Wipro IT Chiefs Quit; Profit Lags Rivals

Wipro overhauled the management of its key outsourcing business and reported third-quarter profit growth that lagged its main rivals, sending its shares down the most in a year. India’s No. 3 software services exporter has been struggling to win big contracts as the sector recovers from the global downturn, and its shares and margins have suffered compared with its larger competitors, Tata Consultancy (TCS) and Infosys.

“Wipro has been underperforming both TCS and Infosys for the last five to six quarters,” said Hardik Shah, IT sector analyst at brokerage KR Choksey Shares & Securities. Rival Tata Consultancy Services posted a 30-percent rise in quarterly profit and Infosys reported a 14-percent increase. “Something was wrong, things were not quite working out and this (the management change) seems to be a drastic step,” he said. “It will take a couple of quarters at least for the new strategy to come through. There should be some uncertainty till then.”

Wipro said co-CEOs of the IT unit, Girish Paranjpe and Suresh Vaswani, would resign effective January 31 and be replaced by company veteran T.K. Kurien to make the organisation structure simpler. The unit, which develops software applications, integrates IT systems and manages call centres for clients such as Citi, Cisco and Credit Suisse, accounts for about three-quarters of Wipro’s revenue.

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“I don’t think we should be making excuses,” Chairman Azim Premji told a news conference. “We have underperformed in quarter three, relative to competition and relative to our potential as a company. Let’s just acknowledge that. What we are trying to do is improve performance in quarter four and significantly improve performance going forward.