Mega deals dried up at Wipro before team lead’s departure

Between January 2021 and up until last week, Tata Consultancy Services Ltd won five mega contracts, while Infosys Ltd won three, according to publicly available data compiled by Mint. Noida-headquartered HCL Technologies Ltd won one of the largest contracts valued at over $2 billion.

Trautman, who was hired from Accenture Plc to take over as Wipro’s chief growth officer in February 2021, put in her papers on Friday, making 31 December her last day with the firm.

Wipro in a press release stated that the large deals team, comprising at least a dozen executives, will no longer function as a centralized unit, and will now work with industry-focused business units.

Now, the company runs the risk of some of these dozen executives hired at high salaries from Cognizant Technology Solutions Corp. and Infosys, moving out. One such senior executive, Eddie Woods, is learnt to have put in papers, according to an executive aware of the development.

An email sent to Wipro seeking comment went unanswered.

Wipro’s sub-par performance and inability to bag large contracts from Fortune 500 companies has made at least one analyst conclude that the company is struggling.

“The sales engine is not firing and it is not capturing the imagination with innovation either,” said Tom Reuner, executive research leader at IT outsourcing advisory HFS Research. “… Stephanie’s (exit) is the last throw of the dice for Thierry,” said Reuner.

Mega deals, or contracts valued at over $1 billion, are critical for the country’s largest IT services firms as they give these firms an assured revenue, every year, and respectable growth.

However, mega deals have been few, since only a few Fortune 500 companies want to lock themselves with a single IT vendor for a long time. In 2020, there were just three large deals. This year has proved to be a jackpot for homegrown IT firms as they won eight such contracts.

Significantly, winning these deals takes time—it takes almost 12-18 months to close, according to industry executives.

Wipro, which ended with $11.16 billion in revenue last year, and is the smallest of the Big Five, runs the risk of a full-year revenue decline in 2023-24, after the company saw its revenue decline in the first and second quarters of the current fiscal year. The company expects revenue to fall up to 3.5% in the October-December period.

“Clearly, having a dedicated large deals focus lacked teeth in a cut-throat market, where large deals are becoming fewer and further between, especially after a very tough 2023 for the whole industry,” said Phil Fersht, chief executive of US-based HfS Research, an outsourcing-research firm.

Wipro, under Delaporte, won its sole mega deal with German retailer Metro AG in December 2020. The $700 million contract, over five years, allows for another $300 million in the works for Wipro over four years. However, over the last three years, Wipro’s largest deal, worth $500 million, has been with US cosmetics maker Estee Lauder.

A rare peek into what it takes for an IT services firm to win a large deal was offered some years back by Mohit Joshi, Infosys’ then head of sales and the current chief executive officer of Tech Mahindra Ltd.

“I think senior leadership commitment is a critical thing everybody in the organization with Salil (CEO Salil Parekh), with Pravin (COO U.B. Pravin Rao), now Nilanjan (CFO Nilanjan Raoy), me, Ravi (President S Ravi Kumar), Karmesh Executive Vice President Karmesh Vaswani), we have all been involved in the large deals since inception. I think this is a key differentiator,” Joshi told analysts on 6 November 2019. “We see many of our peers where senior executives get involved at the level when it comes to providing organizational commitment. We have been involved in large deals from the inception so that the client is aware that we have worked through the lifecycle of the deal and I can tell you that in many deals that we have won this has made the difference between winning and coming second.”

For now, recessionary fears have made Fortune 500 clients hold back from starting work on the large deals won by the homegrown IT firms. But analysts, including those at Kotak Institutional Equities, maintain that work on many of these deals will start in 2024, which could widen the gap between Wipro and rivals as the country’s fourth-largest IT services firm does not have any mega deal in its order book.

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Published: 10 Dec 2023, 11:14 PM IST