Why is Leadership Changing in India’s Service Provider Firms?
Leading service providers in India are going through substantial change due to executive leadership churn. The question is: is this bad? To answer, let’s look at what’s driving the churn and how long it’s likely to continue, and why.
Take Cognizant, for example. The firm has gone through leadership change for some time. First, it changed the chairman of the board and a few board members. Then it changed the CEO. With the recent resignations of Debashis Chaterjee, EVP and President, Global Delivery, and Prasad Chintamaneni, EVP and President, Global Industries and Consulting, we’re now seeing turnover in the next level down in executive leadership. And I believe we can expect more turnover.
Similar churn has been happening at other services companies given the fact that each of the top five India heritage companies announced a new CEO in the past three years.
What’s Driving the Executive Churn?
Underpinning the leadership turnover is the providers’ move to a new business model. They shifted away from struggling with the issues of the labor arbitrage model and moved to the digital platform model. As companies move down this path, I think it’s natural for their leadership to evolve.
Evolving the executive leadership is natural because the old guard must give way to the new guard – firms must bring in fresh thinking. The prejudices, paradigm and old rules of thumb don’t work in the new digital model (or, at least, only a few of them work). To succeed in this transition, the firms must change their thinking. One way to do that is changing the leadership.
The offshore services majors have extraordinarily deep talent benches. To keep their deep talent pools, they need to provide opportunities for them to progress and move on to more senior roles. When the senior teams move on, it opens opportunities for this talent. And it’s an opportunity to being in some new blood from the outside. That talent combination can be quite healthy, particularly at a time where companies are no longer scaling the known, existing model. Instead, they are moving into uncharted waters with a new business model that is evolving and being defined.
Another manifestation of the executive leadership churn is taking place at TCS, which is handling the digital shift differently. The firm reorganized to give its deep talent pool opportunities and new responsibilities. Instead of executives leaving TCS, we see a substantial reorganization that opens opportunities for the young blood, new talent, to take on more executive responsibilities. TCS handled this in a different mechanism to achieve the same goals as Cognizant – bringing new blood through. TCS retained its old blood by giving them different responsibilities and by shaking things up and moving people around.
This is what’s happening, and it affects pretty much all the service industry’s firms.
How Long Will the Leadership Churn Continue?
The executive leadership churn is predicated upon the fundamental industry shift into a new business model, which naturally causes this turnover. The turnover is healthy and inevitable, given the degree of organizational change going on.
I think it’s prudent to watch for too much of a good thing. However, the turnover is inevitable. I believe we’ll see more change as companies navigate and embrace the new digital future and move deliberately into that future.
