For Indian IT firms, the buzz is ‘Go West, CEO’

By: | Published: January 28, 2016 1:26 AM

Cognizant’s Francisco D’Souza was the first CEO who proved to the IT industry the importance of being based in the US, the sector’s biggest market.

WiproWipro’s decision to have its CEO in the US seems to be a new beginning as it looks to move away from the model of just lower-cost contracts to a more strategic engagement.

Cognizant’s Francisco D’Souza was the first CEO who proved to the IT industry the importance of being based in the US, the sector’s biggest market. Then came Infosys CEO Vishal Sikka, who too opted to operate from America. And now it’s the turn of Wipro CEO-designate Abidali Neemuchwala to be be based in the US, trying to drive volumes from the most important market of all, reports PP Thimmaya in Bengaluru.

The reason is simple — the firms can remain connected with their largest customers and get an early understanding of key trends.

Wipro’s decision to have its CEO in the US seems to be a new beginning as it looks to move away from the model of just lower-cost contracts to a more strategic engagement.

Peter Bendor-Samuel, CEO, Everest Research, said, “As the market has matured, it has become increasingly important to develop deeper understanding of the issues driving large clients and foster more intimate relationships with their key executives.”

Bendor-Samuel added, “Having their CEOs based in the US facilitates this understanding and makes relationship development much easier.”

Infosys’ Sikka during the company’s recent investor call said, “We continue to focus on changing the nature of our conversations with clients to become much more strategic and we can see this reflected in the renewal of existing large contracts, opening of new types of engagements and net new accounts as well as in signing of large deals.”

This change has also resulted in an improved deal pipeline for Infosys, with the IT major bagging four large deals in the quarter with a total contracted value of $360 million. In addition, it also won a large renewal deal of around $600 million.

While these CEOs are in the US, their companies have also appointed a chief operating officer (COO) who will primarily look into delivery operations. Wipro announced Bhanumurthy BM as its COO while it is UB Pravin Rao for Infosys. A senior Wipro executive on condition of anonymity said, “This model seems to be working well and this is evident from the way Infosys has been performing in the last three quarters.”

Industry experts believe that CEO-COO model is likely to deliver the goods for the Indian IT companies as the former would be more focused on strategies and client relationships while the latter is focused more on the operational issues. On this model, Bendor-Samuel said, “I think it is highly likely that much of the rest of the industry will adopt this model in as much as they will relocate their executive teams to the US or EU. Cognizant and Genpact are already there and now Infy and Wipro.”

However, there are others who disagree with this move relocate the CEO to the US, pointing to the case of TCS, India’s largest IT services exporter. “Delivery is the key for any Indian IT company,” said an IT industry source. “If the CEO is in India, it would definitely help the execution of contracts.”

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