Wipro chief grooms son for top job
Wipro Ltd has appointed billionaire founder-chairman Azim Premji's oldest son, who is widely seen as heir apparent, as chief strategy officer in a move that could touch off more restructuring at the company.business Updated: Sep 02, 2010 15:39 IST
Wipro Ltd has appointed billionaire founder-chairman Azim Premji's oldest son, who is widely seen as heir apparent, as chief strategy officer in a move that could touch off more restructuring at the company.
Harvard-educated 33-year-old Rishad Premji is currently general manage of treasury and investor relations at the third-largest outsourcer of IT services. He will take over from K R Lakshminarayana effective January 1, 2011.
Lakshminarayana headed both strategy and M&A, but Rishad will only be in charge of strategy. Sridhar Srinivasan has been made the interim head of M&A.
"He was being groomed to take over at the top. This is just a step toward that," said Harit Shah, IT analyst with Karvy Stock Broking. "He has to earn his way up, it is a complex company."
Like his billionaire father known for living a modest life, Rishad flies economy class and drives his own Maruti SX-4 car. He is married to his childhood sweetheart and has two children.
His father, Azim Premji, took over his father's ailing vegetable oil business in the mid-1960s. He diversified into making hydraulic cylinders in the 1970s and struck out into information technology in 1980.
Wipro now makes consumer care and lighting products besides offering IT services and products.
Based in the southern Indian city of Bangalore, Wipro counts Citibank, Cisco, Credit Suisse and General Motors among its clients. The company posted a market topping rise in quarterly profit in July and said the deal pipeline in the United States, its biggest market, and Europe looked good.
The younger Premji has a management degree from Harvard Business Schoool and joined Wipro in 2007 in the banking, financial services and insurance business. He had worked with GE Capital and Bain and Co earlier.
In contrast, Azim Premji had to quit Stanford University, his degree in engineering unfinished, to rush to the aid of his family's vegetable oil business following the death of his father in the mid-60s.
Azim Premji is the single largest shareholder in Wipro, owning close to 80 percent of the company.
Some analysts said the rapid rise of the junior Premji could ruffle the feathers of some executives at the top.
"Signals that Wipro might convey of fast tracking Rishad could create a sense of unease and uncertainty among sections of the senior management," JP Morgan analyst Viju George said in a note.
"We believe that this potentially sets off the risk of further management reshuffles and departures," he added.
The brokerage said there had been at least ten changes in senior management roles due to rotations or departures at the company in the past three years.
"What should ideally have been a period of acceleration in certain well-functioning business units is possibly reduced to a period of consolidation and what should have been a period of consolidation is now a period of stability/modest uptick," George said.
However, Karvy's Shah did not see this as a major worry.
"Wipro has always seen more churn than the other top IT firms. But the top two people have been on the top for quite some time," Shah said, referring to the two joint chief executives of the IT business -- Girish Paranjpe and Suresh Vaswani.
"They have been able to manage the churn well," he added.
The younger Premji would report to Paranjpe and Vaswani. The incumbent Lakshminarayana will become chief endowment officer at a trust set up to fund the founder's philanthropic work.
The company's shares, which rose almost 1 percent in morning trade, gave up gains to trade down 0.1 percent at 403 rupees in a firm Mumbai market at 0711 GMT.