TCS 'won't make any change', focus on principles: CEO designate Krithivasan

With the appointment of K Krithivasan as chief executive officer (CEO) designate, India’s largest IT services firm, Tata Consultancy Services (TCS), has yet again validated its strategy of succession planning well in advance and grooming internal candidates for leadership roles.

However, with Krithivasan it looks like the tenure of CEOs at TCS is coming down. For instance, F C Kohli’s tenure was 28 years. S Ramadorai, who spent 40 years with TCS, spent 13 years as CEO. N Chandrasekaran, who joined in 1987, was with the company for 30 years and as CEO helmed operations for eight years.

Compared to the three early leaders, Rajesh Gopinathan was CEO for six years. And Krithivasan, 58, will be at the helm of the company for six-seven years because the executives can continue till the age of 65 years at TCS.

“Unlike previous transitions, where incoming CEOs had a long runway in front of them till retirement at 65 years, Krithi is 58 years old and will be CEO for the next six-seven years only. While this limits the flexibility for him, we expect TCS to continue to benefit from the recent changes in its operating model (in 2022) as well as a significant recent intake of freshers in the system,” said Mukul Garg of Motilal Oswal in his note.

Krithivasan’s time of taking over is interesting, especially with the agenda already being set. TCS, under Gopinathan, has chalked out its ambition to be a $50-billion company by 2030. For this the company will need a compound annual growth rate (CAGR) of 9 per cent.

Looking at the current growth rate, which does not look too difficult, what will be a concern is the macro environment and the shift that the technology world is going through due to huge advancement in artificial intelligence (AI).

Krithivasan is aware of these since he heads the biggest vertical — banking, financial services, and insurance — which contributes 32 per cent to its revenue.

“The announcement of change in CEO was unexpected, particularly as Rajesh Gopinathan was re-appointed as CEO in 2022 after having completed five years in the role since February 2017. However, we expect CEO transition to be smooth, since Krithivasan has been with the company for 34 years, serving various customer-facing leadership roles and heading the largest industry vertical, BFSI,” said a note from ICICI Securities equity research.

On a lighter note, though, Krithivasan, during the morning media briefing, said that moving from Chennai to Mumbai seemed to be a bigger challenge than taking over the helm of the $25.7-billion IT services firm.

In his first media interaction Krithivasan outlined his plans for the new role. “Our core set of beliefs and values, that is, focus on employees and customers, is the most important engine that drives our growth. We will not make any change, we will continue with our focus on core principles and fine tune as we go along.”

“I do not think there are any insurmountable challenges ahead of us. There are a lot of opportunities and how we leverage and seek those is the task in front of us, and make TCS grow,” he said in Mumbai.

“Just because there is a macro uncertainty it does not mean that customers are done with digital transformation and they have to stop … if at all there is more need to continue and maybe or a quarter or two will be disturbance, growth has to come back and we will leverage all the digital tools we have.”

Asked if there would be internal changes as he took up the CEO’s role, he said: “We will look at all the plans and how we will handle them. TCS has always been built on a continuous evolutionary approach. We will do our best to reorganise ourselves.”