quality in Information Technology Services industry
 Comparative advantages of host country and Technology sector in the particular country.
 Skill level of workforce in Information Technology Services industry.
 Education level in the economy
 Labor costs and productivity in the economy
 Economic growth rate
 Discretionary income
 Unemployment rate
 Inflation rate
 Interest rates

Social Factors that Impact Wipro Limited:

Society’s culture and way of doing things impact the culture of an

organization in an environment. Shared beliefs and attitudes of the population
play a great role in how marketers at Wipro Limited will understand the
customers of a given market and how they design the marketing message for
Information Technology Services industry consumers. Social factors that
leadership of Wipro Limited should analyze for PESTEL analysis are -  

 Demographics and skill level of the population

 Class structure, hierarchy and power structure in the society.
 Education level as well as education standard in the Wipro Limited ’s industry
 Culture (gender roles, social conventions etc.)
 Entrepreneurial spirit and broader nature of the society. Some societies encourage
entrepreneurship while some don’t.
 Attitudes (health, environmental consciousness, etc.)
 Leisure interests

Technical Factors that Impact Wipro Limited:

Technology is fast disrupting various industries across the board. Transportation

industry is a good case to illustrate this point. Over the last 5 years the industry has been
transforming really fast, not even giving chance to the established players to cope with
the changes. Taxi industry is now dominated by players like Uber and Lyft. Car industry
is fast moving toward automation led by technology firm such as Google &
manufacturing is disrupted by Tesla, which has stated an electronic car revolution.

A firm should not only do technological analysis of the industry but also the speed at
which technology disrupts that industry. Slow speed will give more time while fast speed
 of technological disruption may give a firm little time to cope and be profitable.
Technology analysis involves understanding the following impacts -

 Recent technological developments by Wipro Limited competitors

 Technology's impact on product offering
 Impact on cost structure in Information Technology Services industry
 Impact on value chain structure in Technology sector
 Rate of technological diffusion

D. Assumptions:

E. SWOT Analysis:
 
Strengths: Weakness:
 Diversifies product offerings  A small player in the global market.
 Early strategic alliances & boosted  Investment in research & development
credibility. is below the fastest growing operations.
Multi domestic market philosophy  Not a proactive company.
 Stronger dealer community  Low operating margin of other
 Well established infrastructure companies
 Low-price benefits and high-quality
standards
 Wide range of developmental services,
and one of the top IT Companies.

 
Opportunities: Threats:
 New company strategy leads to greater
profits.
 Expand from pure tech to a broad-based
vendor that solves business problems.
 Diversify brand products and
consultancy service.
 Huge global market and domestic
market.
 Rising exports from the industry.
 New varieties of products.
Solutions for the questions in the Case study:
 Huge competition from its rivals
 New entrants
 The increasing cost of human capital
 Rising raw materials
 No regular supply of innovative
products
 Shortage of skilled workforce
F. Conclusion:

Wipro is undoubtedly the leading company in IT technology and has grown

immensely over the last few years. The company gives importance to its customers and
employees to ensure better services and quality products. Moreover, they have a huge
presence on all social media platforms which helps them create strong brand awareness in
the market. The company is constantly developing and evolving. Although it really needs
to be more active and innovative to beat its competition in the market.