Tata Consultancy Services (TCS) has appointed K Krithivasan as CEO designate with effect from March 16, replacing the outgoing CEO Rajesh Gopinathan, in one of the biggest developments in the Indian IT industry.  Gopinathan who will stay with the company till September 15 to provide transition and support to his successor.

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Krithivasan has been with TCS since 1989. Prior to becoming the CEO of the company, he was President and Global Head of Banking, Financial Services, and Insurance (BFSI). Under his mentorship, the BFSI was highly profit-making component for TCS, generating 35-40 per cent of its revenue.  Krithivasan has won praise from all quarters and outgoing CEO Gopinathan also spoke highly of him.  Despite having a highly acclaimed record in TCS, Krithivasan is taking over the company at a highly testing time. At the helm of affairs in the company, he will face situations where he has to swim against the current. His impeccable record notwithstanding, the test his real worth starts now. 

The development at the top helm of TCS comes at a time when Indian IT companies have been struggling against tight margins owing to higher employee expenses in a bid to tackle elevated levels of attrition despite robust demand.  Zeebiz.com takes you through some of the factors that can put Krithivasan to the test in a volatile global market.    

Slowdown in US and European markets

TCS's finances are in a healthy state. Its biggest markets for outsourcing are the US and Europe, where the economy is highly volatile at present. 

Attrition rate

Attrition rate is quite a big problem in TCS. For the quarter ended December 31, 2022, the attrition rate at the company was 21.3 per cent, as the lost 2197 employes during the period. 

 Krithivasan has to stop the rot and keep attrition rate in check.

Margin pressure on earnings

Marging pressure in IT companies is related to higher levels of attrition. It's increasing employee costs and thus resulting in more margin pressure. TCS's attrition rate in the December quarter was slightly better than in Q2. 

The company expected that it would ease in coming months. 

But this stays as one of the biggest challenges for Krithivasan.  

2024 US election

Political rhetoric works best when the economy of a country is going through a lean path and people feel emotionally drained. Donald Trump's America First policy rhetoric against outsourcing ahead of the 2016 US Presidential poll helped him a great deal garner votes and become president. He is one of the Republican contenders for the 2024 Presidential Election. At a time when the sitting president Joe Biden is failing in putting the US economy back on track, Trump can not only become the Republican Presidential candidate, but can also win the 2024 election. 

His build-up to the polls and victory can again highlight the importance giving jobs to locals and cut down on outsourcing work. Such a changed regime will surely hit TCS's business.      

Leading TCS at current times is like walking on the edge of a sword. 

Krithivasan, however, has the challenge as well as opportunity to come off with flying colours.  

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