Wipro CEO to focus on AI, automation tech

Wipro Ltd's CEO-designate Abidali Z. Neemuchwala is banking on new-age technologies, including the firm's own artificial intelligence platform Holmes and other automation tools, to catalyse growth at the country's third largest software firm.

The plan also envisages Wipro's consulting arm working closely with the company's IT services teams to help generate more business from existing clients and help win large deals, according to an executive familiar with the strategy plan being discussed as Neemuchwala prepares to take over as chief executive officer from 1 February.

"We have been focusing on automation and so all projects will be evaluated on which new automation tools can be used," added the executive, who spoke on condition of anonymity. "Holmes is just one of the many tools. The focus will be on Holmes, automation and consulting practice to create a differentiator for our services," this person said.

The company's newly created Marketing, Innovations and Technology (or MIT) division will review all projects currently underway at the company, and details of the new strategy will be outlined in the coming month, the executive added.

Wipro has thus far fared poorly in terms of account mining or generating more business from existing clients, and is expected to grow by at-best 4.2% in dollar terms this financial year, the slowest since it grew 1.6% in 2009-10. Last year, Wipro recorded a growth of 7%.

Given this, the company's management believes that Wipro can improve its efficiency and profitability by automating manual tasks. Wipro's renewed push towards embracing automation and consulting under Neemuchwala, the former Tata Consultancy Services Ltd executive who joined Wipro as chief operating officer in April last year, mirrors the strategy undertaken at Infosys Ltd by new boss Vishal Sikka.

Since he took over in 2014, Sikka has created a team to improve sales pitches to address Infosys's struggles in account hunting or winning large new deals. The sixmember team, based out of Palo Alto, offers solutions to clients by practising the usercentric approach of Design Thinking. Sikka has also tasked 100 of the firm's nearly 3,000 consultants with added responsibility to manage 200 of its largest clients.

"Wipro believes that robotic automation, cognitive computing services based on Holmes and new human-machine interfaces are key to the future of IT services business and we will continue to invest deeply in these technologies to enhance our differentiation," said G.K. Prasanna, currently head of infrastructure practice who will take over as president of the MIT division from 1 February. "MIT will work closely with all the business units and service lines of Wipro to strengthen our proactive account-mining capability and also improve our positioning in large bids," said Prasanna, declining to share details, including on the use of consultants to help generate more business.

The two biggest challenges ahead of Neemuchwala will be to increase the company's growth and improve profitability. Over the last 18 months, Wipro has been unable to generate more business from oil giants and big banks, two industries which bring about 40% of company's revenues, according to a few equity analysts. The current decline in crude prices has made many oil firms, including BP and Exxon Mobil Corp., defer new technology spends, thereby hurting Wipro. Global oil firms now account for only 14% of Wipro's $5.46 billion revenue in the nine months ended December 2015, as compared with 16.4% at the end of December 2014. Worryingly for the company, it has also been unable to increase its share of business from big banks and insurance firms-the biggest tech spenders.

At the same time, Wipro's profitability has taken a hit as commoditised outsourcing deals have come under pressure, making IT firms take on new projects at discounts. Wipro reported operating profitability of 20.2% at the end of December 2015 as against 21.8% at the end of December 2014, much lower than its larger rivals, Infosys and TCS. "These measures (the focus on automation and consulting-led approach) suggest that the company is looking at belt tightening, which will help them arrest falling margins," said a Mumbai-based head of research at a domestic brokerage.