Why Azim Premji Is Expressing Displeasure Over Wipro’s Performance: A Detailed Insight

Wipro, a prominent name in the Indian IT industry, has recently been under scrutiny, drawing attention to its underperformance in both business and the stock market. Former Chairman Azim Premji has expressed his discontent, signalling dissatisfaction with the current state of affairs within the company.

 

What Has Azim Premji Said About Wipro?

Azim Premji, who holds a substantial 73% stake in Wipro, reportedly conveyed his disappointment regarding the company's performance to his son Rishad Premji, as well as the current CEO Thierry Delaporte. A Mint report highlighted that this dissatisfaction was evident in a private meeting between Premji and CEO Delaporte before Wipro's 18 October board meeting to approve its second-quarter earnings.

 

Why Is Azim Premji Unhappy With Wipro?

The dissatisfaction resonates from various factors beyond Wipro's underperformance in the last six quarters alone. Current projections suggest that Wipro anticipates no significant growth until at least June of the following year, based on the existing order book and internal hiring estimations. This forecasted stagnancy leads to an expected revenue decline of up to 3.5% in the October-December period, mirroring the figures from the same period in 2021.

 

The 78-year-old Premji's discontent stems from Wipro's struggle to navigate sweeping cultural changes within the organization, declining growth rates, decreased profitability, a notable exodus of employees, and an underperforming stock, as reported by anonymous sources familiar with the matter.

 

Wipro's Historical Context and Business Performance

Established by Mohamed Premji in 1945, Wipro took a new trajectory under Azim Premji's leadership in 1966, following his father's demise.

Regarding its business performance, Wipro's second-quarter results for 2023 showcased nearly stagnant consolidated profit figures of Rs 2,667.3 crore compared to Rs 2,649.1 crore in the same period a year ago. Its consolidated revenue from operations marginally declined to Rs 22,515.9 crore from Rs 22,539.7 crore in September 2022. However, Wipro's shares reflected only a modest 5% increase year-to-date.

Comparatively, industry peers have exhibited varied performances. For instance, HCL Technologies Ltd saw a 10% rise in consolidated net profit, while TCS reported a 9% YoY growth in consolidated net profit for the quarter ended September 2023. Meanwhile, Tech Mahindra faced a 61.1% YoY fall in consolidated net profit, and Infosys reported a mere 3.2% YoY rise in consolidated net profit for the same period.

Conclusion

Azim Premji's discontent with Wipro's performance reflects concerns over the company's growth stagnation, cultural changes, employee exits, and subdued stock performance. This dissatisfaction has highlighted the need for Wipro to strategize and address these challenges to reposition itself for sustained growth and competitiveness in the dynamic IT landscape.