Can Delaporte plug into the right turnaround port?

In May 2020 — after a well-publicised, four-month-long search — India’s fourth largest IT consulting and services firm, Wipro, announced that a then 52-year-old Frenchman, Thierry Delaporte, would be its next CEO. Markets cheered the announcement. Delaporte, a lawyer by qualification but a technology leader by choice was after all a senior executive at the France-based multinational IT giant, Capgemini, with a 25-year track record of having delivered growth for the company across multiple geographies.

In the recent past, Capgemini had been a favourite head-hunting ground for Indian IT companies looking for CXOs. Wipro’s cross-town rival Infosys had hired Salil Parekh from Capgemini as its CEO just 30 months earlier. Also, Delaporte brought extensive experience across geographies having worked in the crucial the US geography, Australia and the European territories, all of them key markets for Indian IT services.

India was also not new to him, as he had been travelling to the country for two decades and had helped scale Capgemini’s Indian operations. But turning around the fortunes of Wipro with more than two lakh employees as it lags behind its peers in terms of growth and profitability is not going to be an easy task.

In a nutshell

Wipro had always been an outlier in the Indian IT industry on multiple fronts. First, for the savviness of the promoters in identifying the IT opportunity and making the transition from being a mere vegetable oil company. Second, for being one of the very few players who had a footprint both in hardware and software services, unlike most others who focussed only on the latter. Third, for the focus — at least in the initial decades on the telecom and outsourced R&D segments of the market unlike most of its counterparts who were majorly dependent on the BFSI segment.

Fourth, for the ability to stitch up alliances and partnerships to understand the market before jumping in full. Fifth, for its famed ‘string-of-pearls’ strategy to make significant acquisitions, even as other Indian IT players remained very conservative, preferring ‘organic growth.’ What set the company apart was also the fact that the promoter Premji family led by patriarch Azim H Premji (AHP) had an overweening shareholding and influence in the way the company was run.

While day-to-day operations may have been handled by a strong set of leaders groomed by AHP, the Premji family’s outsized presence in terms of its shareholding, which even today hovers at around 73 per cent, lent a sense of permanence and stability in an ever-changing dynamic industry.

However, after decades of gang-buster growth, which at one time was the second largest IT services player in the country after TCS, first ceded that position to Infosys and eventually even HCL Tech overtook them in terms of revenues pushing it to a distant fourth. While other players too did face some sectoral challenges, they seemed to have navigated it more adroitly.

Wipro had tried everything from having joint CEOs to hiring former TCS veteran Abidali Neemuchwala as its Chief Executive, to fix its lagging growth, with limited success. So when Delaporte, with his strong record at Capgemini, was brought in, the markets hoped that he would be able to address issues quickly.

Early days

In his first couple of years at the helm, the Frenchman was both lucky and unlucky. He was hired during the Covid pandemic, which meant that for the first 500 days, he worked in isolation, only connecting with colleagues, clients and employees online. However, the pandemic proved to be a significant advantage for IT service providers. With nearly every industry striving to establish an online presence as physical commerce came to a standstill due to Covid, companies like Wipro and others reaped substantial benefits.

Thierry acknowledges that, “in the IT industry, you’ve had cycles that last close to a decade every time. Indian companies starting to appear on the international scene was in the late ’80s or early ’90s, but were small. And (with the Y2K opportunity) in the ’90s, they started to get scale. Then came the internet bubble burst, early 2000, few difficult years and then go back for massive growth and then financial crisis. Back to growth and slowdown. (20)20 to (20)22 was, however, incredible growth, one of the biggest. What used to be a 10-year cycle has been, in this case (crunched into) a three-year cycle.”

However, the adage that it is only when the water recedes that one knows who has been swimming naked has come true, as some of the players, including Wipro, are facing greater challenges now. IT spending which was on steroids has been pulled back and Wipro’s shares in the stock market also remains stagnant.

The CEO and MD admits to the challenges. “Wipro is a fantastic company that has been developed over the years, that has had an outstanding ride for years. And then over the last 10 years, between 2010-20, it has been lagging behind its competitors,” he says.

So what has he been doing to fix this? Since he joined in 2020, Delaporte has established a “deep” transformation programme after examining the company’s strengths and weaknesses along with its senior leadership. The transformation, he explains, is happening on multiple fronts, right from changing its positioning to being a partner rather than an IT resources provider, organising the business to focus on key strategic markets, to building and investing in operating to improving efficiency, making acquisitions and upgrading the talent pool. “We’ve been executing on this, ever since without any deviations,” says Delaporte.

However, he also admits that there are ups and downs. “We are at a low cycle, no doubt. At the same time, I’m convinced that this market will bounce back. There will be continued demand for IT services, across industries.”

Asserting that technology is taking a massive role across industries,he says that IT services is absolutely key to drive alignment, coherence, simplification, scale, security and privacy. From being and enabler for businesses 10 years ago, technology is the heart of all activities today.

Inflection point

However, with advent of generative AI there is a perception that we are at a true inflection point indicating a fundamental shit in the industry. . And that only those who are ahead of the curve will be able to ride it out, with most traditional system integrators falling by the wayside. Delaporte, however, disagrees. “We are the coordinators. We are one of the orchestrators who help companies to not only add the technology layer-by-layer, but also help them make sense of all this addition of technology. Is there a fundamental shift in in our industry?Looking back, we are always seeing technology constantly disrupted by new technology.”

He points out that the role of System Integrators was questioned when the advent of the transformative impact of cloud technology happened 10 years ago just like how the emergence of AI will transform the landscape is pondered on. Delaporte opines that not investing in the new technology will make them less relevant, hence the companies are leveraging, embracing and working with AI.

On the issue of some of the substantial acquisitions made under his tenure yet to pay off, the CEO asserts: “Yes, we’ve done about 10 to 12 acquisitions in the last few years. I think we absolutely need to recognise that acquisitions cannot be tactical. They are strategy. They are here to transform the organisation and our position in the market in the long run.”

Even as multiple challenges persist, the ‘Crazy French’ — as he refers to himself — remains resolute and believes there’s nowhere to go but up. Delaporte believes that, “there will be quarters where the market is higher than others and there will be quarters where things will be easier than others, but it doesn’t change the direction. Transforming an organisation of this size is not something you do overnight. You have to be clear about your priorities. One has to be ambitious, persistent, resilient and patient. And that’s what we have been doing ever since. This company is getting stronger by the day,”

For the consummate family man (he is one of nine siblings in his close-knit family), who has been married for 32 years and has four children, taking care of the larger Wipro family of clients, employees, shareholders and all stakeholders, comes naturally. The Premjis, specially Rishad, who is the Chairman and with whom he works closely, ensures that whenever Delaporte visits, he has his favourites of rasmalai and gulab jamun made available.

Stakeholders will be hoping that the outcome of the transformation journey by the CEO will be as sweet. For the Frenchman who is an avid sportsman, who plays soccer, runs marathons (the last one he did was the Paris marathon) and loves to sail the high seas, steering Wipro out of troubled waters to a firmer path of growth will be a legacy he would want to leave behind.

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