TCS extends Chandrasekaran's tenure by five years

Tata Consultancy Services (TCS), India’s largest information technology services provider, on Wednesday announced its board of directors had re-appointed N Chandrasekaran as the chief executive officer and managing director (CEO & MD) for five years. This is effective October 6 and is subject to necessary approval of shareholders.

Earlier, Chandrasekaran was appointed CEO & MD for a period of five years from October 6, 2009 to October 05, 2014.

Chandrasekaran managed to grow the company at a scorching pace since he took over in 2009. Earlier, in an interview with Business Standard, he said the growth mindset of the company was the secret to its success.

Under his leadership, the company has been transformed from a $6-billion revenue company to a $13.4-billion one, besides being one of the largest net hires in India Inc, with an employee base of 300,464 as of March 31.

Analysts pointed out that the crucial part of his innings was the fact that he had managed to take the company to new heights when the industry was impacted by one of the worst economic downturns.

“The announcement is on expected lines. When he took over as CEO, it was expected he would do better, but when you look at the track record he has done much better,” said an analyst of a leading multinational brokerage house.

A look at the numbers tells the story. TCS revenue rose from Rs 29,091 crore at the end of September 2009 to Rs 85,933 crore at the end of the first quarter of FY15, a compounded annual growth rate of 24.2 per cent.

The other important parameter has been the company’s market capitalisation, which has increased from $25.4 billion to $81.9 billion. This means it has moved way ahead of competition, too.

In 2009, the company’s market cap was 0.9x that of Infosys. In September 2014, this has increased to 2.4x in value. Similarly, its market cap in comparison to Wipro’s is 3.6x in value against 1.3x in 2009. More importantly, the TCS market cap today is a combination of that of the top three IT players. In October 2009, TCS market cap was Rs 1,20,000 crore, while the next three largest Indian listed competitors’ combined market cap was Rs 2,45,000 crore.

“He has helped the company transform into a more savvy, agile, customer-centric and brand-conscious organisation. What is commendable is, despite the size of the organisation, he has managed to deliver results that are far better than peers in the industry. He has clarity of thought and his re-appointment, though known, re-confirms a better future for TCS," said C K Guruprasad, principal (global technology and services practice) Heidrick & Struggles, a global executive search firm.

Guruprasad said his appointment showed continuity in the organisation that goes well down the line.

"The re-appointment also sends a message down the line that there is stability at the top and that there are no surprises. I think, for the next five years Chandrasekaran should aim to make TCS one of the top three IT services companies globally."