The Regent

WHAT DOES THEKKETHALAKAL KURIEN (T.K.) Kurien see when he looks in the mirror? A fit, 51-year-old, who has recently been appointed CEO of Wipro Technologies (ranked 23 on the Fortune India 500) with a ready smile and easy charm. A family man and a gamer. A quiet philanthropist. A man who gets the job done. An articulate man with a keen sense of humour. A man who, when asked about a management reshuffle soon after he took on the top job at Wipro, shot back: “That’s one of those have-you-stopped-beating-your-wife kind of questions.”

If a Wipro employee were to sneak a peek into that mirror, would it reflect a
different Kurien?

They are more likely to see Kurien the raging bull, perhaps. A ruthless CEO who has axed nearly 40 senior managers in just three months, and who calls colleagues to talk work at 6 a.m. during his daily run.

The overwhelming sentiment among senior managers in Wipro Technologies today is that Wipro chairman Azim Premji appointed Kurien to play bad cop. Kurien’s job, as insiders see it, is to create a lean and hungry Wipro, to be handed over to Rishad Premji, 34, scion of the family that owns 79% of the company.

The market seems to agree. In an informal poll of six brokerages, analysts of four see Rishad Premji as CEO in the medium (two or three years) to long term (five years); two others don’t dismiss the possibility, but are reluctant to put a time frame to it. A Mumbai-based analyst says: “From Ashok Soota and Vivek Paul, to Girish Paranjpe and Suresh Vaswani (the joint CEOs who were asked to leave in January), CEOs at Wipro Technologies seem to have had limited freedom to operate. Although T.K. Kurien has a difficult task at hand, he may eventually have to make way for Rishad Premji after steadying the ship.”

Asked if this is a possibility, Kurien shrugs. “If I’m run over by a bus tomorrow, will Rishad Premji take over? The board will have to take that decision.” Wipro old-timers, however, say that the younger Premji’s ascent is not automatic. “It is not in Azim Premji’s blood to mix management with ownership,” says Dileep Ranjekar, former corporate head for HR of Wipro, and CEO of the Azim Premji Foundation since April 2002.

Rishad Premji has worked for four years in Wipro Technologies and has moved from business head for special projects in banking and financial services to chief strategy officer (CSO), entrusted with M&As. For him to rise in Wipro beyond CSO, he needs a strong operational stint to demonstrate performance.

The younger Premji is yet untested, and Wipro’s growth story is a mess notwithstanding operating margins of over 20%. So the challenge would have been too daunting for him, had he been made CEO now. Technically, it won’t be a blurring of ownership and management if Rishad Premji becomes CEO. Pratik Kumar, director for HR in Wipro says: “He is a potential inheritor down the line. As far as we are concerned now, he is an employee.” Which might just be splitting hairs, but is the management’s line.

While succession is, no doubt, a talking point, what’s more interesting is the signal that Azim Premji is sending out by appointing Kurien over other contenders: that Wipro is gearing up for competition and will take on all comers, even if that comes at the cost of a drastic change in management style. Hitherto seen as a caring organisation that valued entrepreneurial thinking, Wipro is morphing into a ruthlessly efficient machine. “The fire, the willingness to take responsibility, the willingness to be nice to people, to spend time with people—that has diminished in Wipro Technologies,” says a former top manager from Wipro. As the most powerful CEO in Wipro since Vivek Paul resigned in mid-2005, and the highest-paid in the Indian IT industry today (according to a company disclosure to the Bombay Stock Exchange on Feb. 28, Kurien’s salary is in the range of Rs 3 crore to Rs 10 crore a year) Kurien’s ascent is symbolic of a radical shift for Wipro Technologies. And no mirror can reflect that.

KURIEN—INSIDERS CALL HIM T.K., and not always fondly—will need to draw on all his resources and experience to be able to change Wipro from the inside so that it can fight competition more effectively. He will have his work cut out while fending off Cognizant Technology Services, which has its eye on Wipro’s No. 3 spot in the IT rankings, as well as bridging the growing gap between Wipro and Infosys, which is at second place.

The new Wipro, a Rs 31,099 crore American-style corporation, could be the face of most Indian companies tomorrow. The nature of recruiting for this new beast is already changing. Where a Wipro employee once geared up for a 20-year stint, the 21st century fresher is looking at what Wipro can give him in the job market.

Kurien is looking at a broad lower layer of employees for economies of scale, a pruned and nimble middle management, and then a smaller number of senior managers who report to him. “Most of our businesses run on portfolios—you have some high-growth businesses, potential businesses, slow-growth ones, and dying businesses. If I have to invest in this today by putting either capital or resources into it, I will decide which areas I will put them into,” says Kurien.

To this end, he’s made some widely publicised organisational changes. For one, he’s created clear and transparent reporting structures. Till Kurien swung into action, the various units of Wipro, such as retail, energy, health care, and financial solutions, had service line heads, domain heads as well as geographic heads, who were primarily sales and marketing people. Kurien has now done away with the geographic heads, and given all those powers to the heads of business units. This has meant a 25% cut in sales positions, affecting the roles of several vice presidents and general managers. In all, over 900 positions in senior and middle management have been affected. “A lot of people have been redeployed; we could not find roles for some of them,” says Saurabh Govil, senior vice president for human resources at Wipro Technologies. “But in most cases, the role has been defined as opposed to the earlier case of everybody trying to do everything.” Shared services, such as remote infrastructure management, which function across units (or verticals), now have to report to the head of whichever vertical they are working with. “Earlier there was no single point of accountability,” Govil says. “Now the decision will reside with the vertical head.”

Shorn of jargon, this means Kurien has effectively centralised decision-making, which is a cultural shift. Earlier, the heads of geographies, service lines, or verticals could take independent calls. “That is a resource allocation choice I have to make in a global business. It’s got to be made at the top, not by the lowest entity in the system. Second, we’ve to decide where and how to play,” Kurien says.
Intuitively, this restructuring seems like an efficient use of resources. However, as in any large and complex business structure, there are problems in implementation. A senior Wipro official, on condition of anonymity, tries to explain why he thinks Kurien might be on the right track, but implementation is not. “HR is not handling the issues properly; it is not acting sensitively. Employees will welcome an exercise to cut down on non-performers. But this is an exercise to cut down expenditure. It is more of an Excel-sheet exercise.”

NONE OF THE EMPLOYEES Fortune India spoke with wanted to go on record, but the widespread feeling is that although he might be making conciliatory overtures to the rank and file (for instance, by personally answering any e-mail sent to him regarding employee grievances), Kurien has treated senior management shabbily. For example, a business unit comprised four service lines, each with a head. Under the new dispensation, these are to be merged into one unit, but not all heads were informed of this. This has resulted in a strange situation where a senior manager comes to office, sticks around for a couple of hours and then goes home. Technically, HR has not asked him to go; it has just ignored him, says an employee . Govil denies this, pointing to micro sites and employee hotlines that have been set up to communicate with affected people. “The discussion has to happen between the manager and employee; HR only enables that.”

Such incidents don’t win Kurien kudos from senior management; at the time of writing, news reports say that at least 100 of the top 500 Wipro managers (with around 15 years of experience) are looking around for other openings even if their jobs are not under immediate threat.

Kurien is not fussed about this. After all, this is the man who triumphed even when unhappy employees (he had sacked more than 250 people) threw snakes into his office when he was away. That was when he became managing director of GE Elpro, which made and supplied surge arresters and zinc oxide discs for GE Healthcare, in 1997. When he took over, he inherited a non-functioning factory in Pune, 300 employees, and a very strong trade union. The top line was around Rs 2 crore, while the losses came to Rs 11 crore. “My job was to restructure this business and make it profitable.” And he did. “I reduced the number of people to 46 despite huge opposition from the union—but we did it. We got a sunk entity to clock a turnover of Rs 140 crore, and profits of close to 50%, which was big,” he says.

Kurien’s no-holds-barred performance at GE Elpro made him several enemies—but also brought him to Azim Premji’s notice. In the mid-1990s, GE was building formal ties with several domestic enterprises (public and private) through joint ventures. Wipro too had a tie-up with GE: Wipro GE Medical Systems. The board included GE CEO Jeffrey Immelt, who came to India every quarter; Azim Premji was board chairman of the joint venture. Kurien’s raging-bull act at GE Elpro was the talk of the boardroom, and insiders say that Premji had Kurien marked as a potential Wipro CEO right then. The buzz in IT circles is that some time ago, Premji actually held Kurien back from a lucrative position at a multinational. When asked, Kurien says he would have left but for family reasons. Wipro gave him a floating leadership role, straddling various internal business units.

Premji wanted Wipro to feel Kurien’s impact. A former Wipro manager recalls the difference in Kurien’s Wipro meetings even before he became CEO. “He would actually yell at people in a full meeting, which was unusual in Wipro,” he says. “The Wipro culture in a meeting was more ‘We need to discuss this offline’ or ‘What seems to be the matter? Is everything all right?’” That sense of tolerance and consensus-building is a thing of the past as Kurien makes his presence felt. “There is a very big difference between the anarchy that comes out of consensus and the alignment that comes out of consensus. I have not tolerated the anarchy that comes out of consensus,” Kurien says. Insiders say that Wipro can get over the reshuffles; what is harder to digest is the sudden death of a longstanding culture and belief system.

Kurien says he’s not blind to the resentment about the culture change; “I can’t take one culture and impose it on another,” he says, when asked if he’s bringing his GE experience to bear at Wipro. But he’s unapologetic about the effect of his restructuring plan. Signing on large clients will be vital. That, he says, is why he has designed the new, integrated structure. His focus will be to raise the number of large accounts (in the $75 million or Rs 333 crore and above range).

HE'S ALSO NOT GOING TO CHANGE his rough-and-ready style; five years from now, he’s hoping that there will be at least some aggressive middle and senior managers who will have survived and learnt from the present trial by fire. “People who have self-confidence, and who truly believe in what they are doing and saying, will remain happy and excited in any environment. People who don’t have an opinion and remain in the organisation will be affected.” Wipro, under Kurien, seeks to groom business analysts and advisory talent. The business advisory roles are in specific units such as banking and health care, each with specialists who understand the details. The heads of these units will work in conjunction with Wipro Consulting Services, managed by Kirk Strawser, who comes from Ernst & Young Consulting.

“I’ve always believed that the job of leadership is to create more leadership. Once you build the next level of leadership who can run with it, that is your win,” says Kurien. (Not everyone agrees. A former Wipro hand says: “Show me one guy T.K. Kurien has mentored or groomed in his previous roles. He is too aggressive.”) As part of Kurien’s plan, the top 100 leaders in the company will be rotated across the portfolio of businesses. “So they are going to be through different jobs; 50% of these will make it now, 25% will probably make it in two years’ time, and another 25% won’t. That 50 is our leadership bench today,” he says.

Wipro spokespersons and Kurien say that Rishad Premji will have to be among the 50 leaders to be considered for the top spot. “Whatever applies to others applies to Rishad as well,” says Pratik Kumar. “He is an employee of the organisation and, if he performs well, he will have opportunities like anyone else.”

Typically, Wipro assesses top leadership potential by measuring the performance of strategic business unit heads. Kurien’s projects and assignments spanning three decades have given him exposure to 74 countries. That gives him more than a reasonable appreciation of the younger Premji’s growth as a leader. “He is mature and old enough to realise where his professional interests start and end,” Kurien says. “He has been extremely conscious about that.”

So, what about the other 49 CEO prospects? Will they have a fair chance to fight for the top spot in a family-controlled company where the boss’s son is in the fray? “It is my job to see that the guys who require coaching are coached. The guys who need performance management are managed. The guys who believe they are the leaders of tomorrow are given tasks that will stress-test them,” says Kurien. “Every person in the company who wants to grow has to go through a strategic role and an operational role. Because strategy without operation is hallucination. If you can’t do execution and ops, you are hallucinating. That, by the way, is a twist on a Thomas Edison statement,” he adds, laughing. Edison said that vision without execution is hallucination.

THE CEO BENCH THAT KURIEN is building is not a new concept for Wipro. Kurien himself is the product of the bench that Azim Premji had built up to 2005. In fact, much of what’s going on at Wipro today has its roots in history.

Azim Hasham Premji had inherited Wipro Products, a vegetable oil and soap manufacturer, in 1966, and took an active interest in growing the business. In 1978, when the personnel department of Wipro conducted an employee analysis—an unheard of exercise in those days—employees almost unanimously named Premji when asked to specify the company’s biggest strength. And the biggest weakness? They identified it as almost an obsession with cutting costs. There was a rising sentiment among the ranks that the company must dream beyond Amalner in Maharashtra, where its factory, operations and over 800 employees were based. The culture, employees said, emanated there.

Three decades later, that basic weakness looks like it has returned in a different avatar, and is at the heart of employee discontent today. It’s ironic that a pioneer of HR processes should now be damned for the lack of basic HR skills. For over three decades, Wipro took pains to develop a humane face. That camaraderie contributed immensely towards Wipro becoming a technology leader. Sudip Nandy, a former Wipro president, and now CEO of Aricent in East Brunswick, New Jersey, U.S., explains: “From the outside, Wipro may have looked like a normal outsourcing company. But what I learned there across various roles was that I could change my job content completely, change my location and change my boss. This would not affect my existing work within the company. We focussed on how one could generate new revenues. It could have been a new business, intellectual property creation in the U.S. and licensing it to people, and so on. This is what I am doing at Aricent—focussing on innovation and customer value creation.”

In the early ’90s, Indu Khattar, a young software engineer, worked on teams that spent more than 12 hours a day, six days a week, in office. “Despite that, it was an enjoyable experience. The environment was stress-free and performance was recognised,” says Khattar, who quit Wipro in early 2009 as general manager to become chief operating officer of Systime in Mumbai. “The teams were closely knit with a very open culture. We could really walk up to anyone.” Employees stayed loyal to the company because of this caring attitude. But as the company became bigger and fought to stay competitive, it began losing its human touch. “The moment Wipro Technologies started doing better, the old teams sensed a difference. There was a bit of discomfort,” Khattar says. By 2010, when the attrition rate of most Indian IT companies was 13% to 16% in a couple of quarters, Wipro’s was an alarming 22%.

The more aggressive Wipro has its defenders. “This is symbolic of the high growth of the country. We have to get used to these things. You can’t be in an open market and refuse to inherit its traits,” says Subroto Bagchi, who left Wipro Technologies in 1999 as corporate vice-president for mission quality, to co-found MindTree.

Kurien’s combative style also has its fans: The millennial generation (21- to 32-year-olds) likes that he is plain spoken and takes a stand. A manager in his early thirties says: “He has got a stated opinion and then challenges you to prove him wrong. More often you end up going with his opinion.”

THE BIG PROBLEM that many insiders see is the changing management style of Premji, who continues to be the driving, albeit unseen, force at the company. When Vivek Paul put in his papers in May 2005, he ended a six-year stint as CEO and vice chairman of Wipro. His predecessor Ashok Soota had a longer stint of almost 15 years. During Soota’s and Paul’s tenures, Premji actively encouraged his top management to argue, and believed that the friction made for a better Wipro. To Premji’s credit, management did have the last say, though his élan for operations showed in Wipro’s decisions.

“Premji would never ask of management what he himself could not do,” recalls Sridhar Mitta, head of global R&D of Wipro Technologies, and its first employee in 1980. Quite literally, if Premji demanded 14 hours from a senior leader for a certain task, he would clock 16 hours.

Around the time, he had a reputation of being risk averse and conservative. Premji comprehensively disproved this in the Vivek Paul years, when Wipro Technologies breached the $1 billion-revenue mark. The CEO was based in the U.S., during his stint—this went against the grain of Indian IT companies, whose CEOs were headquartered in Bangalore, Mumbai or Delhi. This showed clients in North America, as Cognizant has shown, that the company wants to have its feet on the street.

Once Paul left, Premji decided to take the reins himself though there were three contenders for the post of CEO— Sudip Banerjee, Girish Paranjpe, and Suresh Vaswani. This period was marked by the ‘String of Pearls’ deals, when Wipro Technologies spent $1 billion on nine acquisitions in two years. By now, Premji’s earlier mantra of ‘respond, don’t react’ was changing to a far more reactive style.

In April 2008, the Wipro board announced the decision to have joint CEOs; Premji stepped back, allowing Paranjpe and Vaswani free rein. But by then the company was breaking up into cliques—there was the Banerjee camp and the Paranjpe-Vaswani camp. Ramesh Emani, president of telecom and product engineering services, was the first notable exit in 2007. By the end of 2008, three more presidents—Sudip Nandy, Banerjee, and P.R. Chandrasekhar—had quit Wipro. They joined Aricent, Larsen & Toubro Infotech, and Hexaware Technologies respectively, each as CEO. Kurien was then head of Wipro Consulting Services.

Meanwhile, rival Cognizant had completed almost two years of a smooth transition at the top. In early 2007, its then CEO, Lakshmi Narayanan, became vice chairman, passing the baton to 38-year-old Francisco D’Souza. It was rolling out its verticalisation model (what Kurien is doing now at Wipro) in a pre-recession environment.

Between September 2007 and September 2008, Cognizant’s quarterly organic growth was significantly ahead of its Indian IT peers. While Cognizant’s increase in quarterly-revenue rate in this period was $147 million, the figure stood at $87 million for Infosys, and a fall of $19 million for TCS. Only Wipro, at $148 million, kept pace with Cognizant. An Edelweiss Securities report took note of the fight in the banking, financial services and insurance (BFSI) space: “In a difficult environment, Cognizant is adding more revenues per quarter in BFSI than its larger peers.”

But by 2009, Wipro was in an awkward spot. As a company that sought to cut costs to cope with the recession, it had two CEOs. At this time, the logical fallout of the joint CEO structure—in a high growth scenario—was that either Paranjpe or Vaswani could continue as CEO in the long run, but not both. Senior managers thought Vaswani would survive; since 1995, he had been seen as a Premji protégé. Eventually, the joint CEO model itself was dismantled. On the outside, Cognizant wasn’t letting up. Business wasn’t growing for Wipro. It recorded growth of 1.5%, in contrast to Infosys’s 5% and TCS’s 8% in FY2010. Cognizant had clocked 16% in 12 months ending December 2009.

Premji began to play an active role in Wipro Technologies again at client advisory meetings in Europe. “It is typically Premji,” says Sridhar Vedala, managing director of QS Advisory, a client advisory. “At any Wipro big event anywhere, he is a show stopper. He understands that and is proactive in the European market.” In August 2010, Premji spent two hours each with a person from Ernst & Young, Deloitte, QS Advisory, and TPI, to understand business potential in Europe. Competitors Infosys, TCS, and HCL tend to depend on advisory relations teams for the same. Jessie Paul, former chief marketing officer at Wipro, says: “It’s great for Wipro because a lot of people want to know how Premji thinks. It is not just to discuss IT, but more like ‘What are you investing in?’, ‘Which business or market excites you?’”

As chairman and majority owner, Premji continues to be involved in management. The smart CEO takes advantage of this, as Kurien does. “My job is to leverage what I think is right for the business. Mr. Premji has a tremendous aura, and I would be foolish to try and do it on my own,”
says Kurien.

Mid-managers see Kurien as Premji’s man. “T.K. is like his problem solver. He has always put T.K. where there is a problem, and he will turn it around,” says a manager, citing Kurien’s record in the telecom, media and technology, and BPO verticals.

IT IS IMPOSSIBLE TO GET Vivek Paul to talk about Wipro or Premji. But powered by a deep curiosity about Indian history, he’s constantly interested in how family-promoted enterprises will evolve. The debate, he says, is not between “professionally-held” companies and companies where founding families hold sway and are active in management. “It is not that families are important, but interested shareholders are,” he says. In other words, if family promoters manage shareholder interests responsibly and transparently, Indian business will be richer for it. “As a result, how India will evolve its promoter capitalism is going to be a source of wonder to the rest of the world. Let it unfold.”