New Jersey-based Cognizant Technology Solutions is one of the largest IT services companies in India. After a decade of rapid growth, the company underwent large scale restructuring recently. The company had a dream run under CEO and co-founder Francisco D’Souza, from whom Brian Humphries took over last year. In the short period at the wheel, Humphries has focused on giving the company a strategic direction. In an exclusive interaction with THE WEEK, he talked about the restructuring and the growth challenges. Excerpts:
Q/There have been several high profile exits from Cognizant of late.
A/We are focused on returning Cognizant to its position as the IT services industry bellwether. To achieve this, we need a combination of Cognizant veterans and newcomers who can bring in fresh perspectives to our business. That is why I have sought to create a senior leadership team that balances internal promotions with external hires. We decided recently to hire a more senior Indian MD who will join our executive committee. A comprehensive search is under way, and it has seen a lot of interest.
Q/What kind of challenges does Cognizant see in the current business scenario and how do you see things shaping up in the future?
A/We are confident that our industry, geographic and customer segment mix, strong balance sheet, momentum in our digital imperatives, and growing competitiveness allow us to compete well on a relative basis, regardless of the macro environment. While there are certainly demand challenges in some sectors such as travel and hospitality, we believe that the current situation is leading customers to accelerate their shift to digital business models. This secular trend plays directly into our strategy around our four digital imperatives. Companies that proactively manage this crisis will emerge stronger than those that assume an eventual return to business as usual.
Q/Cognizant has been witnessing growth challenges for quite some time. What are you doing to fix it?
A/We are gaining commercial momentum. This is illustrated by our bookings trends, which grew 14 per cent year-over-year in the first half of 2020. North America, which grew more than 25 per cent in the first half, is particularly strong. This momentum speaks to how well clients have embraced our strategy and have responded to our renewed sense of client centricity. It also (illustrates) how our executives and their teams have embraced our focus on growth.
At the same time, we are making noteworthy progress in the digital space with revenue up by 14 per cent in Q2, and 1H 2020 digital bookings up almost 50 per cent year-over-year. Digital is now 42 per cent of our mix. This becomes a virtuous circle as the greater our digital mix, the greater our overall company growth prospects. As digital reshapes business landscapes and competitive environments, Cognizant is focused squarely on four key areas where we believe we have industry leading capabilities, deep industry knowledge and the best global service delivery teams. These are cloud, digital engineering, internet of things, and artificial intelligence and analytics.
Q/How does Cognizant intend to grow—organically or inorganically?
A/Our growth strategy has two parts. First, we are protecting and optimising our core portfolio, which includes increasing efficiency, tooling and automation and delivery optimisation, protection of renewals, strengthening our industry alignment, and scaling our international footprint. And second, we are building leadership positions in the four key digital imperatives I had mentioned earlier. We are investing aggressively in these areas. And as we do so, we expect to accelerate our revenue growth. The two parts of our strategy reinforce each other. It is our core portfolio that has built our strength in the market and that historical strength means that we know how to help clients transition from managing their current legacy state to enabling their digital future.
Q/What has been your approach while hiring local people in overseas markets, particularly in the US?
A/North America is 75 per cent of Cognizant’s revenue and we have a momentum in the region, with bookings up by 27 per cent in 2020. Our customers expect us to have diversity and inclusion in our workforce to represent society at large. As a global company, we are committed to hiring in all geographies. We are building a global delivery network with centres throughout the world that will complement India, which will always remain our major delivery centre and is home to our two lakh talented and engaged colleagues. Building a global delivery network is important because we need to better reflect today’s world of agile development, where solutions are created in a rapid, iterative and flexible manner by having more near-shore and onshore skills, more automation and greater access to talent.
Q/What about campus hiring?
A/We plan to hire 20,000 new graduates in India this year and have strong relationships with major Indian universities. We are also investing in upskilling and reskilling tens of thousands of our employees in newer digital technologies where we are seeing demand above industry averages.