Home / Industry / Infotech /  Two new top leaders at Cognizant and Wipro: Can they deliver?

It is rare when a week sees two of the largest companies in the IT services industry appoint deputies to CEOs.

Last Monday, Cognizant said that a former Infosys executive, S. Ravi Kumar, will oversee its business in the US starting next year. This executive appointment came after a former Capgemini executive, Amit Choudhary, joined as the second-in-command to chief executive Thierry Delaporte at Wipro.

The 40th edition of Twich+ tries to decode these two senior appointments at Cognizant Technology Solutions Corp. and Wipro Ltd.

Starting 16 January, at Teaneck, in the New Jersey-based Cognizant, Kumar will be president of the US market and will run three-fourths of the total business. Kumar is the first senior executive to join Cognizant directly from a top-tier IT services company since Brian Humphries took over as the boss in February 2019.

Over the last 44 months, all senior executives to have joined Cognizant came from smaller companies (Andy Stafford from Computacenter) or from outside the services industry (Rebecca Schmitt from Walmart) or were not employed but had worked in the past at an IT services firm (Ganesh Ayyar of Mphasis)

Effectively, Ravi Kumar is deputy to CEO Brian Humphries, by dint of the scope of the business entrusted to him.

Cognizant’s challenges under Humphries have been underlined multiple times. From battling to build a stable leadership team to losing business to its rivals, Humphries has struggled to script a turnaround at the Nasdaq-listed IT firm.

Agreed, Cognizant is bigger than Infosys: Cognizant ended with $18.5 billion in revenue as against Infosys’s $16.3 billion last year. But Cognizant’s lower profitability makes investors put a premium on Infosys: Cognizant’s market value totalled $31.8 billion versus Infosys’s $76.8 billion as of 25 October.

So why did Kumar join a firm with its share of challenges?

Kumar, who used to be one of the two presidents at Infosys, held the rank of deputy chief officer at the Bengaluru-based IT services company. But when U.B. Pravin Rao retired as the chief operating officer late last year, Infosys did not elevate Ravi Kumar. Instead, the company split the role of delivery between six senior executives.

“The writing on the wall for Ravi was when he was not made the chief operating officer," said an executive familiar with the developments told your writer. “Infosys giving a second term to Salil also meant that there was no other role Ravi could have got at the company."

Earlier in May, Infosys extended Parekh’s term as CEO until March 2027.

This effectively meant that there was little room for Kumar to grow within Infosys.

According to at least one analyst, Kumar might have a path to the corner office at Cognizant, which had been shut to him at Infosys.

“We are assuming the board is factoring a transition phase, as Mr. Kumar at his new role (which was either newly created or hasn’t been filled for quite some time) goes through a “learning curve", and then, ultimately, becomes Cognizant CEO, next year or by 2024, once Mr. Humphries completes his five-year term as company’s CEO," Moshe Katri, managing director of equity research at Wedbush Securities, said in an 18 October note.

Cognizant lagging its peers made Katri in July admonish the board, demanding the company find a successor to Humphries.

But until now, Kumar managed only the back-end or delivery side of the business at Infosys and has little experience in sales.

For this reason, Twich+ is sceptical if Kumar will indeed be the successor to Humphries.

Wipro’s appointment of a chief operating officer is also surprising because the country’s fourth-largest IT services firm had dispensed with the role nearly 16 months ago.

At the start of last year, Wipro put in a new organizational structure under which four leaders are entrusted with managing sales teams covering multiple industries across the globe while two executives manage the back-end or delivery side of the business. For this reason, Wipro said that it did not see the need for a chief operating officer.

Capgemini is much bigger than Wipro. Capgemini, which follows a January-December year, grew 15.1% to end with €18.16 billion ($17.7 billion) in revenue last year, while Wipro ended with $10.35 billion in revenue.

For Choudhary, who used to be the chief operating officer of the financial services business at Capgemini, his latest gig is certainly a step up.

The financial services business division is the second-largest business segment, accounting for 22% of the business at the French IT services firm. For Capgemini, revenue from big banks and capital markets grew 6.3%, the second worst-performing, coming higher than the energy and utility segment, which grew 1.2%.

Put simply: From managing the back-end of a $4 billion business at Capgemini, Choudhary will oversee the delivery side of $10.35 billion in revenue at Wipro.

Choudhary’s appointment at Wipro comes when Delaporte, himself a former Capgemini executive, appears to have run into challenges.

After a fabulous start, Wipro’s growth is sputtering, and the company will struggle to grow in double digits. Cognizant, too, estimates its full-year growth to be at best 9.5% in constant currency terms in 2022 (Cognizant follows a January-December financial year). Including the currency movement, Cognizant’s full-year growth in dollar terms would be lower.

Even though Wipro is still in a better position than Cognizant, for now, three consecutive quarters of weak growth and tepid guidance for the current October-December quarter might have prompted the board of the Bengaluru-based IT company to look for a helping hand for the CEO.

Both Kumar and Choudhary will be based out of New York. Having Choudhary based out of the largest market for Wipro could also assuage some of the concerns of analysts who have wondered why Delaporte has not relocated to the US, as promised by Wipro at the time of his appointment in July 2020.

Humphries is stationed in London, while Delaporte is based in Paris.

Investors of both companies have expressed their unhappiness: Wipro shares are down 47% on the National Stock Exchange even as the Nifty 50 has remained unchanged between 1 January and 25 October, while Cognizant shares are down 32% as against a 12% fall in Nasdaq during the same period.

For now, the jury is still out on whether Kumar and Choudhary can help bolster the fortunes of Cognizant and Wipro, respectively. It won’t be easy for these executives as companies are reviewing tech spending to save money as the economic outlook darkens.

ABOUT THE AUTHOR

Varun Sood

Varun Sood is a business journalist writing on corporate affairs for the last fifteen years. He also writes a weekly newsletter, TWICH+ on the largest technology services companies. He is based in Bangalore. Varun's first book, Azim Premji: The Man Beyond the Billions, was brought out by HarperCollins in October 2020.
Catch all the Industry News, Banking News and Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
More Less

Recommended For You

Trending Stocks

×
Get alerts on WhatsApp
Set Preferences My ReadsWatchlistFeedbackRedeem a Gift CardLogout