Leadership shakeup crisis continues to haunt Indian IT industry

The leadership churn in the Indian IT industry continues unabated. The latest top-level exit came at HCLTech. Its Chief Financial Officer, Prateek Aggarwal resigned from the company to pursue opportunities outside the firm. In a late evening filing on Monday, the Noida-headquartered company informed exchanges that Shiv Walia will take over as its new CFO on September 6. Since a year, Indian IT firms are witnessing frequent leadership changes. Wipro last year saw several top level exits with a new CEO taking over.

In April 2023, Thierry Delaporte resigned as the CEO of the company with Srinivas Pallia succeeding him. After Delaporte’s resignation, several senior leaders have left the company. Not only HCLTech and Wipro, even their larger peers, including TCS and Infosys have also seen senior-level exits, which show the changing contours of the global IT industry.

Since last year, the demand environment has changed drastically with digital spending going down in the United States. Owing to its macroeconomic uncertainty and high interest rates, many enterprises are holding back technology spend. In FY24, the revenue growth rate came down for the entire Indian IT industry. Both large and mid-cap firms are facing both revenue and margin pressures since last year. Top-level leaderships are facing constant pressure from investors to deliver superior results, which has created an environment of workplace pressure at this point of time.

When times were good, everyone was cheering for these very leaders. However, with time getting tough, investors and their respective boards want them to deliver better results than their peers. That is the reason why many senior level people are leaving their positions in top firms. Secondly, there is now a visible movement of senior level people working in large firms towards mid-tier IT companies.

Many vertical heads of large IT firms have moved to mid-tier IT services companies as CEOs. As these mid-tier IT firms are looking at moving to the next level, they are seeking the expertise and experience of such leaders for accomplishing their objectives. Not only mid-tier firms, even some senior leaders of tier-I companies have moved to another peer. For instance, Cognizant has seen such a move. Among mid-tier firms, Tech Mahindra has appointed Mohit Joshi as CEO, who was previously with Infosys. Such intensity is likely to increase in the coming quarters, considering that the global IT industry is yet to witness a full-fledged recovery as far as technology spending is concerned.

In the absence of discretionary spend, most companies are competing with each other to garner higher market share. This means that only leaders with proven abilities to steer a company towards better growth rate will be in demand. And those who are not able to cope with the new environment may be forced out. Another significant factor that is playing out in CFO-level exit is the disagreement between the top-level leaders about growth versus margin. While CFOs are very touchy about protecting and improving margins, CEOs are more focussed on revenue growth. More exits are not ruled out.