Moneycontrol Pro Panorama | The silver lining in the CXO exits at big IT

The loss of senior talent in quick succession can weigh on business momentum, especially in the current growth moderation phase.

Headline attrition rates in the IT services industry may be moderating. However, employee churn at senior levels remains elevated at large companies. The latest executive to send the resignation letter is Nilanjan Roy, chief financial officer of Infosys. A couple of days ago, Wipro announced the departure of its chief growth officer Stephanie Trautman.

The exits mark a series of departures at these companies. Notable among these are Mohit Joshi and Ravi Kumar at Infosys who went on to become CEOs of Tech Mahindra and Cognizant, respectively. Jatin Dalal from Wipro took up the chief financial officer role at Cognizant. Executives from Wipro went on to take up leadership roles at firms such as CitiusTech and Arthur D. Little. Top management changes and exits are also seen at TCS and Tech Mahindra. But the level of senior exits at TCS are much lower compared to other companies.

Given the size of these organisations, the companies can easily reallocate the roles of the departing executives. Even so, senior exits have been too frequent for investors' comfort. Infosys and Wipro lost two executives per quarter in the current calendar year on an average.

Loss of senior talent in quick succession can weigh on business momentum, especially in the current growth moderation phase. As analysts explain, the new leaders take time to get a good grip over their roles. Also, departing leaders can tap talent and business relationships of their previous organisations, intensifying competition. Cognizant’s increased focus on large projects under Ravi Kumar is a case in point.

Both Nilanjan Roy and Stephanie Trautman were hired by the current leaders at Infosys and Wipro during organisation revival efforts. While Infosys achieved the desired progress, Wipro seems to be sputtering on the turnaround.

Nilanjan Roy has served Infosys close to five years till now. Stephanie Trautman has spent around three years at Wipro. Three to five years may seem a reasonable time in the current fast-changing world. But senior leaders used to stick around for a longer time in the past. Note that companies thrive under a stable leadership team who serve long tenures.

To instil organisation culture and improve loyalty, companies are mandating work from office for regular employees. Perhaps organisations should devise innovative programmes to improve employee loyalty at senior levels, too.

As it turns out, small and tier-II companies are doing good work in tapping talent from the frontline peers.

Several companies have successfully tapped talent at tier-I companies, improving their performances. “Over the last ten years, we have seen multiple cases of segmental heads of tier-1 IT Services companies joining as the CEO of a tier-2 company. In most cases, such transitions have worked well for tier-2 companies, characterised by a reset of their growth trajectory or operations, or both,” analysts at Nuvama Institutional Equities said in a note. Perhaps this is the silver lining in the current churn in the IT sector.

Ethanol’s importance in powering Aatmanirbhar Bharat

Protean Tech – Should investors consider this stock, post the listing rally?

Mandatory ACs in trucks: Multiple companies to benefit from the move

Pro Economic Tracker | Consumer sentiment, labour participation rate perk up

Article 370 verdict: The BJP scores a major ideological victory

Why have jobs as unpaid helpers increased when GDP growth is 7.6 percent?

2024 – The year of elections across the world

Using risk weights is not without risks for the RBI

Why Glencore's exit from the coal sector is no big deal

Solar project developers in a sweet spot over steady tariffs, falling costs

Marketing Musings: The creator economy

China faces the risk of a debt-deflation loop (republished from the FT)

Desperate retail investors drive India’s options craze

Telangana: Will national parties dominate in 2024 polls and sideline the BRS?

COP28: Fighting climate change can create jobs in India

Do Indian banks care about climate finance?

Address drivers' range anxiety over inadequate EV charging networks

ChatGPT, Google's AI will have to start answering to EU

Start looking at fixed-income funds a lot more actively now: Anthony Heredia, Mahindra Manulife MF

RBI's cloud centre for financial data sparks concerns among fintechs and banks Technical Picks: Coforge, Mahanagar Gas, Cipla and Aluminium (These are published every trading day before markets open and can be read on the app).