Wipro needs more consistent performance for accelerating revenue growth
Wipro’s appointment of a new head provides an indication of the things in store for the Indian IT industry. The Bengaluru-headquartered company on April 6 informed the exchanges on a regulatory filing that Thierry Delaporte has resigned from his position as the Managing Director and CEO and will be succeeded by Srinivas Pallia, the CEO of the company’s American operations. Though the resignation of Delaporte did not come as a complete surprise, the timing of the announcement indicated that the board did not wish to continue with the underperformance that has dogged the company for long. This prompted them to opt for a proven in-house candidate, who could stabilize the ship. Wipro is the first Indian company to change leadership at the very top, and indications are that many Indian IT firms are likely to take cue and go in for leadership revamp hoping that the move could infuse a new brand of dynamism into the decision-making process. Currently, the global IT services industry is going through a slowdown. After the post-pandemic surge, IT spend by enterprises has come down drastically. Clients are focussed more on the ‘run’ part of the business than investing in new areas. That is the reason digital revenue of all IT firms has been coming down.
As a large share of revenue comes from digital projects, the steep downtrend has led to moderation in growth rates by most IT players. In FY24, results of which will be known starting this week, some companies are likely to see a negative growth. So, the going is getting tough. Against this backdrop, boards of IT firms will try to get a leadership team that can successfully navigate through the tough environment. Rather than bringing in drastic reforms within the company, they will likely stabilize the ship and get the company ready for the next phase of growth. Previous trends showed that leadership churn was a natural outcome of a tough demand environment. And this fact will not change in the present times. The industry has already seen a slew of leadership changes in the past one year.
Many new CEOs have taken over the mantle in companies like Tata Consultancy Services, Cognizant and Tech Mahindra, among others. These leaders now have the uphill task of performing in an environment, when demand is moderating. Although there are hopes of IT spend improving towards the second half of 2024, the recent revenue forecast of Accenture doesn’t evoke much confidence. Therefore, leaders of large and mid-tier IT firms have to find new ways to generate revenue. Added to that is that the environment has become more challenging with the advent of generative AI tools. Most analysts predict change in the business model of Indian IT firms as large-scale automation creeps in. Given the disruptive nature of Gen AI, those at the helm have to ensure that their firms stay ahead of the curve. Overall, the Indian IT industry is likely to see many more leadership changes in the coming quarters as they bid to weather many a storm.
