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Business News/ Companies / News/  Gopinathan  signs  out  of TCS, Krithi to take over
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Gopinathan  signs  out  of TCS, Krithi to take over

Move effective 15 Sep makes incumbent’s tenure the shortest at firm
  • The change is being seen as an uncharacteristic move by ex-employees
  • Rajesh Gopinathan (left) and K. KrithivasanPremium
    Rajesh Gopinathan (left) and K. Krithivasan

    Tata Consultancy Services named K. Krithivasan as chief executive after Rajesh Gopinathan unexpectedly resigned.

    The decision surprised senior leaders of India’s largest software services company and is being referred to as an uncharacteristic move by former employees.

    On Thursday, TCS told the exchanges that Gopinathan had resigned. The move will be effective 15 September, making Gopinathan’s six-year tenure the shortest in the company’s history.

    “I have been harbouring a few ideas on what I want to do in the next phase of my life," Gopinathan said in prepared remarks. “After deep reflection and in discussion with the chairman and the board, we decided that the end of this fiscal year is a good time for me to step aside and pursue those interests."

    “I am deeply appreciative of Rajesh’s enormous contribution to TCS. I wish him the very best for the future," said N. Chandrasekaran, chairman of parent Tata Sons and TCS.

    Differences between Chandrasekaran and Gopinathan could have led to his departure, according to three executives familiar with the development.

    “There had been some resentment in the senior leadership ranks and client partners about the CEO’s approach and style, especially when it came to managing people," said the first executive. “The Board met yesterday and today and then decided to accept the CEO’s resignation."

    “We have not had any leadership call with either the outgoing CEO or the new CEO," said the second executive.

    Gopinathan’s sudden exit is surprising because TCS held its two-day annual strategic meet in Doha last month, where about 750 of the senior leaders were in attendance.

    “Beyond the talk of the chairman not being happy with the growth, there was absolutely no sign that there would be a change," said the second executive.

    Significantly, in October 2021, TCS gave a second five-year term to Gopinathan, who succeeded Chandrasekaran in February 2017.

    So how has TCS done under Gopinathan?

    To be sure, analysts and investors won’t have much to quibble with TCS. The firm has managed to grow its quarterly revenue from $4.45 billion at the end of March 2017 to $7.075 billion at the end of the December quarter, translating into a growth of 58.9%.

    Significantly, TCS has also retained its industry-leading profitability, from 25.7% in March 2017 to 24.7% in the latest quarter. During this time, TCS managed to retain employees with relatively low attrition rates, especially compared to some of its rivals.

    TCS, which ended with $25.7 billion in revenue and reported 15.9% growth last year, has done well but lagged behind its larger peer, Accenture Plc, and smaller rival, Infosys Ltd, in the recent past.

    But one big wrinkle under Gopinathan’s tenure has been the company’s inability to win more large or mega deals (a project valued at more than $1 billion). TCS last won a large IT project when it bagged a contract from Deutsche Bank in September 2020.

    Some analysts and a few executives within the company maintain that TCS continues to prioritize profitability over revenue. And that is a key reason for its failure to win large contracts.

    Sample this: TCS was in the running when American investment firm Vanguard was in the process of awarding a multi-year $1.5 billion project in 2020, but the company backed out towards the end as it was not happy about the profitability. Infosys bagged the project in July 2020.

    Krithivasan, who joined the company in 1989, and climbed through the ranks to become the head of the banking and financial services group, is perceived to be a “safe choice".

    Big banks and financial services clients accounted for $8.2 billion, or about a third of TCS’s total revenue last year.

    “Krithi is a safe choice and the man the chairman trusts," said a third executive.

    In 2018, Krithivasan in a rare interview with Mint, called Chandra, as Chandrasekaran is affectionately addressed by his colleagues as his elder brother.

    “Now, there is a lot of respect for Chandra. And when I look back, he (Chandrasekaran) was an elder brother to the team," Krithivasan said.

    “Most of us joined this company as trainees. We all were from ordinary middle-class backgrounds, and we all have grown based on performance. The company has allowed us to make mistakes. Whatever we are is purely because of the company," Krithivasan said.

    TCS, which was set up in 1968, was led by F.C. Kohli from 1974 until 1996 (this is because the company did not have a CEO for the first six years). S. Ramadorai steered the company for the next 13 years, before handing it to Chandrasekaran in 2009.

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    Published: 16 Mar 2023, 11:12 PM IST
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