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2015-02-18

Wipro may hive off unit investing in disruptive ideas

Leading IT firm Wipro's investment in next gen programmes could soon be spun off into a separate entity.

Wipro's investment in next gen programmes, overseen by Rishad Premji's strategy office, could soon be spun off into a separate entity, according to various media reports.

"The day is not too far wherein, we are going to look at the H2 initiative as a separate bucket. It's going to happen in two, three or four months, I don't know. But it's going to happen, where we are going to take out the entire stack and it's not going to be about technology alone. It will be about creating solutions that can fundamentally disintermediate our existing business," Wipro CEO TK Kurien said at a panel discussion at the Nasscom India Leadership Forum (NILF) in Mumbai that concluded last week.

The core theme for NILF 2015 was - ‘The World in 2020: Building the Digital Future’, where the industry representatives discussed about the emerging digital technologies that will shape the future of the industry and evaluated their global impact on business and society.

Called H2H3 (Horizon 2, Horizon 3), the programme operates like an in-house incubator and fund, identifying potent ideas that have the potential to scale up over a two or three-year timeframe and generate substantial revenues.

IT firms are increasingly focusing on developing proprietary software and platforms as traditional IT services like application maintenance and development become commoditized. Such programmes are seen to require different treatment and hence are beginning to be housed in separate entities. Infosys's EdgeVerve, a subsidiary that was established early last year, focuses on products and platforms.

At the Nasscom event, Premji noted that larger organizations face challenges over compensating risk-takers. "We struggle with that and don't have the right answer in terms of how to do that. Today, we have one currency of compensation, which is the Wipro stock....We seriously considered some ideas including spinning off what can be partly owned by employees to drive a different kind of motivation, but we haven't done that," he said. 

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