CTS

Cognizant executive vice president Mahesh Venkateswaran quits

 

 

 

 

BANGALORE: A Cognizant veteran who reports directly to chief executive officer Francisco D'Souza has resigned, a development that adds to the steady trickle of negative information emanating from a company which used to set the growth pace for the information technology services industry.

The departure of executive vice president Mahesh Venkateswaran is also leading to questions about the company's ability to retain key leaders, especially when revenue growth has slowed. According to several people familiar with the development, Venkateswaran is the third senior executive to leave in less than six months, following long-time executive's chief innovation officer Sukumar Rajagopalan and chief people officer Sankar Srinivasan.

"Executive exits are not unique to Cognizant, but the profile and timing of these departures is worrying," said a person aware of the mood at the company. A Cognizant representative confirmed Venkateswaran's exit, saying "During his nearly 18 years at Cognizant, Venkateswaran has successfully incubated and grown a number of our practices."

Venkateswaran is known to have incubated several multi-billion-dollar businesses for Cognizant, including the fast-growing software testing, manufacturing and retail practices.

"Mahesh (Venkateswaran) is the only offshore leader to report directly to Francisco (D'Souza), so his leaving is causing anxiety within, especially in India," said an executive on condition of anonymity.
In 2011, when D'Souza was looking to incubate a new business to focus on future bets, he handpicked Venkateswaran. Called the Emerging Business Accelerator, the new unit focused on incubating and building new revenue streams in the areas of social, mobile, analytics and cloud known as Smac.

The Smac business led by Venkateswaran is now worth around $500 million (Rs 3,000 crore).

For Cognizant, the strategy of earning revenue from new areas while protecting the traditional cash cow has been a game changer. Rival Infosys too attempted to push its high-end and next generation services termed 3.0, but it didn't go far.

"Cognizant demonstrated how to balance future with present, and people like Mahesh (Venkateswaran) played an important role there," said an Infosys executive.

Company insiders, analysts and executives at rival firms said Cognizant has just hit $10 billion (Rs 60,000 crore) in annual revenue, and there are new realities at that scale.

"One of them (realities) is the challenge to retain top talent and at the same time ensure growth," an analyst at a multinational brokerage firm said.

Last year, Cognizant's revenue outstripped that of Infosys — a company founded more than 13 years before it.

Ever since D'Souza took over in 2007, Cognizant has disrupted the pecking order in Indian IT, attracted and retained the best talent in the industry and has been the only serious rival to Tata Consultancy Services, the country's biggest software company.

But over the past year, some of that sheen seems to be fading. Revenue growth has slowed, especially from key segments healthcare and banking. The company has lowered its revenue forecast by 2.5 percentage points for the year.

"Nobody is writing them off; they are too good to lose their way," said a senior executive at a rival software firm that just lost a large contract to Cognizant. "But they can't take their eyes off India and the leadership based here. From what we understand, there is some disenchantment with the way the power centre has shifted to the US."