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The abrupt change in leadership in
Wipro in January and the public rumblings by one of the
ex-directors of Infosys about the way the company was going
forward with the selection of its new CEO in April have suddenly
brought into limelight the issue of succession planning in Indian
IT companies. The not-so-exemplary leadership changes within a
span of few months in two of the top three IT firms in India have
not exactly created a great impression about the management depth
and maturity in these companies.
A few other examples of the past, such as that of WNS Global
Services, one of the top BPO companies, which took more than a
year to name a successor when its founder director announced his
resignation, have strengthened this perception. Coming at a time
when most of the first generation leaders - many of them founders
and entrepreneurs - are stepping down, such a perception may
create doubts about the ability of this sector to create value in
the long term.
Research by Dataquest shows that this perception is not exactly
based on fact. Among the larger Indian IT companies, more firms
have had a well-planned succession strategy than those who did not
have such a plan. They include India's largest IT company, TCS,
which saw a leadership change in 2009; Cognizant, which had had
that transition in 2007; and HCL Technologies, where the
leadership baton passed to a new CEO in 2007. All these three are
among the top five offshoring companies from India. In the BPO
segment too, Genpact and EXL, two of the largest BPO firms, had
had a good succession planning in place while HCL Infosystems, the
largest Indian company focussed on the home market, too has had a
well-executed transition.
Based on the examples of these companies, here are a few trends
that we have noticed in the good succession plans:
The planning happens at least three years before transition. In
all these cases, except HCL Infosystems, the faces of successors
were projected internally and externally well before the actual
transition. In HCL Infosystems, while the name was not known, it
was pretty clear internally that someone from outside and much
younger was taking over. So, there was no surprise for employees,
customers and investors.
Usually, there is a generational shift. In all these succession
plans, there is a minimum age difference of 10 years. In one case,
it is 21 years. That is clearly the next generation in an industry
which is not more than 30 years old. This is an acknowledgment of
two things: one, the business rules change over a period of time
and a fresher approach is always better and two, any new CEO
should have enough time to carry out his plans and ideas.
Usually, the new leader has to have deep understanding of the core
business, whether insider or outsider. While the shifts may be
generational, and it is a good idea to get a fresh approach, a
lack of understanding of what is the most important thing in the
business may create problems. So, for most offshore companies, it
is both an understanding of the front-end as well as the delivery.
Understanding of customers may come from an outsider but
understanding of delivery would come from someone who has spent
time internally. In all our examples concerning offshore
companies, it is internal people who have been promoted to the top
job. HCL Infosystems, which has most of its people in the
front-end, decided to go for an outsider who has good
understanding of the customer.
Here are a few examples from the recent past:
TCS
S. Ramadorai 65/N. Chandrasekaran 45
Year of Change: 2009
The age difference between them is 20 years. While TCS' Ramadorai
was known for his organization building and driving the depth of
execution - TCS listed under him, remained a best employer and
made major acquisitions in selected markets - Chandrasekaran is a
hands-on man, always with customers and very active in industry
causes. Has recently taken over as NASSCOM vice chairman.
Cognizant
Lakshmi Narayanan 54/Francisco D'Souza 38
Year of Change: 2007
If Lakshmi Narayanan was the bridge between the old era and the
new, who grew from becoming a programmer to a large project man to
a CEO, D'Souza, at 38, is the youngest CEO of a professionally
managed large company. While continuing with the growth machine
image of the company, he started pursuing completely newer
opportunities, instead of trying to play catch up with the bigger
companies in the latter's turf.
HCL Technologies
Shiv Nadar 60/Vineet Nayar 43
Year of Change: 2007
Shiv Nadar is a legend and attained that status much before even
Narayana Murthy and Azim Premji. Nadar was a rebel who questioned
all the trends so far in the industry. He was successful in
challenging some of them and was not so successful in others but
never gave up. His latest - employees first, customers second - is
now not just the latest idea to be discussed in US B-schools, it
is also a bestseller book.
HCL Infosystems
Ajai Chowdhry 60/Harsh Chitale 39
Year of Change: 2010
The only outsider to take up the top job in such a generational
shift in this list, Chitale has proved his credentials, albeit
outside the company. But for a company that has the majority of
its staff in the front-end, understanding the opportunities
outside was more important than understanding the organization,
unlike in case of offshoring companies. Founder CEO Ajai Chowdhry,
a man with all the old world virtues and sophistication - he is a
good singer actually - chose someone who shared his trust and
values but little else.
Genpact
Pramod Bhasin 59/Tiger Tyagarajan 50
Year of Change: 2011
As founder CEO, Bhasin built the DNA of the company,
commercialized it and built the depth and quality. Some of the
best managers in the Indian BPO industry were trained by him.
Tyagarajan is a man of execution; who was instrumental in driving
non-GE revenue in the initial years. Bhasin has the larger than
life image but Tyagarajan is more comfortable with technology, is
more in touch with people and even writes a regular blog at
http://tigertyagarajan.blogspot.com.
EXL Service
Vikram Talwar 58/Rohit Kapoor 43
Year of Change: 2008
Though there is an age difference of 15 years between them, they
together founded the company. That is something that any company
would envy: to have a next generation leader who understands the
company so much. If Talwar is a maverick, is often irritated by
the ignorance of the media and analysts, Kapoor is cool, measured
and hands-on.
(All the ages given are at the time of transition)
Shyamanuja Das is editor of CyberMedia flagship
publication Dataquest. He can be reached at shyamanujad@cybermedia.co.in
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