Azim Premji, a compassionate capitalist with an eye for picking leaders

In Amalner, Maharashtra everyone has a Premji story. One of them will tell you that the wife of the just-retired executive chairman of the $8.5 billion Wipro Ltd had presented him with a watch after he completed 25 years in the company. Amalner is where Wipro started its journey in 1945 by setting up a factory there to produce vegetable oil. The company was also perhaps the first one to share its wealth among its workers by distributing shares to all the residents there. Today, Amalner accounts for 20 per cent of the total public shareholding of Wipro, according to FactorDaily.

If at all the description of a compassionate capitalist in the country fits anyone it is Premji and NR Narayana Murthy, and other co-founders of the cross-country rival, Infosys. The fact that Bengaluru has produced two of the biggest giants in the IT industry may have less to do with the place than with the fact that these gentlemen chose a different path while building IT behemoths.

Wipro’s IT services subsidiary, Wipro Infotech was started in 1984 with Ashok Soota heading the company. When he left the company in 1999 to launch his own IT services’ company, Mindtree along with a few colleagues, Wipro Infotech’s annual revenues were at $500 million. In another two decades, Wipro Ltd has grown to become an $8.5 billion, a phenomenal growth for a company which was set up during the licence raj era but managed to be at the right place and at the right time when the IT boom swept the country.

As Soota in a recent interview pointed out, Premji had a keen eye for leadership talent. He picked up the right person to head his IT services business. After Soota exited the company, Vivek Paul became its vice-chairman and CEO and by the time he left the company, it was a multi-billion dollar business with a strong foothold in the US, its main market. During his tenure, Wipro was listed on the New York Stock Exchange in 2000. Paul also had the distinction of being recognised as among the top six managers in the world by Jack Welch in one of his books.

But perhaps the biggest contribution by Premji is not about being one of the leaders of the IT industry or about how he has been able to share his wealth with his employees. It is more about pledging most of his wealth for philanthropy. His Azim Premji Foundation now owns 67 per cent out of the total 74.30 per cent which Premji owns in Wipro. In value terms, the contribution is worth $21 billion which places him on par with Warren Buffet and Bill Gates, some of the world’s greatest philanthropists.

But there is a paradox that keeps playing out here. While he is known for his large heartedness giving away most of the wealth for social causes, he is also known among his employees as someone who keeps a close tab on how they spend the company’s money. Wipro is also not known for giving handsome salaries and incentives to its employees. What is well known among employees is that each one of them has to account for every paise that he spends during his official trips either in India or abroad. What is not accounted for is taken from the salary of the employee. Therefore, while Premji is not so generous with salaries, he is the exact opposite when it comes to his philanthropic activities.

His Azim Premji Foundation set up in 2000 is a not-for-profit organisation that has been working with the elementary education system in rural government schools. It changed its strategy after it found out that working on a “project” mode was inadequate such a large issue. Hence, it started setting up district institutes in several field locations which collaborate with local government structures. Today, the foundation has over 1,000 employees and has field institutes in 40 plus districts across six states and one union territory reaching more than 3.5 lakh schools across the country.

Those who have worked with Premji say that while he comes across as a disciplinarian, he takes the employees’ welfare quite closely. In case he arrives late for a press conference, he makes it a point to apologise to the journalists though one must say that he rarely gives interviews but allows his management team to freely interact with the media.

But a worrying factor for Wipro now is more about how it can regain leadership in its sector. The IT industry itself is stable but not growing at a pace it used to a decade ago. Especially for Wipro, it is slipping on several parameters. “Unlike its other three peers, Wipro has somehow not been able to balance profitable growth with the continual restructuring/repositioning that is a must in an ever-changing technology/business services market,” Nirman Bang Equities wrote in a note to its investors.

That’s where all the grooming that has gone into making Premji’s son Rishad take over the mantle from his father will be tested. Rishad Premji, 42, those who have worked with him closely, will tell you that he has a mind of his own. With Abidali Neemuchwala as the CEO and MD (the last role was added along with elevation of Rishad as the next executive chairman), Rishad will need a lot more support from his management team to take the company forward or at least regain the number three slot in the pecking order of IT companies which it surrendered to HCL recently.

These are perhaps one of the most difficult times for Wipro, more so because it has been restructuring its organisation on and off over a decade now. “Wipro has not been able to deliver smoother and at-par with-industry growth because of the sector, client and restructuring-related problems during a large part of this decade,” the note pointed out With a new man at the helm, Wipro finds itself at a crossroad and five years from now, the company could either end up being a shadow of its former self or close to toppling TCS and Infosys from their perch.

(thefederal.com seeks to present views and opinions from all sides of the spectrum. In case of articles by contributors who are not staff of thefederal.com, the information, ideas or opinions in the articles are of the author and do not reflect the views of thefederal.com)