Will new CEO continue rejig exercise at TCS?

Focus On Deal Pipeline

- TCS yet to provide the business outcome of reorganisation

- Continuing the deal momentum will be on the radar of investors

- Outgoing CEO one of the key architects for sound deal momentum

- Markets will keenly watch whether this continues under the new CEO or not

- Senior level exits at TCS couldn’t be ruled out

Bengaluru: IT major Tata Consultancy Services (TCS) is unlikely to face any growth bumps despite the leadership transition though investors will keenly watch the outcome of recently introduced operational structure along with the traction in large deal space under the CEO designate.

Industry insiders are of the view that under the outgoing CEO Rajesh Gopinathan, TCS is able to maintain both revenue and operating margin momentum, which the new CEO has to continue in a tough macroeconomic environment.

“Leadership transition is not likely to impact growth of TCS in coming quarters as the new CEO designate K Krithivasan is a long-time insider, who knows the company well and heads the largest BFSI vertical. Moreover, the large deal momentum seems strong with bagging of new orders in the fourth quarter,” said Pareekh Jain, an IT outsourcing advisor & Founder of Pareekh Consulting.

In a surprise move, Gopinathan resigned from TCS last week after a stint of six years as its CEO. This came at a time when the IT industry seeing multiple headwinds in the form of dip in technology spend and economic uncertainty in the US and Europe. The fall of the Silicon Valley Bank and a few other regional banks in the US has also created concerns over slowdown in all important BFSI (banking, financial services &insurance) vertical of IT firms. In a report, JP Morgan has said that TCS and Infosys have the largest exposure to regional banks in the US.

Against this backdrop, sources in the know said investors would look into the business outcome of the restructuring process that has done by the company recently. Under this restructuring, TCS had divided its clients into four distinctive business groups depending on the clients' tenure and account size with the IT major instead of verticals and geographies. These were namely acquisition group, relationship incubation group, enterprise group and business transformation group.

Some reports suggest that there were discontent among senior executives with regard to the restructuring, which was termed as one of the reasons for Gopinathan’s departure. “It has to be seen whether the new CEO designate continues with the restructuring process or not. The company is yet to provide the business outcome of the such reorganisation,” said a person familiar with the development.

Similarly, another person said that continuing the deal momentum will be on the radar of investors. “The outgoing CEO has been one of the key architects for sound deal momentum. Markets will keenly watch whether this continues under the new CEO or not,” said the person.

Meanwhile, some pointed out that senior level exits at TCS couldn’t be ruled out as there are several executives close to Gopinathan.

New CEO designate K Krithivasan is a long-time insider, who knows the company well and heads the largest BFSI vertical. Moreover, the large deal momentum seems strong with bagging of new orders in Q4, said Pareekh Jain, an IT outsourcing advisor & founder, Pareekh Consulting