CEO level exits signal tough times for IT

Indian IT industry is witnessing many changes in boardrooms of late. Several senior executives of large and tier-II IT services firms are making moves that have surprised the market and industry watchers. While Infosys has seen two senior level exits in recent months, the resignation of the CEO of India's largest IT firm Tata Consultancy Services, Rajesh Gopinathan,has taken investors off-guard. Aformer president of Infosys,Ravi Kumar, has joined Cognizant as its new CEO. Similarly, Mohit Joshi, the ex-president of Infosys' BFSI (banking, financial services & insurance) vertical, will join Tech Mahindra as its next CEO.

However, it is the resignation of Gopinathan that has surprised one and all. With a steady ship like TCS, which has no history of such abrupt moves, the CEO's exit highlighted many facts that areup ahead for the country's IT sector. First, these significant moves at the CXO level reflect that the sector is confronted with tough times ahead. Usually, churning in the senior management happens when the board and promoters are not happy with the current performance of the company. In the case of Cognizant, the company was going through years of underperformance under the past CEO. The company was in search of a leader, who was capable of putting an end to the dry spell while energising the workforce for higher growth. Similarly, as the current CEO is leaving Tech Mahindra this year, the mid-tier firm brought on Mohit Joshi to accelerate growth prospects. In the case of TCS, the reasons for CEO exit are not clear. Reports suggest that the Tata Group Chairman was not happy with the current growth rate of TCS. Although, it has performed well according to market conditions, it was unable to match the performances with peers like Accenture and Infosys.

Though everything is in the realm of imagination,and perhaps speculation, at this point of time, the one thing that is clear is that TCS selected a market-facing executive, K Krithivasan, who is also the head of BFSI vertical. This indicates that the company was in need of a person who could accelerate the sales engine.

Another factor that drives the phenomenon is that global technology industry is in turmoil. Gartner has cut its forecast for worldwide IT spending growth to 2.4 per cent this year from the 5.1 per cent projected earlier. With the banking crisis brewing in the US and Europe following the fall of Silicon Valley Bank and acquisition of Credit Suisse by UBS, Indian IT sector can face growth bumps as BFSI is the vertical from which most companies draw more than 30 per cent of their revenues. Staring at tough times ahead, many companies are searching for seasoned campaigners to help successfully navigate through the crisis.

Indian IT companies have already seen large cost takeout deals coming to the market owing to pressure faced by enterprises across the globe. These companies are trying to garner the maximum share by accelerating the sales engine. Going ahead, such moves from the senior management is going to gather pace as the demand environment further deteriorates.