Way to go, Wipro!
It’s not quite there yet, but the goal is certainly within reach. One of India’s largest IT solutions providers, Wipro Technologies, is taking on the likes of IBM and Accenture in its effort to be included among the largest and most successful technology services companies in the world. Restructuring Wipro was considered the most important step in becoming a global giant, driven by the goal towards improved customer orientation. During the past few months, Wipro separated itself into several subsidiaries by product line: telecommunications, engineering, financial services, etc. Each subsidiary brings in about $300 million in annual earnings and is self-sufficient with their own accounting books, personnel and administrative functions. Wipro shifted from a centralised to decentralised management system. All responsibilities for growth lay with the management of each entity. “We tried to de-layer the organisation and empower our business leaders with a much higher degree of growth responsibility,” said Premji. “We removed an entire layer [of executives]”.
The advantage Wipro enjoyed by separating itself into several subsidiaries is:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Each division can function as an autonomous unit.
Option (1) Divisional heads didn’t become accountable for profits. — Incorrect. The opposite is true. In a divisional structure each divisional head is responsible for the profit or loss of his own division.
Option (2) It provided managers with the authority to supervise all activities. — Incorrect. Each subsidiary manager looks after his own product line only. One manager supervising all activities describes a centralised set-up.
Option (3) Revenues and costs related to different departments can not be easily identified. — Incorrect. The feature is reversed. In a divisional structure the revenue and cost of each division can be easily identified, because each keeps its own accounting books, as Wipro’s subsidiaries do.
Option (4) Each division can function as an autonomous unit. — Correct. Wipro split itself by product line into subsidiaries. Each one had its own accounts, personnel and administration. This is a divisional structure. Every division has what it needs to run on its own, so it works as an autonomous unit and takes its own decisions quickly.
Note: The passage is the NCERT case study ‘Way To Go, Wipro!’, which has been reproduced by NTA in the exam. NCERT (2026-27 Edition): “During the past few months, Wipro separated itself into several subsidiaries by product line: telecommunications, engineering, financial services, etc. Each subsidiary brings in about $300 million in annual earnings and is self-sufficient with their own accounting books, personnel and administrative functions.” “Advantages: … (b) Divisional heads are accountable for profits, as revenues and costs related to different departments can be easily identified and assigned to them. This provides a proper basis for performance measurement. It also helps in fixation of responsibility in cases of poor performance of the division and appropriate remedial action can be taken. |