As K Krithivasan is set to take the helm of Tata Consultancy Services from the outgoing CEO, Rajesh Gopinathan, experts argue that the incoming CEO will need to rethink growth strategy for the IT giant yet again.
The word on the street is that the structural reorganisation of the IT company prompted Gopinathan’s ouster from the position of CEO when he was unable to deliver the desired results. Analysts that businessline spoke with added that the structural reorganisation led by Gopinathan is unlikely to deliver the faster growth trajectory desired by Asia’s largest IT company.
Operational structure
TCS unveiled its new operational structure one year ago, under which the IT giant ordered its business into groups termed acquisition, relationship incubation, enterprise growth, and business transformation — a structure that moved away from the traditional three-dimensional framework of geography, verticality, or services.
However, barely a year into the structural reorganisation, analysts note that the move was not enough to counter the slowing growth being experienced by the IT company. The company needs to reimagine itself on the innovation front.
Experts’ take
Sanchit Vir Gogia, CEO and Chief Analyst at Greyhound Research, said, “While Rajesh Gopinath identified the right problems that prompted the reorg by TCS last year, Gopinathan could have included horizontal reorganisation in parallel with the vertical organisation of accounts by the IT company. Gopinathan’s reorganisation strategy was likely met with resistance from account executives, customers, etc., who now had to embattle a completely different organisational structure — something which will not be welcome when they have so much at stake.”
Gogia added that TCS is however in need of an institutional overhaul; Gopinathan quite correctly identified the problem statement, especially as the IT company is posting single-digit growth numbers.
However, an institutional overhaul will need to look very different from a simple organisational reorganisation. TCS needs to make some hard decisions to achieve growth at this stage, especially on such a large scale. TCS needs to become a leaner organisation, consider paring down business units, and invest in future areas of growth.
Ashish Chaturvedi, Practice Leader at HFS Research, added, “TCS needs to change its brand image and ways of working from a provider that is known for mastering technical execution to an applied innovation company. The focus needs to evolve from delivering quality services to co-creating with partners and clients. This will enable TCS to win those high-margin and high-value deals that it desires.”
For that purpose, the acquisition group constituted by TCS is a step in the right direction, according to Chaturvedi.
Published on March 20, 2023
