Wipro CEO Neemuchwala to quit 1 year before his term ends

BENGALURU: In a widely anticipated move, Wipro CEO Abidali Neemuchwala has stepped down, a year before his five-year term comes to an end. Neemuchwala cited family commitments, but analysts say the decision would have been prompted also by the company’s lackluster performance under him. He will continue to hold the office until a successor is appointed to ensure smooth transition.
Handpicked by Wipro promoter Azim Premji in 2015, Neemuchwala – who had previously spent 23 years with TCS – tried to crank up Wipro’s struggling delivery and sales engines.But the efforts did not pay off the way it was anticipated, and the company’s growth rate continued to lag way behind those of peers TCS, Cognizant, Infosys and HCL.
Moshe Katri, MD of US-based Wedbush Securities, said during the past few years, the company's financial metrics consistently underperformed relative to its tier-1 peers. “Structurally, relative to its sector peers, we believe Wipro continues to have a substantial exposure to legacy-based projects. Delivery of these projects is gradually shifting to alternative means, including SaaS, cloud and automation, triggering persistent cannibalisation in Wipro’s revenue growth. In our view, Wipro's Board has the opportunity now to nominate an `agent of change’ with a mandate to transition the business,” he said.

Phil Fersht, CEO of US-based HfS Research, said Neemuchwala’s tenure at Wipro was plagued by a constant struggle to change the leadership culture in the firm. “He was keen to bring a startup mentality to drive more entrepreneurship and creative ideas, and had some successes, such as the acquisition and expansion of Topcoder and driving the establishment of Rishad Premji's VC fund. However, he didn't make all the changes he would have liked and was in a constant battle to instill his ethos,” he said.
Neemuchwala's exit comes soon after another very modest quarterly performance, and forecast of an even more modest Q4 performance. Under Neemuchwala, Wipro grew at a CAGR of 3%. Under his predecessor, T K Kurien, it grew at 6.5%, but even that was below that of its peers. HCL pulled ahead of Wipro for many quarters to emerge as India’s third largest IT service provider in 2018-19. During Neemuchwala’s tenure, Wipro’s shares rose 13%, while Infosys’ grew 33% and TCS’s rallied 78%.
Neemuchwala, 52, said, “It has been my honour and privilege to serve Wipro, a company with a rich legacy of almost 75 years. We have made considerable progress in our transformation journey, improved our delivery engine and institutionalised deeper client-centricity. I thank Azim Premji, Rishad, our Board of Directors, my Wipro colleagues and customers for their support over the years.”
Rishad Premji, who is executive chairman, will likely play a bigger role now, at least till the company identifies a new CEO.