TCS CEO exit: ‘Reason is internal discomfort with reorganisation’
Research teams from Everest Group have picked up both internal discomfort with the reorganisation as well as external confusion.
BENGALURU: With four years still left before his term ends, TCS CEO and MD Rajesh Gopinathan last week announced his resignation from the country’s largest IT services behemoth. Though the next day after his resignation, at a press briefing, he said it is better to leave when everything is good and that ‘if not now, will there be a better time’, analysts said there is more to this than meets the eye.
Research teams from Everest Group have picked up both internal discomfort with the reorganisation as well as external confusion. In April 2022, TCS launched a new operational structure under, which four business groups - acquisition, relationship incubation, enterprise growth and business transformation - were created. “Under the new structure, it is hard to find who is in charge and in some instances, with too many cooks in the kitchen, this is quite unlike the normal TCS interactions that are usually disciplined and on target,” said Peter Bendor- Samuel, CEO of Everest Group.
That said, TCS posted good numbers and it seems out of character for them to make precipitous changes, he added. Gopinathan, who led the IT services company as CEO for the past six years, added over $10 billion in incremental revenues and over USD 70 billion increase in market capitalisation.
His exit also comes at a time when there is slow economic growth, geopolitical tensions and increased concerns about IT spends.“Given TCS’ size, order book and exposure to long duration orders, and portfolio, it is well positioned to withstand the weakening macro environment and ride on the anticipated industry growth,” said Motilal Oswal Financial Services.
In recent months, both Tech Mahindra and Cognizant appointed new CEOs. When asked about it, an analyst said these changes come at a time of industry inflection. “The IT industry is moving from the first phase of digital transformation with its post-pandemic final kick to a phase of operating in a mature digital world.,” Samuel said.