In a surprise exchange of documents, Wipro on Thursday announced that its chief financial officer Jatin Dalal will leave the company and be replaced by Wipro veteran Aparna Iyer, who has outstanding credentials. While departures of senior talent at the company are not new, Dalal’s exit and Iyer’s promotion comes at a critical time for Wipro as the company lags behind peers in growth and development and is in an uphill battle to turn around its fortunes. Profitability.
Iyer joined Wipro in April 2003. During her 20 years with Wipro, she held various finance positions including Internal Audit, Commercial Finance, Financial Planning and Analysis, Corporate Finance and Investor Relations, most recently as Senior Vice President and Chief Financial Officer, Wipro FullStride Cloud.
She is a qualified Chartered Accountant (CA) and a gold medalist of the CA batch of 2002 and is reputed to have deep expertise in financial risk management, capital allocation, fundraising and driving business strategy and growth . With this promotion, Iyer will become one of the top female CFOs of a reputed company, which is quite rare in the Indian IT industry.
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CEO Thierry Delaporte said in a release: “Aparna is an accomplished and results-oriented leader. During his 20-year career with Wipro , she has been a dynamic, forward-thinking strategic partner to our business leaders.”
Iyer replaces 21-year Wipro veteran Jatin Pravinchandra Dalal, who resigned yesterday “to pursue career goals outside the organization”. His exit around the time of quarterly results raised eyebrows in the industry and caught most people by surprise. The market didn’t take this development well either, with Wipro shares falling around 2 per cent to Rs 418 even as broad market indices opened flat.
Dalal’s exit highlights the high attrition rate at Wipro’s top brass over the past few years. The company has experienced a number of exits under new CEO Thierry Delaporte. Wipro has bid farewell to nine top executives in the past 24 months.
“Quite a few senior executives have exited Wipro in the last 9 to 12 months. Jatin’s exit also adds to this list. Exhibit 1 lists them along with some new hires. To check underperformance, some Change. However, the loss of key leaders continues into the fourth year of the company’s turnaround and one cannot look at the situation with optimism,” Kotak Institutional Equities said in a report.
Lagging growth and profitability compared with peers have also become a growing concern for the company as attrition at the top levels increases. The company’s turnaround journey, which Delaporte led during the pandemic, hasn’t made much progress and is still struggling. Iyer now faces a tough task as the company’s revenue and profit growth are weak, margins haven’t improved much compared to peers, guidance remains very dovish and confidence is limited.
Wipro reported a 6.6% sequential decline in net profit in the last quarter (first quarter) to Rs 2,870 crore. Profit increased by 12% year-on-year. Operating income decreased by 1.54% month-on-month and increased by 6% year-on-year. On a constant currency basis, revenue fell 2.8%. Wipro’s outlook for the quarter ahead also remains weak, with its sequential guidance revised modestly to -2% to 1% from -1% to -3% in the previous quarter. Although profit margins stabilized at 16%, they were still below the ideal level of 17%.
In contrast, Infosys’ net profit fell 3% month-on-month and increased 11% year-on-year. Its revenue increased 1.3% month-on-month and 10% year-on-year. Larger peer TCS also reported a 3% quarter-on-quarter profit drop and a 17% year-on-year growth. Its revenue increased by 0.4% and 13% year-on-year respectively.
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“Wipro is struggling to turn around the situation, has a weak pipeline for large deals, and is vulnerable to vendor consolidation. We expect the company’s growth to underperform peers in FY24 and mid-term. Low growth characteristics justify its cheap valuation is reasonable,” brokerage firm Kotak noted.
To be sure, the entire IT industry in India is in a volatile, uncertain phase of decline as macroeconomic headwinds from a possible slowdown in Western economies impact the demand environment and impact technology spending across the world.