Outsider CEOs, Remote Leadership Haven't Found Favour With India's Global IT Companies

Two other important factors are equally responsible and relevant in this context: one, that the Information Technology (IT) sector in India has not had much luck with outsider CEOs and two, remote leadership, where the CEO is based outside India, has also not been successful. 

“In fact, the two factors are interrelated and would be the key reasons for the under-performance of the company. Take the case of Tata Consultancy Services (TCS). Over the years, it has had reasonably stable leadership and good performance with homegrown CEOs,” said Rahul Mishra, Professor of Strategy, IILM Institute of Higher Education.

Insider Vs Outsider

The debate on whether an insider or an external CEO is more effective and better is not new. While the jury is still out on this, it seems to be a truism that outsider CEOs have not lasted long in Indian IT companies. 

Apart from Delaporte, Brian Humphries, the former CEO of Cognizant Technology Solutions, was also abruptly asked to leave just a little over a year back. Again, in 2017, outsider Vishal Sikka, even though an Indian expat who spent his time till college in India, lasted only three years as the CEO of Infosys Ltd. 

Delaporte, who was based out of Paris, helmed Wipro for four years and Humphries at Cognizant for three years. And, both of them departed much before the end of their tenures. There are some common threads in the above three cases. 

One of the fundamental reasons seems to be the discomfort felt by the board or some members of the board with the CEO. 

For example, in Delaporte's case, towards the later part of his tenure, it has been reported that his growth plan did not resonate with Chairman Rishad Premji. And, Infosys co-founder NR Narayana Murthy crossed swords with Vishal Sikka on the latter’s high compensation. Also, almost all the Cognizant board members were unhappy with its poor financial performance under Humphries.  

Another key factor putting external CEOs under pressure is that they fall foul of the culture and people in the organisation. It is clear that this was particularly relevant in the Wipro and Infosys cases. At the latter, Sikka was the first non-founder CEO after SD Shibulal. The current episode in Wipro reflected the difficulty of changing a legacy company. 

Close to at least half a dozen senior executives left Wipro in what was widely seen over differences with Delaporte. In both cases, the dominant culture of the companies was different from the one that the CEOs came from or tried to instill. Changing mindsets and culture, which can have you for breakfast, is not an easy task as the two realised.

Remote Leadership 

In this age of technology, hybrid working and mature team management, remote leadership by CEOs, who are away from their headquarters, should not be a difficult task. However, in two of the above instances at Infosys and now, Wipro, it clearly did not work.

This despite the fact that for Wipro, 61 per cent of its total revenue in 2023 was from the Americas, about 28 per cent from Europe and APMEA (Asia Pacific Middle East and Africa) made up the balance. 

If we take another metric, offshore revenue was 59.8 per cent of total revenue and onshore the rest. With employees present in 66 countries across six continents and comprising 144 nationalities, Wipro is without doubt a global firm from India. 

Similarly for Infosys over the last six years, the Americans accounted for about 60 per cent of the revenue, Europe around 25 per cent and the balance came from the rest of the world. India accounted for only 2-3 per cent of global revenues. Therein lies the paradox: non-resident (non-India-based) CEOs were clearly not able to manage effectively from overseas even when almost all the clients were outside India. 

Of the many reasons for this, one critical factor was that both companies were at a crossroads in their history and growth trajectory. While Infosys was transitioning for the first time from a non-founder CEO, Wipro embarked on a worldwide complex restructuring exercise.

In March 2024, Thierry Delaporte wrote an article in Harvard Business Review titled, “From Alpha to Adaptive: A New Breed of Leaders is Helping Organizations Navigate In An Uncertain World.” 

“Adaptive leaders question and reassess their efficacy and output, tweaking and adjusting to meet evolving needs. This management style prioritizes individual resilience for collective progress, while focusing on growth and value. It enables people, shares successes and failures, and takes the entire workforce along, not just accommodating but also relying on individuals at every level of the organization,” he wrote

Unfortunately, the right formula did not work for Wipro and Delaporte. 

In the final analysis, irrespective of whether the companies took the right decision that led to the CEO exits, perhaps, they forgot an important aspect: How to do it? 

Taking firm decisions is the hallmark of a good company. Doing it with dignity is the hallmark of a successful company. 

(The writer is an independent journalist. Views expressed are personal.)