Mid-tier IT services companies hiring top executives from larger peers

They feel this move will help them scale up at a faster pace

Mid-tier IT services companies are increasingly hiring top executives from their larger peers in their bid to scale up faster.  Experience in handling large clients and private equity firms’ preference for professionals with previous work experience in big firms are seen as key factors driving this phenomenon, said industry experts.

Among the big firms, senior executives working in Infosys and HCL Technologies (HCLT) seem to be in demand and many of them have donned the role of chief executive officers (CEOs) in most Indian mid-tier IT firms. 

Even, professionals working in global IT companies like IBM have also joined this bandwagon.

For instance, former Infosys executive Sudip Singh took over as the CEO of ITC Infotech in February this year. Singh was global business unit head for engineering services at Infosys and managing a portfolio of $1.5 billion prior to taking up the new role.

Sources said ITC Infotech, with a revenue of around $300 million, is planning to increase its pace of growth by tapping the high-growth engineering services space, which was one of the major reasons for Singh’s induction.

Similarly, Pune-based Persistent Systems appointed Christopher O’Connor – a former IBM executive – as its CEO in February this year.

“As mid-tier IT companies go to the next level, they seek professionals who will help them to scale up. With expertise in handling lager clients and bigger portfolio, senior professionals from top firms are most preferred,” said Pareekh Jain, founder of Pareekh Consulting. “Also, in mid-tier firms where PE players have substantial stake, they (PE players) are more comfortable with professionals from bigger companies,” he added.

For instance, Baring PE-backed Hexaware Technologies roped in R Srikrishana as CEO after the PE firm picked stake in the mid-tier IT services firm in 2013. Srikrishana was heading the healthcare and infrastructure services verticals at HCL Technologies prior to joining Hexaware.

Similarly, NIIT Technologies’ CEO Sudhir Singh is a former Genpact executive while another mid-tier firm CSS Corp’s chief executive Manish Tandon was an old Infosys hand.    

Experts also said that past success of firms after induction of outside talent is another reason for many companies to emulate this model. For instance, after taking over as CEO of L&T Infotech, Sanjay Jalona had driven the firm to cross the $1 billion revenue mark apart from its successful public listing in 2016. Jalona joined the L&T group firm in 2015 from Infosys where he was heading the manufacturing and engineering services business.

“This trend of Indian mid-tier IT firms hiring senior leaders from tier-I firms is catching up. However, they should ideally opt for internal talent as they better understand the client and culture of the company,” said a senior official at an executive search firm. “It is also to be seen whether they can sustain as mid-tier IT firms go through a phase of consolidation,” he added.

However, Mphasis and Mindtree – the other two prominent mid-tier IT companies – are exceptions to this trend. Private equity fund Blackstone-backed Mphasis has Nitin Rakesh as its chief executive, who joined the firm from Syntel. Similarly, Mindtree has one of its founding members Rostow Ravanan as its CEO and managing director (MD) since 2016.