The timing of the announcement of the resignation isn’t good when investor sentiment has already been soured by the global banking crisis. One may see a kneejerk negative reaction on the stock on Friday, but market insiders believe it won’t have a lasting impact given there is 6 months time for the transition process to take place.
“The Board of Directors has considered his request and accepted the same. Gopinathan will continue with the company till 15th September 2023 to provide transition and support to his successor,” the company said in a filing.
The Board has nominated K.Krithivasan as the CEO designate with effect from 16 March. The company said Krithivasan will go through a transition with Rajesh Gopinathan and will be appointed as the MD & CEO in the next financial year.
Gopinathan had a 22-year stint with TCS and during his last six years of tenure, the IT company has added $10 billion in incremental revenue and over $70 billion increase in market capitalisation.
“I have thoroughly enjoyed my exciting 22 year tenure at TCS. It has been a pleasure working closely with Chandra, who has mentored me through this entire period,” Gopinathan said.
Gopinathan has served as TCS MD and CEO since January 2017, when N Chandrasekaran was appointed as the Chairman of Tata Sons.
During Gopinathan’s tenure as CEO, shares of TCS have more than doubled, rising over 160% in the six-year period.
Commenting on the leadership change, Chandrashekaran said, “Over the last 6 years, Rajesh has provided strong leadership as the MD & CEO and has laid the foundation for the next phase of TCS’ growth with significant investments in cloud, agile and automation to help clients accelerate their transformation.”
The new CEO designate Krithivasan has joined TCS in 1989, and during this long tenure, he has held various leadership roles in delivery, customer relationship management, large program management and sales.
Krithivasan is currently President and Global Head of the BFSI business group at TCS. He has been part a of global technology sector for over 34 years.
A mechanical engineer from University of Madras, Krithivasan is also a member of the Board TCS Iberoamerica, TCS Ireland and the supervisory board of TCS Technology Solutions AG. He also holds a Master’s degree in Industrial and Management Engineering from IIT Kanpur.
The timing of the announcement of Gopinathan’s resignation isn’t good when investor sentiment has already been soured by the global banking crisis and its spillover effects on the IT industry.
One may see a kneejerk negative reaction on the stock on Friday, but market insiders believe it won’t have a lasting impact given there is 6 months time for the transition process to take place.
“We will have to wait and see how the market will react tomorrow. But, I don’t think it is a big negative for the company . There is enough time for the smooth transition process to take place and this should not have any impact on the business in the long run,” said Kranthi Bathini, equity strategist at WealthMills Securities.
The IT sector is facing a double-whammy of a slowdown in the US and Europe, their biggest export markets, and the banking crisis, which is the biggest vertical for business.
In FY22, BFSI contributed close to 40% of the consolidated turnover of Tata Consultancy Services. Infosys also receives around the same percentage of revenue from this segment.
The Street will keenly await more details on the transition process and the outlook for earnings from Gopinathan, given it will be his last address to the media as the MD and CEO.
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
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