Simmering tension behind Gopinathan’s sudden exit

Issues ranging from certain aspects of Gopinathan’s management style to certain strategic decisions taken by the company and the associated underperformance had become a permanent source of tension and the CEO would eventually pick up on the Group Chairman’s sense of lack of enthusiasm for his leadership, These people said.

Gopinathan has led TCS to grow its quarterly revenue from $4.45 billion at the end of March 2017 to $7.075 billion at the end of the December quarter, an impressive growth of 59%.

But Infosys registered faster growth than TCS in 2020, 2021 and 2022 while Accenture also registered higher growth than TCS in 2021 and 2022. Under Gopinathan’s watch, TCS is expected to add $10 billion in incremental revenue between April 1, 2017 and 31. March 2023 (TCS announced its fourth quarter and full year figures on April 12). But during the same period, Infosys will add at least $8.5 billion in incremental revenue. Simply put: The gap between TCS and Infosys is narrowing, even though TCS, which ended last year with revenue of $25.7 billion, is comfortably ahead of Infosys, which ended with revenue of $16.3 billion. Happened.

Accenture, which ended last year with $61.5 billion in revenue, added more than $30 billion in new business over the past six years.

A Tata Sons spokesperson declined to comment on the development.

One aspect of Gopinathan’s management style that eventually became a liability to him was that he could be stern in review meetings, regardless of the seniority of the person on the receiving end. This rubbed many senior leaders in TCS down the wrong path. This was acutely felt as it was a sharp departure from the style of his predecessor, who balanced tough and demanding with personal outreach that built loyalty over the years and in the ranks.

Another difference, said a person who has seen both senior leaders in TCS CEO roles, was that while Chandra called on the customer in his work regime and did not hesitate to “wait at the door” for the customer, Gopinathan Loved meeting CEOs. of the company’s customers including large banks and retailers.

But what bothered TCS’s senior leadership team the most was that the outgoing boss always “kept an eagle eye on the bottom line and margins, even with multi-million-dollar investments to protect margins”. Were ready to give up the order of.” (sales revenue) and at times sacrifice margins to optimize fixed costs,” said an executive.

In an aggressive market for tech services where a CEO has to balance topline growth with margins, where others find ways to be flexible, this has caused TCS to lose some important contracts.

Chandrasekaran’s unhappiness is certain at TCS’s relatively underperforming compared to Accenture Plc. And Infosys Ltd. is not new. In November 2021, Mint reported that Chandra had expressed displeasure over the company’s slow growth compared to peers at a strategic meeting in Switzerland in August that year.

At TCS’ annual strategy meeting in Doha last month, there was no bitterness between Chandra and Gopinathan, Mint reported last week, citing three executives familiar with the matter.

Gopinathan offered to resign before the board, following which the three-member nomination and remuneration committee, headed by former State Bank of India chairman Om Prakash Bhatt, last Thursday appointed company veteran K.K. Put Krithivasan on top.

The two other members of the panel are Chandrasekaran and Hanne Birgit Brenbjerg Sørensen.

Chandrasekaran had spoken with some members of the 10-member board of Tata Sons about the regime change at TCS and kept Ratan Tata, chairman emeritus of the Tata group, in the loop, said one of the executives cited above.

But it was a “graceful exit”, considering the long relationship the two personalities—Chandra and Gopinathan—enjoyed, he said.