Monday, February 26, 2024

Decoding CEO appointment strategies of Bengaluru’s ITES founders

These industry leaders are associated with CEOs of either Infosys or Wipro, the two Bengaluru-based pioneers in the ITES space in India over the past three decades. Despite their distinct structural backgrounds, a common narrative of leadership transitions weaves through their histories.

Structurally they are very different. Wipro, initially a non-technology family business, transformed under the leadership of its promoter, who left college to steer the company following his father’s death. This entity, still significantly owned by its founding promoter, diversified into a global tech services leader. 

In contrast, Infosys was established by multiple co-founders, who were well-educated professionals from middle-class backgrounds, working in various IT companies. 

However hard it is, the market-coming-of-age of many of those co-founders took years, under the shadow of the lead founder. Many of them took a chance at the CEO role. Many critics even argue that some of them needed that CEO tag to affirm their presence. Some even went to the extent to say that it was a front for the lead promoter to control the entity. Well, except those involved, one would never know why such leadership-by-rotation practice happened without inducting external talent.

Both companies are led by founders known for their personal frugality and commitment to governance. Both lead-founders are personally-frugal and high on governance. Of course, the PR machinery could never get enough about their economy class air travel, and so on. Their enterprise leadership and wealth creation for shareholders, and themselves have been phenomenal. That’s what matters.

While one founder retired from executive roles and maintains a low public profile, the other has been more visible, returning to the frontlines before stepping back again. His public engagements and opinions on various issues remain notable. Be it views on youth working beyond 70 hours, or having a view on the Chinese economic model. For his frugal persona positioning, he is media savvy, being on the dais repeatedly.

Wipro, in particular, has seen a CEO change approximately every five years over the past two decades, possibly reflecting a strategy to adapt to changing business needs such as scaling operations, maintaining cost efficiency, keeping the engines running smoothly, fostering innovation, or meeting the demands of major client markets. The transitions were, in essence, strategic moves to steady the ship as the company navigated through various business requirements.

Of late, both Infosys and Wipro have seen multiple CXO departures, possibly due to a lack of sight of potential roles to grow higher into the leadership hierarchy, or plain market opportunities. 

Engine stalled

Their foundational work in the IT and ITES sectors was instrumental, particularly during the Y2K era. However, the absence of a global consulting practice or a substantial product lineup has left them as vendors in the technology stack value chain. As India’s tech entities grapple with being perceived as commodity providers rather than knowledge partners, the need for strategic shifts becomes evident.

It’s unsurprising that few of the leaders, in their new avatars and with personal investments, are influencing Digital India startups to develop products for the world. This raises questions about why such pivots were not undertaken during their tenures.

What implications does this hold for the ITES sector? It signifies that within the entire technology stack value chain, Indian entities primarily function as vendors, even with substantial contracts like the $1 billion deal spanning seven-eight years. We fall short as knowledge partners, lacking the status of go-to experts commanding significant fees for insights or advice. To put it plainly, we are in the position of cyber-coolies.

Why is this important to acknowledge? Simply because any CEO, worth his spurs, will need the time and trust of all stakeholders to effect any change in the direction that these companies will take. In the years ahead, one can remain tech-vendors. That’s a choice the enterprise boards will decide with the management. 

Hopefully, they will have an objective. Despite any market claim or board composition, both these entities have been promoter-led entities, for long. Promoter-tag under regulatory guidelines doesn’t matter, if you still influence the board and culture of the organisation. Savvier and practical CEOs know that it is better to lunch regularly with the ‘promoters’, to retain their trust, and their role.

In the face of potential global economic downturns and India’s increasing political influence worldwide, there’s a looming possibility that some nations might exploit geopolitical narratives to their advantage—either out of spite or as a bargaining tactic for bilateral political-economic agreements. It’s crucial for our tech giants to be prepared for such scenarios, starting now.

One could claim that both these entities did not have financial clout three decades ago, to move to consulting and global product space. But it’s a chicken and egg story. Unless they pivot, they will be facing global volatility, every now and then. 

(Srinath Sridharan is policy researcher & corporate adviser. The views expressed here are personal.)

 

#Decoding #CEO #appointment #strategies #Bengalurus #ITES #founders

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