Wipro Share Price: A willingness to experiment and take risks has always been a part of Wipro DNA. The “string of pearls acquisition strategy”, the twin CEO structure or the decision to have acquired entities operate in a parallel structure - all these have been bold strategic calls by Wipro in the past. But none of these have helped improve growth. Wipro’s growth has been anaemic at 4.4% CAGR in US$ terms over the last 8 years (10% CAGR for TCS). That said, we note that Wipro has not had an internal makeover of significance since T.K Kurien.

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Wipro announced an ambitious internal re-organization, collapsing structures, exiting geos and setting up a large deals team. All of this to improve the growth trajectory by creating a more customer facing org vs one that’s had an excessive focus on itself. While the change is positive, Investec await execution based on markers highlighted in this reported. Investec retains HOLD rating on the stock price of Wipro.

The big decisions:  

1. Collapsing 25 P&L' to 4 (should reduce internal friction and help create a more client facing org),
2. Creating 4 Geographic markets and exiting markets accounting for 2-3% of revenue and higher associated costs
3. Global Account Executives (GAE) now have more independence and decision-making ability with their own delivery,
4. Creating a new position called "Chief growth officer" who will 1) lead sales, 2) GAE and 3) a large deals team.
5. A new large deals team (earlier non-existent) reporting into the Chief growth officer to help increase participation in large deals.
6. Likely influx of new leadership talent from outside. Wipro believes all the above should help create a leaner organization with a higher focus on growth.

Tracking the change and the big questions:  

Wipro highlighted that it would provide additional metrics to help track the change.

However, the big questions are:

1. does the new structure create additional decision-making bottlenecks with a fewer senior leadership in-charge of P&L’s and if this isn’t true
2. how easy will it be to have people make decisions on their own after being used to multiple layers of decision making in the past. While these are softer aspects, the bigger marker for investors is to see if Wipro breaks its Q1 jinx. Q1 has been the weakest quarter followed by Q2, with the weight of execution falling on H2 of the year. improving H1 performance itself can lead to better growth.
Investec believes the recovery is more likely to be an FY23 story as Wipro exits geos that account for 2-3% of revenue. Moreover, Wipro share price is likely to be available at a better entry point post the buyback it has ordered.