Fears of top-level exits at TCS after Gopinathan’s elevation

16 Jan 2017


The sudden change of leadership at Tata Consultancy Services last week has left industry experts and analysts concerned that there could be a few senior-level exits at what is the most stable management bench in Indian IT, reports The Economic Times.

Unlike its rivals Infosys and Wipro, TCS has not faced high-level exits and the company has one of the most enviable top-level talent benches in the country. But the elevation of chief financial officer Rajesh Gopinathan could spark some change, analysts said.

"We can expect a modest amount of senior turnover as new winners and losers become apparent. However, TCS has an exceptionally deep bench, and I do not see this impacting TCS' performance in a significant way," Peter Bendor-Samuel, chief executive of IT advisory firm Everest Research, told ET.

Part of concern was that as CFO, Gopinathan does necessarily have the kind of client connect that any of TCS' five geographical region heads and its industry and service line heads would possess.

"We've been talking to each other, and no one thought it would be Gopinathan. It is typically an operations or a sales guy. Now we have to watch and see how that choice shakes out," a senior executive at a rival IT firm said.

Equity analysts have been saying that given the challenges facing the IT sector, it would have been better not to expose the Tata Group's money maker to such changes.

TCS chief executive N Chandrasekaran who will take over as Tata Sons chairman in February (See:  N Chandrasekaran appointed chairman of Tata Sons), addressed concerns about TCS' management bench and the potential for people to leave to get a shot at the title elsewhere.

"We have two people for every role at TCS. Rajesh will be working with the top IT team in the country. Each of them could be a CEO and run a multi-billion dollar IT company. Which is currently what they do at TCS anyway," Chandra said on a call with TCS analysts on Thursday.

Chandrasekaran was alluding to TCS' decentralised strategy of creating units with mini-CEOs. The units are not only responsible for profit and loss but also for metrics like cash-flow generation and collection of outstanding sales. For example, Amur Lakshminarayanan joined TCS in 1983 and helped build its UK business. He is now building TCS' big bet in Japan. Ravi Viswanathan, president of growth markets, joined TCS in 1990 and helped the company boost scale in Europe.

Pratik Pal, who heads retail, travel and consumer goods, manages over $2.5 billion in revenue, more than the revenue of India's mid-cap companies, ET points out.

Chandra also elaborated on his choice for the top job.

"You know Rajesh as a finance guy but he is a rare combination of business and finance. He helped me build the e-business vertical in pre-sales. That business went from $0 to $500 million in about five years," Chandrasekaran said.

TCS also named NG Subramaniam as it chief operating officer, a departure from its normal operating procedure where the COO was appointed as heir apparent to the top job. Industry sources said that COO appointment was likely a way of adding sales and operating heft to the top rung.

Chandrasekaran also lavished praise on Subramaniam, who he said had an 'extraordinary set of credentials.'

"He has done every piece of business that a software leader should do - from operations to sales. He led the financial services vertical and helped build our strategic relationships with clients such as Deutsche Bank and American Express," he added.

"This is not an "overhaul" change at the top, unlike Wipro and Infosys, which both needed to take a new direction. Solid, stable leadership has always been the hallmark of TCS and I do not expect them to change this now, especially as the firm is still on a very solid financial footing," Phil Fersht, chief executive of HfS Research, said.

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