Cognizant Technology Solutions

From Wikipedia, the free encyclopedia
Jump to: navigation, search
Cognizant Technology Solutions
Type Public
NASDAQ-100 Component
S&P 500 Component
Industry IT services, IT consulting
Predecessor(s) Dun & Bradstreet
Founded 1994
Founder(s) Kumar Mahadeva
Headquarters Teaneck, New Jersey, United States
Area served Worldwide
Key people John E. Klein (Chairman)
Francisco D'Souza (CEO)
Services IT, business consulting and outsourcing services
Revenue Increase US$ 6.12 billion (2011)[1]
Operating income Increase US$ 1.13 billion (2011)[1]
Profit Increase US$ 883 million (2011)[1]
Total assets Increase US$ 5.50 billion (2011)[1]
Total equity Increase US$ 3.95 billion (2011)[1]
Employees 150,400 (2012)[1]

Cognizant Technology Solutions Corp. is an American multinational provider of custom information technology, consulting and business process outsourcing (BPO) services. It is headquartered in Teaneck, Bergen County, New Jersey, USA. Cognizant is included in the NASDAQ-100 and the S&P 500 indices.

Originally founded as an in-house technology unit of Dun & Bradstreet in 1994, Cognizant started serving external clients in 1996. Cognizant's IPO was launched in 1998, after a series of corporate splits and restructures of its parent companies. During the dot com bust, it grew by accepting the application maintenance work that the bigger players were unwilling to perform. Gradually, it ventured into application development, complex systems integration and consulting work.

Cognizant saw a period of fast growth during the 2000s, becoming a Fortune 500 company in 2011.[2] In 2011, the Fortune magazine named it as the world's third most admired IT services company after Accenture and IBM.[3]


[edit] History

The company that is now called Cognizant has its roots in The Dun & Bradstreet Corporation, an India-based joint venture between Dun & Bradstreet (76%) and Satyam Computers (24%).[4] Srini Raju was the CEO of this company established in 1994.[5] Kumar Mahadeva played a major role in convincing D&B to invest $2 million in the joint venture. DBSS was set up as an in-house technology unit, and focused on implementing large-scale IT projects for the D&B businesses. In 1996, the company started pursuing the Y2K-related projects, and won two large accounts outside of D&B: Northwest Airlines and Aetna. It put in one of the lowest bids for a Y2K-compliance project for Pacific Exchange, and delivered the work a month before the May 1997 deadline.[6]

In 1996, Dun & Bradstreet (D&B) spun off several of its subsidiaries including Erisco, IMS International, Nielsen Media Research, Pilot Software, Strategic Technologies and DBSS, to form a new company called Cognizant Corporation. Three months later, in 1997, DBSS was renamed to Cognizant Technology Solutions. In July 1997, D&B bought Satyam's 24% stake in DBSS for $3.4 million.[4][7] The headquarters were moved back to the United States, and in March 1998, Kumar Mahadeva was named the CEO.[8] Operating as a division of the Cognizant Corporation, the company mainly focused on Y2K-related projects and web development at this stage.[9]

In 1998, the parent company Cognizant Corporation was split into two companies: IMS Health and Nielsen Media Research.[10] After this restructuring, Cognizant Technology Solutions became a public subsidiary of IMS Health. In June 1998, IMS Health partially spun off the company, conducting an initial public offering of the Cognizant stock. The company raised $34 million, less than what the IMS Health underwriters had hoped for. The money was earmarked for debt payments and upgradation of the company's Indian offices.[9]

Kumar Mahadeva decided to reduce the company's dependence on Y2K projects: by Q1 1999, 26% of company's revenues came from Y2K projects, compared to 49% in early 1998. Believing that the $16.6 billion ERP software was saturated, Mahadeva decided to stay away from the large-scale ERP implementation projects. Instead, he focused on applications management, which accounted for 37% of Cognizant's revenue in Q1 1999.[6] Cognizant's revenues in 2002 were $229 million, and the company had zero debt with $100 million in the bank.[9] During the dotcom bust, the company grew by taking on the maintenance projects that the bigger companies did not want.[11]

In 2003, IMS Health sold its entire 56% stake in Cognizant, which instituted a poison pill provision to prevent hostile takeover attempts.[9][12] Kumar Mahadeva resigned as the CEO in 2003, and was replaced by Lakshmi Narayanan.[13] Gradually, the Company's service portfolio has expanded to IT services, BPO and business consulting. Lakshmi Narayanan was succeeded by the Kenya-born Francisco D'Souza in 2006. Cognizant saw a period of fast growth during the 2000s, appearing in the Fortune magazine's "100 Fastest-Growing Companies" list for nine consecutive years from 2003 to 2011.[14][15] Due to strong competition from Accenture and IBM, Cognizant had to offer lower prices as a differentiator in the early 2000s. To overcome this problem, in the late 2000s, it decided to venture into higher-end technology consulting like these companies.[9]

[edit] Acquisitions

Company acquired Country Date Business Reference
Zaffera United States USA September 2011 SAP Consulting [16]
CoreLogic India India July 2011 Mortgage processing [17]
Galileo Performance France France June 2010 Consulting related to the measurement, management and continuous optimization of IT system performance [18]
PIPC Group United Kingdom UK May 2010 Program & Project Management Consulting [19]
UBS India Service Center India India October 2009 Business process outsourcing, industry research [20]
Pepperweed Advisors United States US 8 September 2009 Business Consulting, Program Management [21]
Active Intelligence Canada Canada February 2009 Consulting, implementation and support services for Oracle Retail Merchandising, Planning and Optimization suite [22]
Strategic Vision Consulting United States US June 2008 Business Consulting for media and entertainment companies [23]
marketRx United States US 16 November 2007 Life Sciences Analytics, healthcare KPO [24]
AimNet United States US September 2006 IT infrastructure services [25]
Fathom Consulting Canada Canada April 2005 Telecom & Automotive IT Services [26]
Ygyan Consulting India India February 2004 SAP consulting [27]
Infopulse Netherlands Netherlands December 2003 IT services [28]
Aces International United States US April 2003 Siebel CRM consulting [26]
American Express Travel-related Services account from Silverline Technologies United States US Sep 2002 Financial services [29]
UnitedHealthcare Ireland Limited Republic of Ireland Ireland June 2002 Healthcare services (a subsidiary of the UnitedHealth Group) [30]

[edit] Services

Cognizant provides information technology, consulting and BPO services. These include business & technology consulting, systems integration, application development & maintenance, IT infrastructure services, analytics, business intelligence, data warehousing, CRM, supply chain management, engineering & manufacturing Solutions, ERP, R&D outsourcing, and testing solutions.

In 2011, the company's revenue from IT services was split roughly evenly between application development and application maintenance. Its business process outsourcing unit leans towards "higher-end" services i.e. work that involves domain knowledge and skills, such as legal services or healthcare claims processing rather than simple voice-based support services.

In the 2012 earnings announcements, the CEO Frank D'Souza categorized the company's service offerings in three groups: Horizon 1 (application development and maintenance), Horizon 2 (BPO, IT Infrastructure Services & business consulting) and Horizon 3 ("SMAC" - Social, Mobile, Analytics and Cloud).[31] In May 2012, the Horizon 1 services accounted for around 75% of the company's revenues, and Horizon 2 services about 15%.

[edit] Business model

Cognizant's offshore delivery center in Chennai

Like many other IT services firms, Cognizant follows a global delivery model based on offshore software R&D and offshore outsourcing. The company has a number of offshore development centers outside the United States, mainly in India.

In its early years, Cognizant gained business from a number of American and European companies with the help of the D&B brand. The company's senior executives envisaged it as a firm which provided high-end customer services on-par with the six contemporary major system integrators (Accenture, BearingPoint, Capgemini, E&Y, Deloitte and IBM), but at lower prices.[32]

In order to deal with the fierce competition from the Indian IT service companies and the major American system integrators, Cognizant decided to focus more on developing deeper relationships with existing customers than on acquiring new customers. The company resorted to what it calls a "two-in-a-box" engagement model: its US and Europe-based leaders (often from consulting backgrounds) manage the customer relationships, while the India-based managers oversee offshore delivery services.[33] The managers who were geographically closest to the customers were given more power and responsibility. However, the time zone differences forced the customer-facing managers to work late in nights in order to resolve issues with the India-based teams. In order to solve this problem, the company instituted another scheme, in which the responsibility was divided equally between the onsite and the offshore managers.[32] In the late 2000s, the company started experimenting with what it calls the "three-in-a-box" model, which adds a business consulting layer to its "two-in-a-box" model (as opposed to a separate concern).[34]

Compared to other major IT services firms, Cognizant has a heavy focus on a few verticals.[35]

[edit] Offshoring and hiring in the U.S.

Cognizant is among the Top 10 companies receiving H-1B visas to bring highly skilled immigrant workers to the United States. The company has been steadily increasing its U.S. work force. In January 2011, the company announced plans to expand its U.S. delivery centers including a new 1,000-person facility in Phoenix, Arizona.[36] In February 2011, Cognizant said it had 60 full time recruiters actively hiring in the U.S.[37]

In 2009, an investigation by the US Department of Labor (DoL) found Cognizant in violation of the H-1B provisions of the Immigration and Nationality Administrative Act. DoL found that 67 of its workers hired under the H-1B program were underpaid. According to Cognizant, this was due to unintentional administrative errors; the DoL investigation revealed that Cognizant had achieved 99.7% compliance in its management of H-1B visa-related issues.[38] The company paid $509,607 in back wages to the 67 employees. No fines or visa restrictions were imposed since DoL did not discover any willful violations. Joseph Petrecca, the director of the Wage and Hour Division's Northern New Jersey District Office praised the company for taking immediate steps to correct the violations, and stated, "This level of cooperation sets a standard for others in the industry."[39]

[edit] Operations

[edit] Geographies

In addition to its headquarters and delivery center in Teaneck, N.J., Cognizant has five additional delivery centers in the United States of America: Bentonville, Arkansas; Bridgewater, New Jersey; Chicago, Illinois; Holliston, Massachusetts; and Phoenix, Arizona. The company has more than 140,000 employees globally, of which over 100,000 are in India across 10 locations with a major chunk in Chennai. The other centres of the company are in Bangalore, Coimbatore, Gurgaon, Hyderabad, Kochi, Kolkata,[40] Mangalore (CoreLogic), Mumbai and Pune. The company also has local, regional and global delivery centers in the UK, Europe, China, The Philippines, Canada, Argentina, and Mexico. The leadership is mainly based in the United States.

[edit] Business Units

Cognizant is organized into several verticals and horizontal units. The vertical units focus on specific industries such as Banking & Financial Services, Healthcare, Manufacturing and Retail. The horizontals focus on specific technologies or process areas such as Analytics, BPO and Testing. The horizontal and the vertical units are often further sub-divided into sub-units. Both horizontal and vertical units have business consultants, which together form the organization-wide Cognizant Business Consulting (CBC) team. The CBC members are also involved in business development and business analysis for the IT services projects. Besides these, there are several other corporate teams such as Finance, Immigration, Legal and Marketing.

According to the 2011 figures, the major portion of the Cognizant revenues comes from the clients in the Financial Services (42.3%) and Healthcare (25.9%) industries. Other substantial revenue sources include clients from Manufacturing, Retail & Logistics (18.6%) and Communications, Information, Media & Entertainment and Technology (13.2%) industries. By geography, the most of the revenue is derived from North America (77.2%) and Europe (19.2%).[41]

[edit] Corporate affairs

[edit] Marketing and branding

Cognizant has used its American incorporation to differentiate itself from the Indian IT services providers. In 2010, some analysts argued that this might have pricing implications for the company's consulting business, since Indian IT services providers are identified with lower prices.[34]

The company's flagship customer conference is Cognizant Community—sometimes simply called Community. It is usually held in the spring in the United States and in the fall in Europe. The summit, which features notable keynote speakers in the world of business, technology, economics and even adventure sports, has been praised as "a model industry event".[42]

[edit] Finances

Cognizant was listed on NASDAQ in 1998 and moved to the NASDAQ-100 Index in 2004. After the close of trading on 16 November 2006, Cognizant moved from the mid cap S&P 400 to the S&P 500. The company claims to be in excellent financial health, reporting over $2.2 billion in cash and short term investments for the quarter ending 30 June 2011.[43]

[edit] Corporate Social Responsibility

Cognizant's Delivery Center in Kolkata

Cognizant's philanthropic efforts are conducted through the voluntary efforts of Cognizant employees and the financial and administrative support of the Cognizant Foundation, which is its corporate social responsibility (CSR) arm.[44][45] Registered in March 2005 as a "Charitable Company" under the Indian Companies Act, the Cognizant Foundation aims to helps "unprivileged members of society gain access to quality education and healthcare by providing financial and technical support; designing and implementing educational and healthcare improvement programs; and partnering with Non-Government Organizations (NGOs), educational institutions, healthcare institutions, government agencies and corporations".

Cognizant's has a grassroots corporate social responsibility project called Outreach, for which Cognizant's employees volunteer to support schools and orphanages.[46][47]

At the 2011 Maker Faire, the company announced plans to fund a Maker Space at the New York Hall of Science, a Making the Future after-school program and a partnership with Citizen Schools to promote STEM education in the United States.[48][49]

[edit] Environmental record

Cognizant's sustainability efforts include a Go Green initiative launched in 2008 focused on energy conservation, recycling, and responsible waste management.[50] In October 2011, Newsweek magazine ranked Cognizant 16th among the 500 largest publicly traded companies in America, in its annual Green Rankings.[51]

[edit] Culture

Cognizant employees stand outside the office building after an evacuation prompted by mild tremors in Kolkata

Cognizant has a diverse and geographically dispersed workforce, operating in different timezones. In 2011, the company director John Klein described its culture as "result-oriented" and "transparent".[52] External consultants have described Cognizant as focusing more on maintaining customer relationships than on aggressive sales.[34] R Chandrasekaran, the company's President and MD, once described its mantra as "Keep the customer happy".[5]

The heads of the vertical units in the company have CEO-like functions and power, when it comes to their units.[5] The senior executives have described the company as a "flat organization" on more than one occasion.[11][52] However, the CEO Lakshmi Narayanan has clarified that the phrase has a "different connotation" in Cognizant: it means a place where even a new employee cares about the company's success as much as the CEO does, has "great ideas" and believes that the customer cares about "our success as we do about theirs".[11]

The Company has been criticized as "conservative", when it comes to acquisitions. However, the senior leader R Chandrasekaran has stated that the company avoids larger acquisitions in order to preserve its culture and manage the acquisitions easily.[53]

Differential performance rewards are a part of the company's culture.[34] In 2012, Cognizant gave 200% of the variable salary components to top performers.[54]

Cognizant invests a substantial amount of money into training. All learning programs are conducted through Cognizant Academy, the in-house training center. The learning programs include e-learning, classroom training programs, external certifications and other role-based training (including executive training). In addition, the associates can undergo management-specific training at partner universities and colleges. The Company's intranet portal is known as "Cognizant 2.0" ("2.0" as in Web 2.0) or "C2", and includes blogs, project management tools and knowledge management applications.[33][55]

[edit] See also

[edit] References

  1. ^ a b c d e f "Cognizant Reports Fourth quarter and Full Year 2011 Results". Cognizant Technology Solutions Investor Relations. Retrieved 27 June 2012.
  2. ^ "Cognizant joins the Fortune 500 club". rediff. 6 May 2011. Retrieved 27 June 2012.
  3. ^ "World's Most Admired Companies (Information Technology services), 2011". Fortune. Retrieved 27 June 2012.
  4. ^ a b "No modest ambitions for Cognizant". Express Computer. 8 October 2011. Retrieved 27 June 2012.
  5. ^ a b c Swati Anand & Ishan Srivastava (6 November 2010). "'Cognizant is like a $4-billion tech startup'". Times of India. Retrieved 27 June 2012.
  6. ^ a b Silvia Sansoni (14 June 1999). "The contrarian"]. Forbes.
  7. ^ "Cognizant back in search of Satyam". Business Standard. 4 April 2009. Retrieved 27 June 2012.
  8. ^ Kumar Mahadeva quits as Cognizant chief
  9. ^ a b c d e International Directory of Company Histories, Vol.59. St. James Press, 2004.
  10. ^ "Dun & Bradstreet Spinoff Will Split in Two". The New York Times. 16 January 1998. Retrieved 27 June 2012.
  11. ^ a b c Rasheeda Bhagat (9 February 2012). "Cognizant rising by Chennai beach". The Hindu. Retrieved 27 June 2012.
  12. ^ IMS sees some positive impact from Cognizant sale by Eric Auchard. Rediff, 16 November 2002 | 1149 IST.
  13. ^ "Cognizant founder steps down". The Hindu Business Line. Retrieved 27 June 2012.
  14. ^ Anne VanderMey (14 September 2011). "Fastest-growing: 16 all-stars". Forbes. Retrieved 27 June 2012.
  15. ^ "Cognizant in Fortune 500". Fortune. Retrieved 27 June 2012.
  16. ^ "Cognizant buys Zaffera,a US SAP consulting Company for an undisclosed value". The Economic Times. 28 September 2011. Retrieved 27 June 2012.
  17. ^ Suparna Goswami Bhattacharya (27 July 2011). "Cognizant to acquire CoreLogic’s Indian business". DNA. Retrieved 27 June 2012.
  18. ^ "Cognizant buys Paris-based Galileo Performance". Business Standard. 18 June 2010. Retrieved 27 June 2012.
  19. ^ "Cognizant acquires PIPC". The Economic Times. 10 May 2009. Retrieved 27 June 2012.
  20. ^ "Cognizant acquires India unit of UBS for $75m". The Times of India. 16 October 2010. Retrieved 27 June 2012.
  21. ^ "Cognizant buys Pepperweed Advisors". The Hindu. 9 September 2009. Retrieved 27 June 2012.
  22. ^ Chandra Ranganathan (11 February 2009). "Cognizant acquires Canada consulting firm Active Intelligence". Economic Times. Retrieved 27 June 2012.
  23. ^ "Cognizant acquires US firm SVC". The Economic Times. 10 June 2008. Retrieved 27 June 2012.
  24. ^ Narayanan Madhavan (20 October 2007). "Cognizant to acquire marketRX for $135 m". Hindustan Times. Retrieved 27 June 2012.
  25. ^ "Cognizant acquires US co AimNet". The Hindu Business Line. 7 September 2006. Retrieved 27 June 2012.
  26. ^ a b "Cognizant buys Fathom for $35 mn". 18 April 2005. Retrieved 27 June 2012.
  27. ^ "Cognizant Tech Acquires Pune SAP Firm For $2 Mn". The Financial Express. 23 February 2004. Retrieved 27 June 2012.
  28. ^ "Cognizant Acquires Infopulse For $5 M". The Financial Express. 3 December 2003. Retrieved 27 June 2012.
  29. ^ "Cognizant Acquires American Express". The Financial Express. 22 September 2012. Retrieved 27 June 2012.
  30. ^ "Cognizant centre in Ireland". The Hindu Business Line. 11 June 2002. Retrieved 27 June 2012.
  31. ^ "Cognizant Technology Solutions Corporation Q1 2012 Earnings Call Transcript". Morningstar. Retrieved 27 June 2012.
  32. ^ a b Peter Cappelli; Michael Useem, Harbir Singh, Jitendra Singh (2010). The India way. Harvard Business Press. pp. 138–143. ISBN 978-1-4221-4759-7.
  33. ^ a b Vinnie Mirchandani (2010). The New Polymath: Profiles in Compound-Technology Innovations. John Wiley & Sons. pp. 81–86. ISBN 978-0-470-61830-1.
  34. ^ a b c d Kunal N Talgeri (26 June 2010). "Culture Kaleidoscope". Outlook. Retrieved 14 June 2012.
  35. ^ Chris Andrews; Jonathan Penn, Pascal Matzke, Edward Radcliffe (22 June 2009). SWOT: The Evolution Of IT Service Providers To Business Technology Competitors (Report). Forrester Research. p. 4. Retrieved 12 April 2012.
  36. ^ "Cognizant Expands North American Delivery Center Footprint to Accommodate Rapid Growth". Retrieved 27 June 2012.
  37. ^ "Twitter status". Cognizant. 24 February 2011.!/Cognizant/status/40842155698159616. Retrieved 27 June 2012.
  38. ^ "Audit Results". Cognizant. Retrieved 27 June 2012.
  39. ^ "Teaneck N.J. information technology company agrees to pay more than $509,000 in back wages following U.S. Labor Department investigation". 30 March 2009. Retrieved 27 June 2012.
  40. ^ Bengal IT minister tells Cognizant growth story to lure Infy, Wipro
  41. ^ 2011 Corporate Fact Sheet
  42. ^ "Cognizant Community: a model industry event". Vinnie Mirchandani. 15 March 2011. Retrieved 27 June 2012.
  43. ^ "Cognizant (CTSH) Financials". Google Finance. Retrieved 27 June 2012.
  44. ^ CSR World. Last accessed on 6 March 2012.
  45. ^ Cognizant Foundation extends aid to five NGOs
  46. ^ "Cognizant Outreach distributes notebooks". The Hindu. 27 June 2010. Retrieved 27 June 2012.
  47. ^ "Industry insights from Cognizant for AUT faculty". The Hindu. 14 May 2011. Retrieved 27 June 2012.
  48. ^ "Cognizant to Unveil 'Making the Future' STEM Education Initiative at World Maker Faire, New York Hall of Science". Retrieved 27 June 2012.
  49. ^ Mary Moore (12 December 2011). "Cognizant to donate $810K to Museum of Science for STEM". Boston Business Journal. Retrieved 27 June 2012.
  50. ^ Cognizant goes for green I.T. Manila Bulletin. 15 August 2011.
  51. ^ "Newsweek Green Rankings 2011". Retrieved 27 June 2012.
  52. ^ a b Pankaj Mishra & Sriram Srinivasan (31 March 2011). "We will not do anything that risks our culture: John Klein, Cognizant Technology Solutions". Economic Times. Retrieved 27 June 2012.
  53. ^ Swati Anand & Ishan Srivastava (6 November 2010). "'Cognizant is like a $4-billion tech startup' (Page 2)". Times of India. Retrieved 27 June 2012.
  54. ^ Sangeetha Kandavel (13 March 2012). "Cognizant rewards employees with 200% variable payout". The Economic Times. Retrieved 27 June 2012.
  55. ^ "Cognizant 2.0: Embedding Community and Knowledge Into Work Processes". Harvard Business School. 4 March 2010. Retrieved 27 June 2012.

[edit] External links

Business data