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.