Expleo’s New CEO: A Perfect Resume and Daunting Challenges
The New CEO Has a Perfect Resume
We just learned that Expleo has a new CEO, Rajesh Krishnamurthy that has a perfect resume for Expleo. He is a French citizen of Indian origin. He has held senior roles at Infosys, including one as head of the Energy, Utilities, and Telco division, a major responsibility as Infosys is organized by vertical. Also, Mr. Krishanmurthy also led Infosys Global Consulting.
Expleo Has an Unusual Profile in the Industry
Olivier Aldrin, Expleo’s CEO, is leaving the company after three years at the top. Expleo is an unusual combination in the industry, as it the merger of an ER&D service vendor (the former Assystem Technologies) and a quality assurance (QA) major (SQS). Mr. Aldrin acquired SQS to balance the vertical mix of Assystem that relied only on aerospace and automotive. SQS brought a diversified client base, with financial services at its core. The amalgamation of these two firms looked good from a financial perspective. However, QA and ER&D are activities with little in common, with limited synergies.
Fire-fighting Will Be The Priority
Mr. Rishanmurthy is facing a challenging situation. Expleo’s ER&D operations are under high stress as its two largest clients, Airbus and Renault, are reducing their engineering footprint very significantly. Renault is laying off in its French R&D center and considering outsourcing. Airbus is expecting a drop in activity of 40% during 2020-21 and is reducing its R&D effort.
Adoption of India Is Next on the Agenda
The priority of Mr. Rishanmurthy will be fire-fighting, and finding new clients for the hundreds, if not thousands, of consultants that Airbus and Renault are likely to release. Longer-term, he will need to diversify the client base of Expleo and open up new geos. Alongside this transformation, Expleo’s new CEO will also need to expand the global delivery network of the company.
Legacy SQS adopted India at the core of its delivery center, several years ago, with the acquisition of ThinkSoft. Assystem Technologies has mostly developed a presence in Romania, primarily to accommodate Renault through its Dacia subsidiary. We estimate that, in total, Expleo, has around 3,000 employees located in nearshore and offshore countries, or about 20% of its headcount. Clearly, Expleo has room for expansion in India. The experience of Mr. Rishanmurthy will be a crucial asset in the transformation of Expleo.