The elevation of Tata Consultancy Services (TCS) CFO Rajesh Gopinathan as CEO & MD, to succeed N. Chandrasekaran, could lead to attrition in senior management at the company, said some analysts.
“The change comes at a time when TCS’s business model is undergoing structural changes and the industry faces increased risk of protectionism,” Kotak Institutional Equities analysts Kawaljeet Saluja and Jaykumar Doshi wrote in a note to clients. “TCS has opted for the right structure for transition. The company’s collaborative culture and choice of personnel to take on the top role can aid in making the transition a success. Would watch for attrition in senior management, a common event after a change of guard,” they wrote.
TCS’s stock slumped 3.9% to ₹2,252 on Friday.
‘Right choice’
S. Mahalingam, the first CFO at TCS who was Mr. Gopinathan’s predecessor, said that the change augured well for the company. “Rajesh has experience across functions: strategy, project delivery, marketing overseas… He led the e-Business unit when we wanted a new direction for the company after Y2K.”
According to Mr. Mahalingam, “You need a CEO with experience in the corporate office, while not ignoring the field, with experience in strategy and in protecting the interests of all stakeholders. He now leads a team of highly competent people and knows how to take them along.”
Sagar Rastogi and Sudheer Guntupalli, analysts at Ambit Capital, said that attrition at the senior levels was unlikely. “Since Mr. Gopinathan is an insider and the TCS senior management team has stuck together for decades, there is lesser likelihood of exits of valuable employees,” they wrote.
- He was born in Thrissur in Kerala but was raised in Lucknow as his father was working there in the Railways. He did his schooling from Lucknow and then joined REC (now NIT) Trichy. This is the same institution where N. Chandrasekaran, Tata Sons chairman-designate studied. This institution now has the distinction of giving TCS two CEOs back-to-back.
- He studied at IIM Ahmedabad and joined Tata Strategic Management Group. Three years later, he moved Tata Industries, working there for two years before joining TCS in 2001.
- He stays in Powai with his wife Lekshmi, an architect (and who is about to finish her Phd from IIT Bombay), They have a five-year old son and 12-year old daughter Malini.
- People close to Mr Gopinathan said that he loved spending time with his children whenever possible. “In the morning, he regularly gives bath to his son and prepares him for school so that he could spend some time with him. Every time he goes out (of the country), he would buy gifts for his daughter,” the person said.
- He likes to go for long walks. He loves reading and watching movies, the last viewed being 'La La Land'.
They also wrote, “The odds are in favour of a smooth leadership transition at TCS as Mr. Gopinathan is a ‘knowledgeable insider’ and he would continue the same strategy. Besides, Mr. Chandrasekaran will be always available to TCS for critical help, they said.
“We have high regard for Rajesh’s vision and capabilities based on our interaction with him as well as feedback from channel checks. He has been with TCS for 16 years and worked closely with Chandra for most of this time across multiple roles including CFO.
After taking over as chairman of Tata Sons on February 21, 2017 Mr. Chandrasekaran would also become the chairman of key Tata group operating companies including TCS.
Mr. Chandrasekharan first spotted Mr. Gopinathan, a young solution consultant of TCS, while the latter was working in the West Coast of the U.S. Mr. Gopinathan started his professional career with TCS in 2001. He had joined TCS from Tata Industries. He had actively helped Mr. Chandrasekaran to grow TCS’ e-Business practice from zero to $500 million in five years.
For a few years, Mr. Gopinathan helped Mr. Chandrasekaran run TCS’ strategy office in Mumbai. Then, he was moved to Business Finance where he was responsible for the financial management of the company’s individual operating units.
His responsibilities included financial planning and control as well as revenue assurance and margin management.
At the time, he received intense training and coaching from the then TCS CFO Mr. Mahalingam to be groomed as the next CFO from 2013.
“Rajesh’s biggest strengths are his experience at having been at the convergence of strategy, finance and business. As a person, he is highly analytical,” according to Mr. Mahalingam. He said that Mr. Gopinathan, as then vice-president, business finance, was instrumental in overseeing strategy when the company went through a period of change, including expanding territory, setting up verticals, growing horizontals and increasing margins. “So, it was not a question of just profits, but the ability to foresee a future for the company and position it accordingly. We wanted to think of the company as a business rather than as a service delivery unit.”
On Mr. Gopinathan’s biggest strengths, Mr. Mahalingam said, “He is highly analytical and is a numbers man. He is not only demanding but also monitors his team and contributes after understanding the issues. He is also very tough but is understanding of people as well. He is much tougher than I was.”
A period of significant contribution from Mr. Gopinathan came when TCS acquired Citigroup Global Services in 2008. “It was a tough period with the financial markets crashing globally and when questions were raised on the way forward. His contribution has been phenomenal.”
An electrical and electronics engineer from REC (now NIT), Trichy, he graduated in 1994, before pursuing his Post-Graduate Diploma in Management from IIM, Ahmedabad.
Born in 1971, Mr. Gopinathan lives in Mumbai with his wife Lekshmi, daughter and son.