TCS CEO-designate faces mammoth task

From retaining senior talent close to the outgoing chief executive to building a consensus on whether or not to stick with the latest organisational rejig, Tata Consultancy Services CEO-Designate K Krithivasan faces some serious challenges as he gears up to take the helm of India’s largest IT firm.

Krithivasan, who was chosen by the TCS board for the top job after the surprise resignation of Rajesh Gopinathan last week, will also have to find ways to sustain the market leader’s momentum in the large-deal space, something his predecessor excelled at during his six years as CEO.

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“TCS has implemented the organisation rejig in its bid to grow more large accounts. It has to be seen what is the business outcome of such a rejig and how the new CEO is going to implement it,” said Pareekh Jain, an IT outsourcing advisor and founder of Pareekh Consulting.

TCS declined comment citing the silent period ahead of its quarterly results.

As part of the restructuring exercise launched last year, TCS divided its clients into four distinctive business groups depending on tenure and account size, instead of verticals and geographies. They were called the acquisition group, relationship incubation group, enterprise group and business transformation group. The rejig created a lot of heartburn among senior executives and vertical heads within TCS, according to media reports. Krithivasan, who heads the banking, financial services and insurance arm, even kept his unit out of the restructuring process.

“It has to be seen whether the CEO-designate continues with the rejig strategy or scraps it altogether,” said an industry source who wished not to be named.

Krithivasan will also have to find a way to replicate Gopinathan’s track record in winning large deals. TCS bagged deals worth $7.8 billion in the quarter ended December 2022. During Gopinathan’s tenure, TCS added over $10 billion in incremental revenue and over $70 billion increase in market capitalisation.

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“The CEO-designate is a market-facing executive with client relationships. So, the hope is that the large-deal momentum will be maintained,” Jain said.

With a revenue run-rate of around $27-28 billion per annum, TCS required large-deal wins on a frequent basis to maintain revenue growth, something that could put some pressure on TCS veteran Krithivasan.

He would also have to develop a strategy to make TCS’s senior leaders stay.

“Though TCS is considered as a very stable ship, we have seen senior executives leaving the company after any leadership rejig. So, the new CEO has to retain key talent,” said a source on condition of anonymity.

Krithivasan will take over in the next financial year from Gopinathan, who will stay with TCS until September 15.

Tata Sons Chairman N Chandrasekaran has discussed the engagement of Gopinathan with the group beyond September 15 in an advisory role, PTI reported on Tuesday, citing Tata Group sources. In a press conference after his resignation, Gopinathan had said he had no immediate plans to engage with the group in an advisory role.

The leadership change comes as the Indian IT industry gears up for a slowdown in client spending in key markets such as the United States and Europe amid economic uncertainties and a banking crisis.