“Our strategy of re-investment has helped us maintain stable operating margins”

Cognizant, a few years back was considered as ‘an also ran company'. But over the last 3 years, its stunning ascent has made its competitors scurrying back to drawing tables to understand what's wrong with them and what's working for Cognizant. In FY13, Cognizant up seated Infosys in the quarter ended June 2012. And in JFM'13 quarter, its revenues crossed $2 bn per quarter mark. Indeed a stellar performance. In an interview to DATAQUEST, R.Chandrasekaran, Cognizant's Group Chief Executive walks through the company's major highlights over the last on year. Excerpts.

On Cognizant's performance

It is pertinent to point out that in the 15 years of our listing on the NASDAQ stock exchange; one thing that has remained absolutely consistent is our strategy of re-investment in the business to drive top line growth. That has helped us maintain stable operating margins and deliver industry-leading revenue growth. The year 2012 was no exception. We saw broad-based, industry-leading growth across industries, services and geographies. Achieving that in a tough demand environment yet again validated the strength of our business model. Our continued track record of market-leading revenue growth and stable margins fueled further reinvestment in the deepest client relationships, most robust portfolio of services, and strong talent pool.

On the key market trends

In the face of secular industry changes, changing demographics, and new technologies such as social, mobile, analytics and cloud, or SMAC as we call it, existing and new clients continued to turn to Cognizant to help them transform their operations and technology to not just run better by way of operational improvements in efficiency and effectiveness that they have always known us to deliver, but also run differently and stay relevant in the marketplace by building new digital business capabilities, driving fundamental innovation, reimagining their business models, and unleashing new potential across their organizations.

On the business spread

We continued to see the trend of large, complex and transformational multi-service line deals becoming more common. As SMAC technologies represent the next secular shift in computing, we continued to build out our SMAC capabilities and had some great client wins, thanks to our early lead and thought leadership in this area. We also saw healthy growth in our Horizon 1 services (application development and maintenance) and Horizon 2 services (consulting, IT IS, BPO), which provided further validation of our balanced approach to growing and integrating our core services with our emerging services and new service offerings.

 

On Indian customers

India is a high-growth market for us and is as attractive today as any other market. Our value proposition to the Indian market is slightly different in terms of the services we offer. While we have invested in a dedicated leadership and sales team, our approach to this market is a lot more consulting and domain led. In India, what Cognizant brings to the table is the rich experience of providing solutions to Global 1000 companies and thought leadership-such as domain-intensive consulting skills, global best practices, large-scale program management and high-end architecture skills, and behavioral and change management interventions with suitable adaptation to meet local needs.

As such, for every opportunity, we create a core team that has already worked extensively for global clients. This team includes a consulting leader, domain/practice expert, technical architects and program managers. We do undertake downstream opportunities in Systems Integration Infrastructure Outsourcing, and KPO, which are usually the extension of the consultative value we provide to our customers.

 

On Indian customers

Cognizant's targets in the Indian market are Indian as well as multinational corporations and the government. We currently service several customers in India-about half of them are large Indian companies with global aspirations and the remaining are global MNCs having operations in India. A few good examples are Future Group (provide end-to-end IT infrastructure services for all Future Group companies to sustain the group's high-velocity growth and drive business transformation), SAP Labs (set up the SAP NetWeaver Test Center in Bangalore), and mJunction services, which a joint venture between Tata Steel and SAIL (developing a scalable e-Commerce infrastructure). Government projects hold a great opportunity and we are keen to participate in these projects.