Behind Gopinathan's abrupt exit, simmering tensions

Last week, when Rajesh Gopinathan resigned as the chief executive of Tata Consultancy Services, Tata Sons chairman Natarajan Chandrasekaran accepted his resignation without a demur, indicating that the differences between the mentor and the successor over how India’s largest software services firm was being run had reached an impasse, multiple people close to the situation said, speaking on the condition of anonymity.

 

Issues ranging from certain aspects of Gopinathan’s management style to some of the strategic decisions taken by the company and relative underperformance had become enduring sources of stress and the CEO ultimately might have picked up on the sense of waning enthusiasm for his leadership from the group chairman, these people said.

Gopinathan has steered TCS to grow its quarterly revenue from $4.45 billion at the end of March 2017 to $7.075 billion at the end of the December quarter, an impressive 59% growth.

But Infosys reported a faster growth than TCS in 2020, 2021 and 2022, while Accenture, too, reported higher growth than TCS in 2021 and 2022. Under Gopinathan’s watch, TCS is expected to add $10 billion in incremental revenue between 1 April 2017 and 31 March 2023 (TCS declares its fourth-quarter and full-year numbers on 12 April). But during this same period, Infosys will add at least $8.5 billion in incremental revenue. Put simply: The gap between TCS and Infosys is closing even though TCS, which ended with $25.7 billion in revenue last year, is comfortably ahead of Infosys, which ended with $16.3 billion in revenue.

Accenture, which ended with $61.5 billion in revenue last year, added more than $30 billion in new business in the last six years.