Insider vs. Outsider CEO in IT and Engineering Services

Whenever there is a new CEO announcement or a publicized CEO search in IT and Engineering Services, the debate over Insider vs. Outsider CEO hots up. Who has a better chance, an Outsider or an Insider? What does data say about companies’ preference for Insider vs. Outsider CEOs?

We compiled data for new CEO announcements in the last seven years.

Note: This is not an exhaustive list, and some of the names we might have missed.

Some trends from the above data:

•  More Outsiders: More service providers prefer Outsider CEOs than Insider CEOs. From the above sample data, about 30% of new CEOs are Insider vs. 70% Outsider.
• Performance Linked: Service providers which were performing relatively well at the time of the CEO transition prefer Insider CEOs, whereas other service providers prefer Outsider CEOs. For example, Accenture, TCS, and LTTS preferred Insider CEOs.
• Size Doesn’t Matter: Both Insider and Outsider CEO list has service providers of all sizes. The Insider CEO list has large service providers such as Accenture, Capgemini, TCS, and HCL and also mid-tiers such as LTTS and Tata Elxsi. Similarly, the Outsider CEO list has service providers of all sizes, including Infosys Wipro, ITC Infotech, Persistent, etc.
• Outsiders From Bigger Firms: When service providers choose Outsider CEO, the candidates are mostly from service providers who are bigger in size than them.
• Ownership Change: Sometimes, CEO changes are triggered by ownership changes by private equity and corporate M&As. In these cases, they are mostly Outsider CEOs.

Bottom Line: Insider CEO signals career path for senior executives, and Outsider CEO indicates a willingness to change and availability of more CEO-level industry opportunities for performing senior executives. If a service provider is not among the top performers, then CEO is likely to be n Outsider, and if among the top performers CEO is likely to be an Insider. One thing is sure the Outsider vs. Insider CEO debate will continue in our industry!