Wednesday, April 20, 2011

Icons move as firms get lean & mean

The Indian IT industry has been making news since the days when the world feared a digital Armageddon of sorts by Y2K. After that moment the IT firms thrived, wrote codes for giants worldwide, changed Bangalore city and, more importantly, the way Indians look at themselves and the way the world look at Indians.

A decade down, now it is payback time. The news began with Wipro firing its twin CEOs and putting in place one man. T K Kurien is someone known as a hard taskmaster. Then came the news of the man who built Wipro Infotech, Ashok Soota, quitting the company he co-founded with his Wipro colleagues, MindTree to launch a new one called Beautiful Minds. Now comes news about the best known face among Infosys executives here, Mohandas Pai quitting, somewhat frustrated with the glass ceiling at the top.

Even without the sound bytes, speculation and gossip around them, the three events are different. Wipro is a family-owned firm and the chairman Azim Premji was getting tired of it lagging behind competition. Premji wanted a leaner and meaner leadership and some action. MindTree has been missing targets since 2007-2008 and there were deep differences among the leadership team. One version is that Soota's energy and ambition could not be matched by the rest of the leadership.

Another version is that the conceptual thinking of the founders sometimes clashed with the nuts and bolts of the market economy. And Infosys is undergoing a leadership change. Only two of its founders, S Gopalakrishnan and S D Shibulal, will be left on its board after N R Narayana Murthy retires in August. Pai, who is not a founder, after announcing his resignation left enough sound bytes to let the world know about his discontent. Infosys share prices fell sharply the day Pai quit.

TCS has recently taken over as IT bellwether influencing trends at the Bombay Stock Exchange. Why are IT companies suddenly facing these problems? Corporate captains and bodies like Nasscom have always said that the Indian IT industry has to move from services to consultancy-led work up the value chain. It has been moving, but slowly. Indian techies began with writing codes, doing offshore work at competitive prices. Then they started building platforms that help companies run their business smoothly. Now there are new entrants across the world who handle this kind of work. The Global Information Technology Report 2010-2011 of the World Economic Forum has shown that India's ranking has come down several notches while competitors in Asia have moved ahead.

China is making giant strides. "The IT industry is at a critical juncture of change," notes Vivek Kulkarni, CEO of Brickwork Ratings in Bangalore. He stresses that thrust on technology and value addition are needed for future growth. "Founders have set the vision. Now professionals have to take the work forward," Kulkarni notes. That is what is happening in all these places. Wipro has removed redundancies in its mid-tier management and Infosys is set to make better profits under new leadership. Shibulal, who is expected to be the new CEO is a hard task master too.

However, in MindTree, Soota's exit will be felt, Kulkarni notes. At the same time observers also point at the need for broader changes. "The leadership focus should not be at the top alone. The current context demands organisations to develop leaders at all levels for sustained performance" said Prof P Vijayakumar of the Center for Social and Organizational Leadership, Tata Institute of Social Sciences, Mumbai. Wipro's new structure is expected to have mini-CEOs heading different divisions. Instead of old icons of IT industry, in the coming years we will see a pantheon in all likelihood.


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