Despite strong strategies in place, Wipro unable to lead?
Although, Wipro had restructured its top leadership team last fiscal and continued with its strategy of acquiring companies, the top-tier IT player Wipro is struggling hard to report significant growth in its business. It is found, Wipro has not shown growth in terms of revenue and profit from last three years in comparison to its peers including Infosys, TCS and HCL.
Presently, Wipro is the third largest IT Company in India. Wipro is known as one of the most aggressive companies in the country in terms of inorganic expansion. Wipro’s "string of pearls" strategy has resulted to over a dozen acquisitions in a decade.
Stats revealed, Wipro's dollar-denominated revenue grew at a CAGR of 12 percent over the three years to June 2012. On the other hand, other companies TCS, Infosys and HCL grew at 21 percent, 15 percent and 24 percent respectively.
As far as Wipro's employee addition is concerned, it is at the slowest rate as compared to its peers over the last few quarters. However, Wipro attributes the slowest pace to its strategy of reducing revenue dependence on the number of employees or making revenue non-linear.
Moreover, Wipro’s rate of attrition was over 15 percent in the June quarter on a trailing 12-month basis. To the reader’s surprise, this is the highest among top-tier IT exporters.
It is quite shocking that Wipro, which has been more aggressive than its peers on the inorganic front, its revenue has shown the slowest pace among its top tier peers including HCL, Infosys and TCS on the basis of the compounded annual growth rate (CAGR).
Points of concern
Besides Wipro's dollar-denominated revenue, its top line growth over the last few quarters looks sluggish compared with some of its peers. Its finance solutions segment, which contributes one-fourth to total IT services revenue, surprisingly recorded a drop of nearly 2 percent in sales from the quarter ago report. On other hands, other tech firms including TCS and HCL Technologies recorded better traction across a majority of their verticals during the quarter. Even for the quarter ending Sep 2012, Wipro has guided for a near flat growth. This clearly reflects the company's inability in the near term to grow its top line.
However, top deck at Wipro is still optimist for Wipro’s growth in near future. Azim Premji, Wipro’s Chairman, stated in a recent interview that the company will outperform IT industry very soon. He stated, Wipro has an order book and a pipeline of products for this year. However, he denied giving detailed guidance on upcoming products.
In addition, Wipro is likely to invest 800 crore in its second software campus in Kolkata which will offer employment to at least 15,000 tech professionals.
Let’s hope, Wipro will soon outperform all the rivals and become the IT industry leader.
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