While the exit of Rajesh Gopinathan as MD & CEO of TCS surprised many on Dalal Street, the appointment of K Krithivasan as his replacement did not. Krithivasan is first among equals in many ways in the organisation, analysts said, noting that Krithivasan handles a large BFSI portfolio of $11 billion, has grown the business consistently and is involved in many strategic decisions.
Krithivasan was among front-runners for the CEO role, in our view, in the past, said Kotak Institutional Equities in a note.
"Given the size of the portfolio handled by him, we would not be surprised if he would have been a key candidate for CEO role in 2017. He handles a large portfolio of $11 billion and grew the portfolio in a consistent manner," Kotak said.
The brokerage noted that Krithivasan may have been a regular contributor in strategic direction of the business.
"Normally, a new CEO appointment leads to the exit of disappointed front-runners. While exits are possible, it must be pointed out that Krithivasan was a clear front-runner in case Rajesh ever wished to step down," Kotak said.
Nirmal Bang Institutional Equities said TCS continues to follow the pattern of choosing internal candidates for the CEO’s role, noting that HCL Technologies has been the only other Tier-1 company that has followed the internal candidate model.
"We have known of Krithivasan’s existence for a few years despite his low profile but were not aware that he was being groomed to be the successor," said Nirmal Bang, Institutional Equities.
"Krithivasan comes from the business side. He has held various leadership roles in delivery, customer relationship management, large program management and sales. Rajesh had been the CFO of TCS for four years before he was elevated to the CEO’s role. TCS is a well-oiled machine and we do not see too many challenges before Krithivasan, except that of demand," Nirmal Bang said.
Age factor
Motilal Oswal Securities noted that unlike previous transitions, where incoming CEOs had a long runway in front of them till retirement at 65 years -- S Ramadorai (CEO at 51 years), N Chandrasekaran (CEO at 45 years) and Gopinathan (CEO at 46 years), Krithi is 58 years old and will be CEO for the next 6-7 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 significant recent intake of freshers in the system," it said.
Kotak said when N Ganapathy Subramaniam (NGS) was appointed as TCS COO in February 2017, he was 57 and had two years left in his tenure.
34 years of experience
At present, K Krithivasan is the President and Global Head of the BFSI business group at TCS. He has over 34 years of experience in TCS. During his long tenure at TCS, he has held various leadership roles in delivery, customer relationship management, large program management and sales. Krithivasan is also a member of the Board of Directors of TCS Iberoamerica, TCS Ireland and the supervisory board of TCS Technology Solutions AG. He holds a Bachelor’s degree in mechanical engineering from the University of Madras and a Master’s degree in industrial and management engineering from IIT Kanpur.
"We believe TCS is a well-oiled machine, and has a long history of seamless transitions at all management levels. Most of its leadership positions have been held by TCS veterans, who have risen through the ranks. BFSI is the largest segment within TCS, contributing over 30 per cent of revenue in Q3FY23, which makes Mr Krithivasan the natural/perfect choice for the role," Nuvama Institutional Equities said.
Disruptions unlikely
In the 55 years of TCS’s history, Krithivasan will only be its fifth CEO — a testimony to stability and quality of its management, Nuvama said. TCS was founded in in 1968.
"We see nil disruption from this management transition. Any drop in the stock price must be used as an opportunity to add as valuation is no longer expensive, which makes risk-reward profile attractive," it said.
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