Wipro: A new CEO should go beyond the tried and tested

Wipro on Friday said its CEO & MD has resigned from the company citing family commitments. A statement from the company said the Board of Directors has initiated a search to identify the next Chief Executive Officer. Neemuchwala will continue to hold the office of CEO & Managing Director until a successor is appointed for a smooth transition and to ensure that business continues as usual, it said.

“Over the last four years, Abid helped build a strong execution mindset, drove key acquisitions and scaled our digital business globally. We wish him the very best for the future,” Rishad Premji, Chairman said.

Neemuchwala was appointed the CEO of the company in February 2016. The departure of Abidali Neemuchwala may have come as a surprise to the uninitiated, but analysts tracking the company saw it coming, and in fact, say the timing could not have been more opportune for a new person to take over the reins at the software major.

“Neemuchwala has been very pivotal to the success of Wipro in the last few years. He brought in a new sense of direction and ushered in a lot of changes, but what has happened in the past may not work in the future,” Sanchit Vir Gogia, chief analyst, founder & CEO of Greyhound Research, told BusinessLine.

“Every time there is a CEO change, the Street hopes that things will get better at Wipro and it will start closing the gap versus peers. But numbers never seem to play out like that,” an analyst with a research firm who did not wish to be named, said.

Gogia said the deal structures are changing very quickly and the new CEO should have the skill sets to take the company to a new level. “Wipro should hire a person who is strong in hardware and software services; the CEO should come across as someone who has a more balanced view of both the new and the old. It is critical because the industry is becoming extremely competitive and the margins are getting thinner.” Another analyst who did not wish to be named said even though Azim Premji has stepped aside and is now the founder-chairman, he continues to have a firm grip on the operations of the company.

Longevity of tenure

“Just the ability to talk digital is not enough. The need to be able to develop solid brands of software outside of what you are doing currently is the need of the hour,” Gogia said. Hence, having a new person will be good for the organisation in the long term.

Gogia added that investors have started questioning whether Indian IT companies tolerate outsiders as CEOs. “Any choice that is made here should come with the understanding that frequent changes are not appreciated by the Street,” he said.

Some of the other analysts this paper spoke to said that Wipro should appoint a CEO who should be given a term of at least five years.