Slowdown delays Wipro, Tech M turnaround

The investors, employees and customers will need to have patience as it will take some time for Srinivas Pallia, to complete the transformation Thierry Delaporte started and get Wipro back into a leadership position. However, there is still a long way to go and substantial investment is required for Wipro to build and acquire the necessary capabilities - Peter Bendor Samuel, CEO, Everest Group, tells Bizz Buzz

Bengaluru: Challenges before the leadership of Wipro and Tech Mahindra are many in their bids to turn around their companies and investors have to wait for witnessing tangible results. Experts are of the opinion that tough demand environment, and company-specific issues have to be navigated to script a successful turnaround story.

In case of Wipro, which appointed Srinivas Pallia this month, the company has to improve its execution capabilities, bag more large deals, improve its technology capabilities apart from raising the morale of employees to get back its industry-leading position in key verticals.

“The investors, employees and customers will need to have patience as it will take some time for Srinivas Pallia, to complete the transformation Thierry Delaporte started and get Wipro back into a leadership position. Srinivas is well positioned to carry the internal stakeholders, improve morale and increase execution. However, there is still a long way to go and substantial investment is required for Wipro to build and acquire the necessary capabilities to get back to its old industry leading position,” Peter Bendor Samuel, CEO of global consultancy firm, Everest Group, told Bizz Buzz.

Wipro lagged its peers in terms of revenue growth in the last financial year as the company witnessed 4.4 per cent decline in its revenue during the last financial year. As compared to Wipro, all its peers saw an increase in their top lines.

Similarly, Tech Mahindra is another company, which is trying to accelerate its growth as the company faces slowdown pangs in key verticals.

Last week, the company unveiled a three-year plan in turning around the company. Titled ‘Vision 2027’, the plan will be executed in three phases. In FY25, Tech Mahindra will be in the ‘Turnaround phase’; in FY26, it hopes to be in the ‘Stabilization phase’, & in FY27, it is focussing on ‘Reaping Returns’.

To achieve the intended objectives, Tech Mahindra’s CEO Mohit Joshi has said that the company had identified 80 key accounts to increase its revenue share. Similarly, it is planning to reduce its cost through hiring, training and retaining of freshers and young professionals.

By FY27, the company aims to achieve an operating margin of 15 per cent along with additional benefits accruing to the tune of $250 million each year. However, brokerage firms said that tough demand environment makes it challenging for the company to achieve its goals. “The management was confident to drive profitable growth for all three years and achieve 15 per cent operating margin in FY27, while it expects $250mn average benefits to be achieved in each of the individual years. We believe, the near-term macro uncertainties would provide limited headroom for growth and margin recovery until FY25. More importantly, the company’s inherent weakness and seasonality of its portfolio businesses would make it even harder for the milestone to be achieved within the given timeframe,” Brokerage firm, Prabhudas Lilladher wrote in a note.