Indian outsourcing: Heads roll in founder-run firms

Board-level reshuffles point to harsher offshoring climate...

Some of those who founded Indian outsourcing firms 15 to 20 years ago, in their forties, are now succumbing to the brutal post-recession changes that are gripping the industry, says Saritha Rai.

Few foresaw the period of intense upheaval that has struck India's founder-run outsourcing companies over the past few weeks. Several of these firms are restructuring their top leadership to strengthen their hierarchy in an industry where status is as important for negotiating large deals as it is for bragging rights.

On the day Indian outsourcing giant Wipro announced underwhelming quarterly results, chairman Azim Premji fired the two joint CEOs of its software services business. Wipro veterans Suresh Vaswani and Girish Paranjpe, it emerged, were replaced for not keeping pace with rivals' performance and not reading industry trends correctly.

Wipro, the third-largest Indian outsourcing firm after Tata Consultancy and Infosys Technologies, is in danger of losing its spot to Cognizant Technology Solutions. Cognizant is disturbingly close and currently growing at a faster pace than Wipro.

Indian outsourcing hub Bangalore is inevitably the setting for many of the present boardroom upheavals

Indian outsourcing hub Bangalore is inevitably the setting for many of the present boardroom upheavals
Photo: Bharath Achuta Bhat

A few days later, there was tumult at medium-sized outsourcing firm MindTree. Its co-founder and executive chairman Ashok Soota quit and emailed a media statement saying he would announce a new venture soon. The move left the other founders scrambling to explain his departure.

Infosys management changes in prospect

Meanwhile at Infosys Technologies, where recent earnings have lacked the shine of its glory years, a multilayer restructuring is imminent. Founder-chairman Narayana Murthy is due to retire in August when he turns 65.

Apart from a new chairman, the firm is scheduled to do its predictable founder reshuffle to elevate yet another founder, SD Shibulal, to CEO to replace Kris Gopalakrishnan. A reorganisation of its next layer of leadership is also in the offing.

In India's $60bn outsourcing industry, founder-run companies in particular...