Facing a leadership crunch, Indian IT sector on the lookout for overseas talent3 min read . Updated: 04 Feb 2020, 08:58 AM IST
- IT firms must groom insiders for the top job and create a pipeline of potential successors, say analysts
- Wipro was the latest to join this trend following the resignation of its CEO and MD, Abidali Z. Neemuchwala
BENGALURU : Indian information technology (IT) companies seem to be facing a leadership crunch, as they increasingly look to replace the top management with external candidates. Wipro Ltd was the latest to join this trend following the resignation of its chief executive officer (CEO) and managing director (MD), Abidali Z. Neemuchwala.
Neemuchwala, the former CEO of the BPO division of Tata Consultancy Services (TCS) Ltd, was named Wipro CEO four years ago. On Monday, a Wipro spokesperson told Mint that the board was scouting for an external candidate to fill in the top position.
Industry watchers said the move either reflects an internal leadership crisis, or a gradual transformation to address the way new-age businesses are run.
Though Wipro said in a statement that Neemuchwala will continue to hold office until a successor is appointed to ensure a smooth transition, analysts said it was not going to be easy. It remains to be seen how seamlessly the new CEO fits into the Wipro culture and how active a role chairman Rishad Premji will play during the transition period.
Infosys Ltd, too, had a leadership issue during founder-CEO S.D. Shibulal’s tenure. The company had appointed SAP veteran Vishal Sikka in 2014 as its first non-founding CEO and managing director, after the firm witnessed at least 13 top-level exits between 2013 and 2014.
In fact, industry insiders said at least three of them quit as their aspirations to be promoted as the CEO were not met. Even after Sikka stepped down in 2017 citing “continuous distractions", after a year-long public spat with the company’s founders, Infosys brought in former-Capgemini executive Salil Parekh as its CEO in January 2018.
Experts said IT companies need to groom insiders for the top job early on and create a pipeline of potential successors who are well acquainted with the culture and the business of the entity. “When there is a sudden vacancy at the top, it creates a gap. It’s a question of spending time and grooming 2-3 people internally. TCS seems to have done this well. In services companies, you can’t be bringing in CEOs from outside all the time," said T.V. Mohandas Pai, chairman, Aarin Capital, and former board member of Infosys.
The crisis management at Infosys over the past few months, of course, has been well-documented. Parekh, who was recently in the spotlight following whistle-blower complaints accusing him of financial irregularities, was given a clean chit by the audit committee appointed by the firm, although a Securities and Exchange Board of India (Sebi) forensic audit may be in the offing. Last October, when Infosys was going through a crisis-like situation, its co-founder and chairman Nandani Nilekani had to step in to pacify investors and shareholders.
“Finding a new CEO for a company as large as Wipro is going to be a Herculean task, especially given the challenges the company is going through," said Sanchit Vir Gogia, CEO and chief analyst, Greyhound Research.
Companies may be looking to hire leaders externally because of the transformation in the IT industry, said Pari Natarajan, co-founder and CEO, Zinnov.
“The industry itself is going through a transformation from traditional services to managed services, IP (intellectual property), and platforms. So, you need leaders who can drive that change," Natarajan added.
After the “hostile" takeover of Mindtree Ltd by Larsen & Toubro Ltd last year, the IT major also witnessed a reshuffle of the entire top deck, which resulted in the appointment of ex-Cognizant president and executive leadership team member Debashis Chatterjee as its new CEO.
However, industry insiders said that for Mindtree, which was known to have a strong leadership team, the takeover by L&T had effected a deliberate change after the founders left.
However, a drastic change in top management may not always be a setback for a company.
“External people can bring in a different perspective…As Wipro was growing below industry’s average, an external CEO could be able to turn it around for the company," said Harit Shah, senior analyst-IT, IndiaNivesh.