Why Infosys and HCLTech have the longest running CEOs

HCL Technologies Ltd’s C. Vijayakumar and Infosys Ltd’s Salil Parekh are the second-longest running chief executive officers of the top five Indian information technology services companies, their longevity a sharp contrast to the recent leadership churn at the other peers.

Tata Consultancy Services Ltd,Wipro Ltd, and Tech Mahindra Ltd have had new bosses within the last two years, whereas Parekh has been at the helm for more than six years and CVK for nearly eight.

TCS, India’s largest IT services company, entrusted K. Krithivasan with the top job in June 2023 after Rajesh Gopinathan, who had steered the company for slightly more than six years since February 2017, stepped down.

At Tech Mahindra, Mohit Joshi took over as chief executive in December following C.P. Gurnani’s 10-year reign. And Wipro handed the reins to Srinivas Pallia in April this year following Thierry Delaporte’s controversial exit after four years at the helm.

At Infosys, Parekh took over as chief executive in January 2018. He had joined the company from Capgemini, where he worked for more than two decades. In contrast, HCLTech’s Vijayakumar, who has been with the company for three decades, rose through the ranks and took charge as CEO in October 2016.

Both Parekh and CVK are out-tenured by the founder-CEOs of their companies—HCLTech’s Shiv Nadar and Infosys’s N.R. Narayana Murthy.

While Mumbai-based Parekh, 59, is in his seventh year as Infosys boss, US-based Vijayakumar, 56, is in his ninth year as HCLTech CEO. Parekh and Vijayakumar are the second-longest and longest-serving chief executives in their companies’ history.

So what explains their longevity?

Parekh and Vijayakumar have followed contrasting approaches. While HCLTech has been inclined towards software products and acquisitions to drive growth, Infosys has relied on mega deals–worth more than $1 billion–to bolster growth. The lack of mega deals contributed to the ouster of Delaporte from Wipro and Brian Humphries from Cognizant Technology Solutions Corp. Ravi Kumar S. replaced Humphries as CEO in January last year.

Under Parekh’s and CVK’s leadership, Infosys and HCLTech have won their largest deals. Infosys has signed an eight-year agreement with German automotive company Daimler, now Mercedes-Benz Group AG, worth $3.2 billion, whereas HCLTech struck a six-year deal with US telecom company Verizon Communications, that would fetch the Noida-based company $2.1 billion.

While deals were a contributing aspect to the companies’ growth, an analyst said Parekh and Vijayakumar have also brought stability to their companies.

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“Both Salil and CVK have signed 5-year contracts, which sets out a mindset of longevity, loyalty and commitment from the ownership and board," said Phil Fersht, CEO of HFS Research.

“Prior to Salil, Infosys had suffered from real instability caused by Vishal Sikka’s controversial reign as CEO, hence the board was very focused on Salil bringing stability and certainty to the Infosys culture and business," he added. “HCL has been under the leadership of CVK for many years but was recently awarded with a long-term contract due to his deep commitment to HCL and his hands-on leadership."

A race to the top

Another common thread explains the longevity of the two executives, which at least two analysts attribute to their companies’ growth.

“CVK has been serving as CEO for longer than Salil. Look at HCL Tech’s growth performance relative to peers and it will be clear why he has been in the position for so long," said a Mumbai-based analyst on condition of anonymity.

HCLTech outgrew all its peers between 1 April 2017 and 31 March 2024, with its business growing at an average of 9.62% annually. Infosys followed, with a yearly growth rate of 8.92%.

Salil has helped add $4.9 billion and CVK $7 billion in incremental revenue from the start of their tenure until 30 June 2024, per Mint’s analysis.

Also read | Infosys hits new high, ups FY25 guidance. Has Kalki arrived for the IT sector?

Growth was not just in terms of revenue, but also in terms of the pecking order for the two IT services companies.

Within two years after C. Vijayakumar took over as CEO, HCLTech surpassed Wipro as India’s third-largest IT services company in July 2018. This growth came on the back of acquisitions, licensing intellectual properties from those, and then building and selling software products around them to clients.

While HCLTech pipped Wipro, there is a neck-and-neck race between Infosys and Nasdaq-listed Cognizant, which has more than 70% of its employees based in India. As of June, Cognizant and Infosys reported $4.85 billion and $4.7 billion, respectively, in quarterly revenue. (Indian IT services companies follow an April-March financial calendar whereas Cognizant follows a January-December calendar.)

Should Infosys outgrow Cognizant before Parekh’s tenure ends in March 2027, that would be his bragging right. Parekh was given a second term as Infosys’s CEO and managing director by the company’s board in May 2022. His current tenure as CEO ends in March 2027.

Not without challenges

Both these CEOs have also delivered on the sales front.

“At the end of the day, the CEO transition that won out was for the best sales leader to take over and build the next generation sales organization," said Ray Wang, CEO and principal analyst of Constellation Research.

Parekh’s customer focus led Infosys chairman Nandan Nilekani to famously point it out in the founder’s panel in December 2022. “One of the things I like about Salil is he will drop everything and catch a flight to Greenland, if necessary, if he has to close a deal," said Nilekani.

Another reason that ensures Salil and CVK remain in the shareholders’ good books is their company’s share performance. Both Infosys and HCLTech have outperformed the BSE30 index since their current chief executives took charge.

Infosys’s shares have jumped more than two-fold since Parekh took charge, and HCLTech’s shares have gained more than threefold since Vijayakumar took over as CEO.

Also read |Why HCL has some edge over TCS, Infosys

However, the going has not been all that smooth for Parekh and Vijayakumar. Both these leaders face the challenge of declining profitability. Infosys’s operating margin has declined by 320 basis points, and HCLTech’s by 300 basis points, since they took charge. A basis point is a hundredth of a percentage point.

Both companies are positive on giving returns to investors.

Infosys under Parekh has agreed to return 85% of free cash flows to shareholders through dividends and buybacks, while HCLTech has decided to give a minimum payout of 75% of net income cumulatively from 2021-22 to 2025-26 to shareholders.

Also read | With Delaporte gone, can legacy hand Srinivas Pallia steer Wipro through the AI age?