The veteran IT leader is held in high esteem and there were fears that after his departure, many employees and clients would also move out of MindTree to join him. Soota, who co-founded MindTree with nine others, is the single largest shareholder in the company with over 11% stake.
Investment bankers are closely watching the developments and awaiting the outcome of the board meeting to be held early this week to determine how the company will move forward. Company officials could not be reached for comment.
Some of the immediate concerns around Soota's departure is if the company will be able to contain the damage and reassure all stakeholders that it is business as usual. Else it could lose business and talent to rivals, who are stepping up hiring to meet increased demand after the downturn, and risk a possible implosion, said bankers. "A lot depends on how quickly the board acts. The earlier the better," said an analyst tracking the developments.
Financial investors, Walden and Nalanda, which hold around 10% each, and Global Technology Ventures with a 6.6% stake are the other large investors in the firm. Among the promoters, Bagchi and Krishnakumar hold around 5% each and S Janakiraman, president and group CEO of product engineering services holds around 2.5%. Bagchi, Krishnakumar and Janakiraman also play a more central role in the company's decision making.
The board could do one of two things-it could elevate Subroto Bagchi to the role of non-executive chairman and find someone to lead the strategic initiatives function that Soota was heading, or move Krishnakumar N, who is currently CEO and MD, to the role of chairman and find a new CEO. Bagchi is not seen as taking an executive role, those familiar with the company said.
The departure of someone of Soota's stature as well as the uncharacterisitic manner in which it was announced- through a personal mail from Soota than a company announcement-has also raised questions about MindTree's flagging performance in recent times. A long-time associate of Soota said differences have been simmering between the members of the founding team for nearly a year, which lead to his eventual exit from the firm he founded and nurtured.
Some of the differences may have been over the company's strategy and positioning as a high-end technology player, with skills in IT services and R&D. "When MindTree was set up in 1999, they replicated the Wipro model of IT services and R&D. But even for Wipro, R&D was a highly fluctuating business. Wipro was able to absorb the impact because it had scale business in IT services," said a former colleague of Soota.
Soota was said to be a strong believer in MindTree's R&D focus, which was also one of the goals of the founding team. There has been a lot of debate within the company itself if it should move from R&D into more of enterprise IT in recent months, said a technology analyst, requesting anonymity.
"Having a 10-member founding team also comes with its own challenges. There is limited ability to attract new talent since most of key positions are with the founders," said a senior IT industry executive.
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