Bengaluru-headquartered Infosys, India’s second-largest IT services company by revenue, has faced a similar predicament with Nasdaq-listed Cognizant Technology Solutions Corp.
In January 2023, when Ravi Kumar S. took over as chief executive officer (CEO) of Cognizant, at least 10 ex-Infosys executives followed—seven joined directly from Infosys in various leadership positions, and three served stints upwards of 10 months in other companies. Kumar, too, was president at Infosys when he exited the company.
Top-level exodus from Infosys in the past 24 months has coincided with the company reporting its slowest growth since Salil Parekh was appointed its CEO in January 2018. Infosys’s full-year revenue grew 1.9% to $18.6 billion for the year ended March 2024.
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Among those who joined Tech Mahindra are Richard Lobo and Nitesh Aggarwal, who joined the Pune-headquartered company as its chief people officer (in January 2024) and chief strategy officer (July 2024), respectively.
At Cognizant, Rajesh V. joined as chairman and managing director for Cognizant India in September this year, and Ravi Kuchibhotla joined as chief strategy officer in July 2024.
For now, Infosys is not particularly worried. “In terms of leadership, we are indeed fortunate to have a good team and a very strong set of leaders within the company and over last several quarters and even [further back], those who have taken on many of the new positions are people who have been in the company, have developed their skills there,” Parekh said in the company’s post-earnings press conference on 11 January 2024.
Even in a conversation with Nomura analysts on 12-13 February, the company’s management noted it has a deep leadership bench and all the talent has been internally filled, according to a note dated 19 February 2024 from Nomura analysts Abhishek Bhandari and Krish Beriwal.
Top-level exodus from Infosys in the past 24 months has coincided with the company reporting its slowest growth since Salil Parekh was appointed its CEO in January 2018.
To be sure, both Kumar and Joshi left Infosys after Salil Parekh was handed a second term as CEO in May 2022, making some analysts believe that chances of getting top jobs at the company were limited.
Kumar and Joshi have the difficult job of turning around their companies’ revenues. While Cognizant saw its revenue slip 0.39% in 2023 to $19.4 billion, Tech Mahindra’s revenue declined a sharp 5% to end with $6.3 billion in FY24.
Executive search firms credit the movement to the credentials and relationships built by Kumar and Joshi.
“Infosys is experiencing significant attrition at leadership levels, which in my view can be attributed to two exceptional leaders—Ravi Kumar and Mohit Joshi. Their leadership acumen is evidently attracting talent from Infosys,” said Ritu Sethi, partner – technology for outsourcing and offshoring at ABC Consultants.
“It’s also worth noting that Infosys is losing talent, particularly in the BFSI and cloud & infrastructure verticals, to Cognizant, as Ravi and Mohit played a pivotal role in developing these sectors respectively during their tenure at Infosys,” Sethi added.
Another executive at a New-York based executive search firm who spoke to Mint on condition of anonymity, echoed a similar sentiment. “As people grow senior within an organisation, their loyalty is not to the brand, but to the people they have worked with,” this executive said, adding that these exits are a cause of concern for Infosys.
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“Infosys must be worried because within the IT services business, clients will not appreciate the lack of continuity,” this executive said, adding that clients are used to a certain style when they work with a senior leader and the same standards won’t apply if a new person takes over. “When a senior executive leaves, a team follows these people and that adds to the worry,” the executive added.
Top-level talent switching allegiances at some of the country’s top software services companies also puts in question the applicability of non-compete clauses.
Infosys in its annual filing to the US Securities and Exchange Commission or 20-F, for the financial year ended March 2023, gave out a list of companies it considered as “competing businesses”. This list named eight organisations, including Tech Mahindra and Cognizant.
However, Infosys has not publicly announced whether its executives can work in those companies and the number of days after their employment with Infosys has elapsed that they can join such companies.
ABC Consultants’ Sethi says the enforceability of these non-competes is still a work in progress.
“The enforcement of the non-compete clause is still a work in progress, and organizations are taking steps to implement it. However, fully enforcing the clause in both letter and spirit seems like a long journey ahead, as we operate in an open market where companies will continue to attract and retain talent from rival firms to continue the business momentum,” said Sethi.
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The acrimony over non-compete clauses comes after Bengaluru-based Wipro Ltd had alleged a breach of contract when two of its top executives had joined Cognizant.
Wipro had initiated legal action against two of its former executives—Mohd Haque and Jatin Dalal—in December 2023 and September 2023 respectively. Wipro had alleged that the two executives joined a rival firm before a ‘cooling off’ period. Both cases are now settled.
Currently, Haque and Dalal are Cognizant’s chief commercial officer for the Americas region and chief financial officer, respectively.
“Every company has these clauses but they are not enforceable and only have harassment value,” said the second search firm executive cited earlier.
