Mid-sized IT firms poaching senior executives from larger rivals to gain management bandwidth

Mid-sized IT firms poaching senior executives from larger rivals to gain management bandwidth

Mid-sized technology services companies are poaching senior executives from larger rivals, forming a new partnership forged by ambition for rapid growth.

The smaller companies are gaining management bandwidth with the skills to handle scale while the executives are handed powers they may not have had in a larger organisation.

The best example of such a trend is Ashok Vemuri, who moved from Infosys, India’s second-largest software exporter, to iGate, a firm that was one-sixth its size. As a member of the board and the head of key units, the 45-year-old may one day have become CEO of the Bangalore-based company, but there was no guarantee. Therefore Vemuri settled on a trade-off which allows him to conceptualise and implement his strategy in a way which he could not have done if he had continued at Infosys.

“At every milestone – be it $5 million, $10 million or $50 million – a company needs a different escape velocity to move into the next orbit. But the kind of escape velocity that is needed to take it to the next orbit from a revenue size of $400-$500 million is very different,” said NS Parthasarathy, co-founder and president at Mindtree, which has hired proactively from larger peers.

Earlier this month, it hired Ramesh Pillai, an executive who spent about 13 years in HCL Technologies and was heading segments such as automotive, aerospace and medical devices globally, to lead its hi-tech vertical. A month ago, it hired Paul Gottsegen from Infosys to lead its marketing and strategy.

Similarly, another mid-sized IT company, NIIT Technologies, hired senior vice-president Sudhir Chaturvedi from Infosys as COO because of his experience across verticals and in scaling the businesses within Infosys to over $1 billion. Chaturvedi will help NIIT in its ambitions to grow from revenue of around 2,000 crore now to $1 billion by 2018.

Despite analysts earlier questioning the future of mid-sized IT companies, they have proven themselves with consistent financial performance and marquee customers. These companies are also hungry for growth and are eager to get to the billion-dollar revenue club.

“Mid-sized IT players have become more credible and they are now of a size where they can afford to pay top-dollar salaries,” said CK Guruprasad, principal at executive search firm Heidrick & Struggles. “The leaders joining them have more often than not been with the large IT service providers for 10-12 years, from the time they were the size of these mid-sized companies. So they come with valuable perspective.”

The challenge was what prompted Raj Mamodia, who was part of Cognizant’s global leadership team, to quit and join Collabera, a $450-million IT and professional services company, as CEO. Mamodia is now restructuring the business and thinking through a strategy that will differentiate and grow Collabera’s IT services.

“The clincher for me was the quality of the challenge. But you have to have the mental preparedness for it because it is a lot of work. Rewards are usually tightly coupled to performance,” said Mamodia. “For me it was certainly attractive, and I know for many of my industry peers, it would be the same.”

Mindtree’s chief people officer, Ravi Shankar, who has been instrumental in some of its recent hires and who himself joined a year ago from HCL Technologies, said the biggest motivation for the new leadership joining the company is the potential to build something and leave a mark.

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