CXO

How Cognizant sees the future of offshoring

"We are living through an age of the great decoupling..."

Out of a total of 130,000 Cognizant employees, more than 100,000 are in India, with more than 40,000 located in the sprawling southern Indian city of Chennai

Out of a total of 130,000 Cognizant employees, more than 100,000 are in India, with more than 40,000 located in the sprawling southern Indian city of ChennaiPhoto: Saritha Rai/silicon.com

Until a few years ago, Cognizant Technology Solutions was a relative unknown. But it has emerged from the shadows of high-profile rivals such as TCS, Infosys and Wipro to become a leading force in India's outsourcing industry.

2011 was Cognizant's year: quarter after quarter of impressive financials, industry-leading growth, and a vault into the third place among India's top outsourcing companies after overtaking Wipro.

The Teaneck, New Jersey, headquartered Cognizant has a workforce of 130,000. The company's leaders divide time between New Jersey, its main market is the US, and Chennai - India is its talent base. Besides Chennai, the company has nine other development centres spread over India.

In a series of interviews with silicon.com, Cognizant's top leadership discuss the company's plans.

Malcolm Frank, chief strategist, Cognizant Technology Solutions on Cognizant's strategy

Q: How do you view the changes that the outsourcing industry appears to be going through?
A: We are living through an age of the great decoupling. Humans, information, machines are all elements that can be pulled apart in virtualisation. In the virtualisation of processes, there could be 20 elements out of which the client wants to own seven, one provider can have three, another can have five and so on.

Cognizant chief strategist Malcolm Frank: The volatility of technology forces - social computing, mobile, big data and cloud - slamming together will be the hallmark of the next decade or two

Cognizant's Malcolm Frank: The volatility of technology forces - social computing, mobile, big data and cloud - slamming together will be the hallmark of the next decade or twoPhoto: Saritha Rai/silicon.com

Virtualisation of organisations, processes, people and technology will have a very profound impact on the outsourcing industry. As clients continue to decouple, the outsourcing industry is going through a significant change.

So, what implications does that change have for Cognizant's strategy?
Every quarter is different from the previous one as we are in the midst of a landscape-altering transition. In the past, we have seen technology shifts and economic shifts but at different times. Now they are happening simultaneously. We believe that the volatility of technology forces - social computing, mobile, big data and cloud - slamming together will be the hallmark of the next decade or two.

We have to help clients by becoming more efficient, and then take the money from those efficiencies to get ahead.

But isn't that the game plan of every top outsourcing company?
There are two simple components to our strategy - one, recognising the client's business environment. Two, helping the client do something about it. At the start of the recession, we got our top 30 people together at Frankfurt every weekend for months to understand this issue through the eyes of the customer. Managers who directly handled the clients' business represented the market.

What differentiates Cognizant in the eyes of your employees, investors and customers?
Our managers are entrepreneurs and drive industry groups. They own geographies. As the future unfolds gradually, we understand that, for instance, our German customers may be going through different challenges compared with our US clients in the same industry.

Our managers are on the ground and can tailor responses to the market and to specific customers. We follow the two-in-a-box model of service delivery - one market-facing person deals with the client and a back-end professional ensures delivery of services.

Our value proposition when we went public was that we would have a lower operating income than our traditional Indian peers but the trade-off was that we would invest that money in nurturing client relationships by getting deeper domain expertise and having more client managers onshore. This approach has led to higher growth and more stable client relationships. When investors look at us, they see that as a differentiator in the marketplace.

Our relationship with clients is measured by one metric. Do we get a larger pie of every new opportunity that the client offers? We give clients the high-touch intimate model of the multinationals and give them scale, technical quality and the price points of the offshore models. They get the best of both roles from us.

Do you think the age of your staff has affected your impact on the market?
Over 80 percent of our workforce is from the millennial generation. They are aged 34 or younger. They think having access to the internet is as natural as having access to water. Their expectations of an organisation are very different to those of the older generations.

They want career velocity, they are very mobile, they want to work in flatter organisations, they want to be entrepreneurs. We try to be that organisation that millennials want to work for. Our campus recruiting successes and our low employee turnover tell us we have a solid value proposition.

As a younger company, we have been a disruptive force in the $60bn Indian outsourcing market. But as we like to say, it's not the...

About Saritha Rai

Saritha Rai is an India-based journalist and commentator who covers technology, business and society from her ringside seat in Bangalore.

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