Syntel CEO Steps Down, COO Named As Interim Replacement

Syntel President and CEO Nitin Rakesh stepped down after 30 months in his position and has been replaced on an interim basis by Syntel's chief operating officer.

The Troy, Mich.-based company – No. 38 on the 2016 CRN Solution Provider 500 – has tapped Rakesh Khanna, COO of Syntel since January 2012, to serve as interim president and CEO. Since issuing a $15 special dividend on Oct. 3, Syntel's stock has lost nearly 55 percent of its value and is now trading at its lowest price in more than six years.

"On behalf of our employees, I would like to thank Nitin for his commitment and numerous contributions to Syntel for over a decade, and wish him the best in his future endeavors," Bharat Desai, Syntel's co-founder and chairman, said in a statement.

[RELATED: Syntel CEO: Future Lies In Marriage of IT, Knowledge Process Outsourcing]

Nitin Rakesh's resignation from the role he had held since April 2014 was a personal decision on his part, according to a source familiar with the situation. His resignation was effective Oct. 31, and Syntel disclosed the move Friday. Syntel did not immediately respond to a request for additional comment.

He has been among the channel's most highly compensated solution provider CEOs for the last two years, according to financial filings reviewed by CRN.

Rakesh Khanna joined Syntel in July 2005 as the leader of its banking and financial services business unit, and moved over to the COO role six and a half years later. Syntel reviews its succession plans twice a year, and it was an eventuality that Khanna would move into the top role, according to the source.

"Rakesh [Khanna] has a proven track record of success at Syntel and an in-depth knowledge of the company, our clients and the markets we serve," Desai said. "I am confident that we will continue to serve and exceed the expectations of our clients."

Syntel also promoted former CEO Prashant Ranade from executive vice chairman to co-chairman of the company's board of directors. Ranade joined Syntel's board in June 2007 and preceded Nitin Rakesh as president and CEO, holding the role from February 2010 to April 2014.

"Rakesh [Khanna] has a good understanding of the technology landscape and is well-suited to lead our clients into the digital future to deliver industry-leading growth for Syntel," Ranade said in a statement.

Desai told investors during an earnings call last month that Syntel is dealing with three broad challenges: soft global macroeconomic trends, industry-specific headwinds and regulatory-related uncertainty in key end markets. Syntel's sales fell 5 percent in the most recent quarter to $241.3 million, while the company recorded a loss of $217.3 million due to a one-time repatriation of $1.24 billion of cash.

Nitin Rakesh told investors last month that the uncertainty across global markets and industry segments resulted in longer-than-normal decision cycles on discretionary spending, delayed project starts, and slower- than-anticipated project ramps. Nitin Rakesh singled out a lack of policy clarity in key banking and financial services markets as a driver of volatility in customer investment plans.

Syntel's stock opened Friday down 2.6 percent to $19.38 per share. Syntel's stock was at $42.64 per share prior to the issuance of the special dividend last month, and the company's stock had been trading at more than $38 per share since October 2013.

Nitin Rakesh's first stint at Syntel lasted from 2002 to 2008, during which time he founded the company's business process outsourcing practice and built it into a significant revenue contributor. After four years as CEO of a financial services company focused on exchange-traded funds, Nitin Rakesh returned to Syntel in September 2012 as president of its Americas operation, responsible for nearshoring efforts.

Nitin Rakesh was promoted to the CEO and president role 19 months later.

Nitin Rakesh's departure comes just two weeks after Syntel promoted Anil Agrawal to the role of chief financial officer and chief information security officer. Agarwal has been with Syntel since 2001, and served as acting CFO since November 2015.