Wipro has lagged behind its competitors TCS and HCL Tech over the last few years, but India's third largest outsourcer made a strong comeback in the December quarter by posting a 3.7 per cent constant current growth in dollar revenues.
To sustain its growth momentum, Wipro will implement a new incentive scheme for sales executive and account managers from April 1, the company told analysts on Wednesday.
"In the past all our promotional policies... all of our compensation used to be based upon how many years you have spent on a particular job and what is your rank in the company. A VP was paid more than a general manager and if you are a GM you got paid more than a manager... that's how the structure ran," said TK Kurien, CEO of Wipro.
The new incentive structure is aimed to reward execution; it will not be linked to gross targets, but to the incremental growth employees add to the company.
"If you are a sales guy, you will not make money till you show incremental growth. If you are a delivery guy, your variable pay is linked to how you show incremental growth. It's a big mindset change," Mr Kurien said.
Wipro will also increase compensation for employees at the bottom of the pyramid, which account for around 70 per cent of its 1.27 lakh workforce. Higher compensation, however, will be given to a select "bunch" of people who can do things "end-to-end", the company said.
Typically, incentives account for 10 per cent to 30 per cent of the compensation structure; senior employees have a higher variable component as compared to junior programmers.
Wipro has done a good job in winning new deals or clients, a process called hunting. In 2014-15, it is estimated to have won deals whose total contract value is pegged at 12 times that of 2012-13 levels. However, Wipro has lagged behind when it comes to retaining and nurturing existing clients, a process called farming. The new incentive scheme will benefit the company in winning more business from existing clients, analysts say.
"It indicated that a lot of work remains to be done here (farming), as many of its customer accounts tend to plateau after a reaching a certain size," said Nomura.
The new incentive policy is also designed to improve cross-selling of Wipro's existing service lines within an account, considered to be a problem area for the company.
"There's no passing the blame, it's clearly mine... After four years you cannot pass the buck," the 55-year old Mr Kurien said.
Account managers will now be responsible not just for overall growth but also for service line growth-three of five service lines in an account have to be sold to qualify for variable pay.
Growth outlook:
Wipro did not change its sales guidance of 1-3 per cent sequential rise in revenue growth in constant currency for the March quarter, but some analysts expect the company to achieve double-digit growth in the next fiscal year. Wipro shares are up nearly 19 per cent in the last three months and have outperformed the broader IT sub-index, which is up 13 per cent during the period.
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