N Shivapriya, Mumbai
The Economic Times (
Patni Computer Systems’ search for a new chief executive officer is proving to be a long-drawn and complex affair. Sources said even after several months of hunt, the company has not zeroed in on a professional.
Apart from the inherent challenges involved in finding a candidate capable of managing a listed firm and delivering on a quarterly basis, the process is taking longer because of concern among potential candidates over the impact of a possible change in ownership, a source said. A dispute between Narendra Patni, the CEO, and his two brothers over their stake in the company to financial investors made headlines last year. Ashok and Gajendra Patni were also keen on bringing in a new CEO to revive the company’s fortunes that has lagged peers in recent years.
“Patni has a very conservative outlook. There are a lot of old warhorses in the company. So anybody who comes in should not only be able to address the sales side but also be make changes on the delivery side. Potential candidates would think twice before taking it on, because the risks are higher. If they are not able to make a success of it, their career graph will be affected adversely even in terms of future assignments,” said an executive with a placement firm.
The possibility of an ownership change at a future date may mean that the new CEO’s tenure could be short-lived, giving him less time to prove himself. “Because of this, there is a feeling that the new CEO will also only be ‘cut and paste’ CEO,” said another executive. A mail sent to Narendra Patni’s office failed to get any response. The other directors on the Patni board also refused to comment.
Narendra Patni’s term as CEO comes to an end in December 2008, and the apprehension is that a stake sale could go through after that. Apart from Ashok and Gajendra Patni who hold about 14 percent each, General Atlantic, which holds about 16 percent in the firm, is also keen on exiting. The new investor coming into the company would be the single largest shareholder and could prefer its own candidate for CEO.
Competition for leadership talent is quite acute among software companies. “As much as the IT sector is facing a slowdown, there is still a shortage in the lateral management. So finding a good quality CEO is difficult when there are others waiting in line to get a good guy,” said an IT analyst, who said Patni’s valuation had suffered as a result. Sources in the placement industry also said the company had earlier gone about the CEO search using more than one firm, before it finally gave the mandate to a one reputed firm on an exclusive basis.
Realising the importance of management continuity, some large software firms have also started grooming younger executives for top positions in recent times. Tata Consultancy Services announced a restructuring exercise that decentralises authority and brings global operations under its COO N Chandrasekaran. Cognizant Technology Solutions has appointed 38-year-old Francisco D’Souza as CEO. “Succession plans have become more important now than ever before because there is market pressure and there is pressure from the organisational side as well. The existing management has completed a full cycle — new blood needs to come in,” said R Suresh, managing director of executive search firm Stanton Chase.
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