Sunday, February 1, 2009

Satyam gone..... Wipro next

Satyam will not exist ... the question was never if but always when. Only the suddenness and the reason of demise caught people by surprise. It was given that consolidation will happen in IT industry. Everyone concurred on Satyam not making it.

I differ with the masses on the second name amongst big 5 - Infy, TCS, Wipro, Satyam and HCL. People think its HCL but my vote is for Wipro.

Lets examine weakness of Wipro

1. Exceptional leader at helm -
Mr. Azim Premji is best amongst all top IT CEOs. I am a big fan of his. I do not idolize anyone more than him in IT industry (minus FC Kohli). It took 6 exceptional people to do the equivalent in Infy what he did single handed in Wipro (TCS had still larger management bandwidth). To execute his vision would require exceptional leaders like Vivek Paul. Its very difficult to be lucky two times over. So we have a situation where in there will be a significant skill gap between number 1 and number 2. I have learnt things the hard way in life and this can be lethal even for a small organization , forget a giant like Wipro.

2. Succession planning
We never knew who after Ashok Soota or after Vivek Paul. The problem runs down the ladder. Most of the senior people give me an impression that their growth into a role or their passing on the baton was never planned. Most of the time progressions are rewards for previous job well done rather than ability to execute the new assignment. Last but not the least who after Azim Premji.

3. HR loosing imagination
For me Wipro's senior HR constitutes of folks who would do very well in an MNC. These are folks who could impress you in a short meeting but shall not be able to steer their organization to leadership. I could go on forever writing about the shortcomings. A glaring example would be that a friend of mine in Infy has 40% variable component in salary while his contemporaries in Wipro have just 20% variable.

4. Loosing out in campus recruitment / wrong philosophy in entry level hirings
Wipro does not get premier slots in engineering campus viz a viz its competitors. There are geographies where it even looses out to lower rung players like Cognizant. Its lower compensation than its competitors does not help. To make matters worse, entry level guy is not hired predominantly on potential but ability to answer questions which require rote.

5. Weak entry level training program
TCS and Infy have dedicated centers for training their entry level. Wipro significantly outsources the same. Also training is more vocational where in focus is on teaching individuals tools rather than fundamentals (however their WASE program for BSc folks is an exception). I know it will be strongly objected to by Wipro folks but I suggest they do a quick poll . This constraints them in hiring students from few engineering streams (Comp Sc/ Electronics etc).

6. Not walking the talk
Mr. Azim Premji ... no doubt is a very strong proponent of ethics. I have no doubt about Wipro's commitment to ethics. But down the ladder I feel there could be a disconnect. While bad apples are always there, the key question is when cornered are these principles the governing corner stones for people holding positions of responsibility. My personal opinion based on very limited datapoints is no. Besides I have heard of instances of team not being fair to new recruits (I suspect that it could be because recruiters get a better review if they are able to man a position at lower salary). I know of folks in mid management of Wipro who were not given a fair deal at time of joining few years ago and are today paying a price (slower than deserved career growth). Are they highly motivated .... answer is no. Ironically they have huge admiration for Wipro. So you have people about to move into leadership positions who are not going to quit because they like Wipro but are demotivated. The other glaring example dates back few years. There were a set of people I had interviewed and figured out in first 5 minutes that they had faked up their CV. Next I know they land up in Wipro. The recruitment could be a genuine error or just short cut to meeting target number of 2yrs experienced hires. I would not want to speculate but the scale and frequency of it in Wipro makes me asks "Is it systematic?".

7 . High stock ownership of Azim Premji
This according to me is a very positive point (and even for any investor). But lot of employees see any cost optimisation technique benefiting Mr. Premji rather than making the business (Wipro) competitive. I know lesser mortals will have limited thinking but unfortunately lesser mortals constitute 99% of any company.

Compare this with HCL. Shiv Nadar has found Vineet Nayar. As long as the marriage lasts its a deadly combination. HCL is overhauling its HR (has done leaps and bounds on that count). They have done huge internal PR on how they are not firing people. No recent exodus of senior management. However their campus program is managed by a guy who is very average (comes with disclaimer that I could be wrong on this count). But this is insignificant and transient. Its sad that in an industry where your biggest differentiator is manpower and campus the largest source of acquiring it, best folks are not put in charge of campus recruitment (across majority of IT services companies).

The last question is when do I expect Wipro to fall. In October 08 I was speaking to CFO of a semi conductor company who had previously worked with Wipro. He was shocked at my prediction of Satyam and Wipro. I gave it 2 years for Satyam and 4 years for Wipro. I was wrong on Satyam ... lets see how Wipro shapes out ....

As an investor, the best value I would get for Wipro is 2 quarters into the recovery.

Disclaimer : At no point of time I have worked with Wipro. My opinions are based on my experience including interacting with hundreds of individuals who have been (or are) part of Wipro. entire opinion is limited software services (export) business.


  1. Wipro's going to be next? My friends at Wipro have been saying this as well. Seems like you are bang on.
    I liked the way you have put your points. Came here searching for something and instead found this article. I will be back for more :)

  2. I disagree with both of you. In Wipro people are still very much ethical and responsible minus probably the HR people who are just happy firing without reason. But read the link below, on how employees were cheating satyam.

  3. many of the information present above is not true .. I have never heard WIPRO out sourcing training ...and at many places WIPRO is robust than their counterparts which I dont want to make public ..dont believe me now ... see the performance of the companies in the next 6 months ..just spreading rumors is not what a responsible person should do lets wait for the right time ..

  4. one more thing I take stock ownership in this way .. suppose a person has confidence in a company that it will surely make profit ..then what he will do he will buy more and more shares in case of Azim Premji ..he is very confident about his company therefore he owns most of the shares otherwise he could have easily sold the shares and made easy money and being a CEO of a Company and owning most of the shares brings more responsibility ..

  5. Saurabh : Rumours , ahem!!! Yours truly has personally given lift to freshers who had joined Wipro and undergo training in some institute in Jayanagar (lift was Jayanagar to BTM, both locations being in Bangalore). And obviously that is not my only data source. Let me know what else stated in my article is rumour (most of it is opinion).

    Next your opinion on Mr. Azim Premji owning most of the shares. Was it ever hinted that Mr. Azim Premji did anything wrong or that he does not have the confidence. Looks like your comprehension of written English is pretty weak. I can almost bet my money that you were hired in last 3 years by Wipro (most probably last 1 year). Shall be glad to stop blogging if I am wrong on that count. The only thing mentioned about ownership was any cost saving initiative within Wipro is perceived by employee as saving money for owner . In contrast a similar initiative in a company like Infy is perceived to be good for company. I have no problem with Mr. Azim Premji ... if you noticed I always add salutation to his name.

    Last but not the least I have no doubt about Wipro being a great company. I would any day wish I go on to build a similar organization. My opinion is on business outcome and which is that Wipro will not have an independent identity 4 yrs hence.

  6. @straight talk : Now I think I should start from the grass root level .Yes I have joined WIPRO 4 months back and I would like to share my experience
    1:In my college WIPRO came in the second slot before Infi .
    2:I am getting more than my friends in Infi & TCS.
    3:Even HCL has outsoucred their training and I heard Infi has also out sourced some higher level trainig to Alkemist.I am saying because one of my friend is their in HCL . He had to pay for the trainig but was told that HCL will return the money if he clears the trainign .. He has cleared but still HCL people dint give him joinig .
    4:Most of my friends from NIT (with branch ece,eee) have joined WIPRO because of their presence in embedded and VLSI . Among them is AIEEE rank 6 holder .
    5:TCS has a odd way of selection . Every body knows that questions will be repeated and will be from Barrons 12th Edition .
    6:competition is tougher in WIPRO as they have higher pay scale for better performance .
    I dont have much idea about HR people but till now ..its feel good in WIPRO for me ..

  7. Saurabh, I think you are defending Wipro just because they are your 1st employer.I wonder if the 6th Ranker in Aieee(is it the AIR or state rank?) had any better offer!!!Also, cracking AIEEE is a one time wonder and it can never predict your performance in four years of grads...there are 5 pointers in IITs as well. So it may be that your 6th ranker friend messed up his B.Tech and did not get better companies in that domain.Based on what I know,no one will look at Wipro-VLSI as a dream company. There are much better companies in that domain.
    The pay scale at Wipro!!! Dude, I am from NIT(2k7 batch), had two on-campus offers(first one being Wipro).Package was one reason why I didn't join Wipro.People never join TCS,Wipros etc. for the package, they hope that if they get an on-site opportunity, they can make up for the low compensation.
    Don't talk about selection process if mass recruiters.If TCS repeats questions then so does Infi,Accenture,CTS,IBM and Wipro.Wipro asked the rope puzzle(calculate 45 mintues with a rope which burns fully in 60 minutes).
    If you want competition then join a start up.Its a challenge dude.

  8. Blogger Ajay Shrivastava said...

    Dear Straight Talk,

    Appreciate the way you put across your point of view.
    Me being from the HR industry having served many "so called Bulk recruiting corporates" in last decade !!
    I kind of agree with you on most of the things.
    Specially with your statement "Wipro will not have an independent identity 4 yrs hence". Yes, It is indeed a very high probability.
    *My nephew who works for Wipro, and i am sure he would hate me for writing this, Sorry Kid*

    There were two things in your blog where i had some concerns:
    1) You said : Entry level guy is not hired predominantly on potential but ability to answer questions.
    *80% HR's dont know the difference between the two my dear firend*

    2) You also said : HR loosing imagination.
    *As if 95% HR's ever had imagination*

    Based on my experience, these are problems with each and every large size corporate in our country. The picture is drastically different in United States where i spent couple of years as my first job and saw the way they recruit.
    I am sure you would have seen such things if you have working experience in Human Resource industry.

    For those who joined Wipro few months back, dont worry folks, Wipro is indeed a good company, and Mr. Azim Premji is a good perosn (added salutation to his name like my friend Straight Talk !! )
    The blog and comments which i put just shows our point of view over the matter.