Bangalore: The country's third largest software exporter, Wipro, announced a major leadership revamp Friday, shortly after posting lower-than-expected growth in quarterly sales by just 10 percent to Rs 1,318.8 crore.
Wipro has been posting much lower numbers than its peers -- Tata Consultancy Services and Infosys -- for the past few quarters, an indicator that the Indian software exporter has not been able to take advantage of the recovery in demand for IT services.
"I don't think we should try making excuses about our performance. We have underperformed in Q3, relative to our competitors and relative to our potential as a company," Wipro Chairman Azim Premji told reporters here.
He added that the company has not been able to take advantage of the recovery as much as its peers have, especially in the health and financial services sector. In a move aimed at simplifying its organizational structure, the joint CEOs of Wipro's IT business – Girish Paranjpe and Suresh Vaswani -- have been replaced by T K Kurien.
"The Joint CEO structure was one of the key factors that successfully helped us navigate the worst economic crisis of our times. With the change in environment, there is a need for a simpler organisation structure," Premji said.
Vaswani and Paranjpe will step down from their responsibilities with effect from February 1, 2011. However, they will continue to work together till March 31, 2011, to ensure a smooth transition.
"There is an uptick in IT spending and outsourcing... It was thought appropriate by the company that we need to have one CEO," Chief Financial Officer Suresh Senapaty said.
Wipro's total revenue increased by 12 percent to Rs 7,829 crore during Q3, FY'11, vis-a-vis the same period last year. IT services revenue, which accounts for 76 percent of the company's business, stood at Rs 5,949 crore, translating into 15 percent growth year-on-year.
The company expects revenue from its IT services business to be in the range of USD 1,384 million to USD 1,411 million in the fourth quarter, translating into an increase of 3 to 5 percent vis-a-vis third quarter earnings.
According to marketmen, Wipro's Q3 numbers failed to boost investors' confidence, as there was no "positive surprise".
"The earnings by Wipro are below-market-expectations. Investors opted for profit-booking as the numbers failed to enthuse them. Moreover, all the three major software firms, including Infosys, grew in the range of 4-5 percent," SMC Capitals Strategist and Head of Research Jagannadham Thunuguntla said.
The board of directors have proposed payment of an interim dividend of Rs 2 per equity share of Rs 2 face value to its shareholders. Wipro shares closed at Rs 456.05 on the BSE today, down 4.59 percent from the previous close.