Monthly Archives: Jun 2019

Wipro needs a bold and differentiated strategy to elevate its middling market position post-Premji

June 12, 2019 | Phil FershtJamie SnowdonSaurabh GuptaTapati Bandopadhyay

We all remember when Jack Nicklaus played his last Masters, and when Sir Alex Ferguson managed his last game for Manchester United. These guys were godfathers of their trades, not unlike Azim Premji has been for IT services, the man who oversaw a firm which diversified from diapers and vegetable oil into one of the largest IT services firms in the world. However, when they retired, they left a legacy that enabled many to follow in their footsteps (albeit noone has come close yet). Premji's legacy, which forever is written into the annals of IT services folklore, is still unfinished, which may be a good thing for his successors... there is still a lot of work to do to get Wipro to the place Premji always envisaged. 

The current market situation facing Wipro's leadership

To recap, Wipro’s Executive Chairman, Managing Director and philanthropic champion Azim Premji is retiring by end July. His son and Wipro’s Chief Strategy Officer, Rishad Premji will take over as the new executive chairman and its current CEO Abid Neemuchwala will become the new MD.

Azim Premji’s father founded Wipro in 1945, with Azim taking over in 1966 on his death. Azim led Wipro’s diversification into information technology in 1980. Today it has become one of the leading service providers in the industry and a big force within the India heritage IT service providers (lovingly called the TWITCH – TCS, Wipro, Infosys, Tech Mahindra, Cognizant, and HCL). However, Wipro has lost a bit of its cutting edge in the market. While its operating margins improved to 19.8% given the focus on the quality of revenues but overall revenue growth dropped to 2.8% YoY – the lowest growth rate of all the TWITCH service providers in 2018. It even lost its standing as the third biggest TWITCH supplier (albeit not permanently) last year to HCL.

We’ve assessed Wipro’s competitive positioning across execution, innovation, and customer experience across major markets (see summary below) and while it mostly performs commendably (ranked #5-#10 in most of our evaluations), it misses out on the Top 5 positioning in most areas of our assessment.

Only 3 of the large IT Services firms with revenues higher than US$5B grew at over 10% in calendar 2018: Accenture (14.8%), TCS (10.3%) and HCL (10.2%), this excludes Amazon Web Services. All of these have an excellent service delivery, but the stand out factor is the ability to differentiate and know themselves and their strengths – which means they market services effectively and to the right customers:

 

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We believe that the increased authority to the young and dynamic duo of Rishad and Abid to shape the overall business will be a boon to Wipro. Rishad has shown tremendous energy and passion for the business, especially with his recent development of Wipro Ventures, which is the most strategic innovation initiative for the firm. And Abid is a proven and seasoned leader. HFS continues to be impressed by his astuteness since his TCS days where he built a stellar BPO capability for the firm till just last year, where Abid was instrumental in getting Wipro’s largest ever engagement $1.6 billion multi-year TCV from Alight. 

The Bottom-Line: The “What” is clear, now Wipro need to focus on “why” and “how.” HFS recommends five focus areas for the newly appointed executive chairman Rishad and CEO and MD Abid

Rishad and Abid already have a strong base to drive an aggressive growth and differentiation strategy. Wipro is a respected brand, offers large scale services with 160,000 employees across the globe, and brings capabilities across emerging technologies to its clients. The “What” in terms of its 4 stated big bets (digital, cloud, cybersecurity, and engineering) makes sense but the “Why Wipro” and “How it will help clients” needs better articulation of value and Wipro’s unique point of view. Here are the five areas that Rishad and Abid should focus on:

  1. Competitive differentiation. Wipro needs to stand for something. Its recent financial results say that customers don’t understand what makes it different from all the other IT services firms – this lack of differentiation is not unique to Wipro and applies to several of its Indian-heritage competitors. If it is to thrive rather than survive, this needs to change.
  2. Digital capabilities. Wipro has seemed two-speed since the acquisition of DesignIT. It needs to integrate the whole firm around its digital message - this means building out its offer and making a splash with some strategic M&A and client acquisitions. Success in the digital long term means helping customers change their DNA – not just providing new IT. Wipro’s digital message needs to demonstrate it can help customers find new revenue streams, new business model and drive customer experience as well as harmonizing business silos (or the One Office).
  3. Change management. Digital is about enabling change – so to differentiate itself in the noisy and overcrowded digital space Wipro needs to focus on change management. It needs to demonstrate that it can manage complex change process that penetrates its clients the businesses and drives value beyond just digital adoption. Wipro’s narrative around “zero touch change” and agile cell teams is a good starting point, but it needs to embed change management in all its engagements. Rishad and Abid also have to change the internal culture and bring together all the business units and service lines to reduce internal frictions and improve internal collaboration.
  4. Fresh talent. Injecting fresh blood and energy into the firm's leadership, under the guidance of Abid will be important. Wipro has a credible track record of retraining ground staff as well leveraging the gig economy (courtesy of Topcoder) but needs to aggressively look at revitalizing its talent base, especially near to its clients. Service providers need to be able to draw on a broader range of skills – which means a richer mix of partnerships, on and offshore talent.
  5. Integrated go-to-market. Wipro has a broad suite of capabilities across emerging technologies (Wipro Holmes AI platform, Wipro cloud services, an end-to-end IoT portfolio, and robust blockchain offering) but to differentiate itself it needs to create an integrated go-to-market across all these capabilities that solve real business problems. The strategic focus has to be on what clients want to buy versus the capabilities that it is selling. Co-innovation with its strategic clients, partnership ecosystem, and aggressively leveraging start-ups (through Wipro Ventures) will need to be core components of how it approaches the market. As one of the best application service providers, it is in a good position to help modernize these clients application portfolio as part of an integrated suite of digital capabilities focused on delivering business value.

Rishad and Abid have very large shoes to fill in with Azim Premji’s retirement, but it also represents a golden opportunity for Wipro to scale new heights. Rishad and Abid together bring the energy and a pulse on the changing market dynamics to transform the IT-services behemoth. We wish them and Wipro all the very best!

Posted in: IT Outsourcing / IT ServicesOutsourcing Heros

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When did you earn the right to stop learning new skills and abilities?

June 02, 2019 | Phil FershtOllie O’Donoghue

When you have to listen to literally hundreds of people a day spouting advice about reskilling, unlearning, change management, relearning etc., I am going to respond with “great, so what are you doing yourself to stay ahead of today’s digital environment and increase your value as a superstar worker?”  You may love to pontificate constantly weird definitions of digital transformation on twitter and harp on about today's digital talent needs, but do you truly practice what you preach?

Is it just me, or have we entered an environment where everyone loves to talk about change, but most aren't actually doing anything (themselves) about it?

I mean, if your accountant hadn’t bothered to brush up on the latest tax changes, or your personal trainer didn’t know how to use a Fitbit, you probably would seek to replace those relationships in your life.  So what gives IT professionals the right not to learn Python, or learn how to deploy data management / automation tools?  And what gives business executives the right not to learn how to use non-code analytics tools to help their decision-making, or social media products to help them communicate in the market?  And operations executives the right not to learn low-code automation and AI apps that can help them free up people-hours on work that adds no strategic value to the business?  And who told sales and marketing executives it was fine to ignore really learning the products / services they were selling because all they had to do was to follow a set of pre-defined processes to do their job effectively?

Why have so many of us become so complacent?

It just seems that the majority of workers today just think they need to learn to follow a few processes and that’s all they need to do to command a tasty salary and remain employed for years and years…. so few people actually realize that the whole nature of people value is changing for enterprises – they just love to do things the same old way they have always done them, and simply cannot be expected to learning anything new.  "We just don't have the talent in-house to do that" is the constant whine we hear from enterprises; and "our IT managers are project managers, not consultants" is what we hear from service providers.  Then why don't you train them?  Is our agonized response.  Why does everything have to stay paralyzed in this constant vacuum of sameness

Much depends on the approach our enterprises take to driving change

The biggest problem with enterprise operations today is the simple fact that most firms still run most of their processes exactly the same way as they did decades years ago, with the only “innovation” being models like offshore outsourcing and shared service centers, cloud and digital technologies enabling those same processes to be conducted steadily faster and cheaper.  However, fundamental changes have not been made to intrinsic business processes – most companies still operate with their major functions such as procurement, customer service, marketing, finance, HR and supply chain operating in individual silos, with IT operating as a non-strategic vehicle to maintain the status quo and keep the lights on.

As our Hyperconnected journey illustrates, many industries have now reached a place where they have maximized all their delivery methods for getting processes executed as efficiently and cheaply as possible.  They have tackled the early phases of digital impact by embracing interactive technologies to help them respond to their customer needs as those needs occur, whether electronic or voice.

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In short, most enterprises have been able to keep pace with each other without actually changing the underlying logic of processes.  Simply doing things the same old way has been enough for many, until a competitor comes along with an entirely unique way of servicing your customers to shrink your market share or take you out of the game completely. We are already in the OneOffice phase where wrapping the needs of our customers around our front-to-back office business processes is critical.  And you can't do that simply by adding more software and bot lisences to stitch together wonky systems and processes - you actually have to redesign how processes work so you can outthink your competitors.  Simply reacting to customer demand won't work these days, you have to be able to anticipate and think ahead, try to predict how their needs will change even before they do.  This means you need systems in place to mine information up and down your supply chains, B2B networks and understand today's geo-political environments - and you need smart people who can think creatively to drive these systems for you.

So why can’t you get away with avoiding learning new ways of doing your job?  Can’t you just find another legacy firm who’s desperate enough to hire you?

In many cases, the answer is still “yes”, especially while the economy is good.  You can still serve up some BS in interview and convince another firm that you are still special, that a few utterances of “digital” and “AI” may be enough to convince them you are of the “new age”.  Yes, you can spin your 2 hour online Blue Prism course learnings to convince them you can take your new firm on a special journey.   

But if you are looking closely at your LI network these days, you will notice that many people who are taking on these “new” jobs aren’t lasting very long in them.  We are living in an age where you can’t just get away with faking your skills and relying on a wafer-thin knowledge level... you need to really learn how to rewire business processes to compete with the best in your industry, and do that you have to drive change initiatives.  This means you need to make yourself emotionally intelligent and understand how emerging low-code/no-code technology tools can help you make these underlying changes to age-old processes.

Time to influence strategy: A Lack of resources we can handle, but a lack of vision and being tied down with short-termist strategies are much harder to push passed

It’s not much of a consolation to know it’s not all your fault that your professional value is in decline. A recent study conducted by the World Economic Forum, presented an unconvincing picture of barriers to change. The research is sound – with over 100 major firms providing insights within each major industry sector – but the excuses provided by executives for hitting roadblocks comes across as a little suspect. In the first graph, we can see that old chestnut of resource constraints rears its head as usual. Let’s be honest, we can’t keep whimpering about funds and resources when it comes to change efforts – executives always manage to find money when something new and shiny crops up (lock at the clamour for blockchain POCs a few years ago, and the more recent rabid adoption of AI without really knowing what it is). And if executives honestly think their biggest barrier to change is that they can’t buy their way through it, that tells us everything about their relative maturity in a rapidly changing business environment.

In reality, it’s this lack of maturity and understanding in senior management teams that’s the real barrier – and it’s one highlighted by 51% of leaders. Leaders simply don’t know where the change is coming from, and what direction they need to shepherd their teams. Package that with the likelihood that at root of their enterprise’s strategy is sits cultural short-termism – driven by short-tenured C-level and increasingly active shareholders looking to force returns in a low-interest economy. In a business environment like this, you simply can’t reply on your leadership team to have the answers – and provide you with the direction you need to keep adding value and collecting that pay cheque. So, you must take on that responsibility yourself – the future of the digital employee is one of perpetual learning and evolution.

All we can tell you, is in certain professions and industries, you’ll need to rouse yourselves from your professional slumber much sooner than others. In the graph below, we can see major crunch points in ICT and Financial services, for example, where a combination of resource constraints and an all-round pitiful understanding of disruption from executives mean your only professional direction can come from within.

The Bottom-Line: We have to get out of these silos and learn how to drive change initiatives and develop cross-functional skills

Let’s face it, change is coming, and it will keep coming. And we can’t rely on anyone but ourselves to find the right balance of skills and experience to keep adding value. We are lucky to live at a time where we have a multitude of established and emerging change agents at our disposal: global sourcing, Design Thinking, Robotic Transformation Software, AI, Analytics, IoT, blockchain among others. But, unfortunately, most of the discussions in the market end up becoming a comparative discussion versus an integrative discussion – man versus machine, offshore versus automation, RPA versus AI, consulting versus execution, and so on. These change agents must work together rather than operate in silos to solve real business problems.  

In Part II of this talent discussion, we will drill into the WEF skills data to align this with actionable steps we can all take to get us back on a cycle of ongoing learning and development:

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Posted in: Digital OneOfficeRobotic Process AutomationEnterprise Integration Platforms

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