Cognizant: Fixing It Before Itís Broke
ne day in January 2009, Francisco D’Souza flew from London to Mumbai for a visit that lasted just eight hours. He was meeting Ulf Henriksson, CEO of Invensys, a leading supplier of automation systems, to strike a research and development partnership with Cognizant Technology Solutions.
Halfway through the presentation, D’Souza felt he would lose the deal. A few yards away, Cognizant’s vice chairman, Lakshmi Narayanan, was keenly watching D’Souza, his boyish successor. “I could see what was going on in Frank’s mind,” he recalls. D’Souza, was looking at everything from Invensys’ point of view. Narayanan was convinced D’Souza would win the deal.
Image: Don Emmert/ AFP for Forbes India
A few months later, Invensys decided to partner with Cognizant.
The partnership was to carry out research and development for its operations management division and Invensys later extended its scope to cover its rail division. Narayanan had no doubt about what clinched the deal for Cognizant — D’Souza’s absolute empathy with the other side. “It’s a unique ability,” he says, “That‘s something I won’t be able to do.”
When a 38-year-old D’Souza took over as CEO from Narayanan in 2007, he knew he had inherited a machine that was designed to grow fast. Under Narayanan, Cognizant had evolved a simple strategy. It did not go after higher and higher operating profit as its rivals did, but capped it at a sustainable level. Any extra dollars were spent on building a strong customer facing team. It also followed a unique delivery system. Every business line was headed by two people, one to serve as the single-point contact for the customer and the other to ensure delivery. This operating model had even become a Harvard case study.
Though Cognizant had been slow to jump into some growth opportunities, this model helped it catch up fast whenever it did. “If you ask me what Cognizant missed, it missed every opportunity,” says Viju George, Vice President, Edelweiss Capital, citing enterprise resource planning, business process outsourcing and infrastructure management as examples. “But the beauty of Cognizant is they play the catch up game very well,” he says.
In sum, Narayanan had put the company on a high growth path. The new CEO had the option of simply carrying on that legacy.
But D’Souza wouldn’t accept the status quo. Before he took over, he had several long chats with Narayanan: He wanted to know how he could take the company to the next level of growth, achieve higher revenues without increasing the staff size in the same proportion.
D’Souza wasn’t satisfied with playing catch-up. He wanted the company to explore new opportunities. “Winning with a new idea is what makes him tick. If somebody says he can’t do it, that is when he gets excited,” says Narayanan.
Son of a career diplomat, D’Souza did his MBA at Carnegie Mellon and landed a job at Dun & Bradstreet, which was then setting up a captive software unit (which would later become Cognizant). He learned his trade from his predecessors, Narayanan and Kumar Mahadeva.
His mentors were quite different from each other. Mahadeva was a McKinsey-trained strategist; numbers-driven and a little aloof with people. Narayanan is a people person; the sort of manager who would throw a highly cited survey into the dust bin and listen to real people.
D’Souza has been imprinting his own stamp on Cognizant in the last three years. He has dragged the company away from its comfort zone. It would no longer be just a faithful stenographer to its customer, listen to their script with all attention, and type it all out for a low price. It would tell the customer how to improve the script and charge for it.
The organisation is changing in some profound ways. In the banking, financial services and insurance (BFSI) business segment, which brings 42 percent of revenues, D’Souza has added one layer of senior management to be able to follow the big shifts in the sector and catch opportunities early. He moved up Debashis Chatterjee, one of the two managers in charge of BFSI in the company’s time-tested two-in-a-box structure, to this new role.
As D’Souza takes Cognizant to new markets, he has also stepped up the focus on building partnerships. Earlier, the company would enter a new business opportunity by hiring people or acquiring a company in that segment. But under D’Souza, it ties up with partners, and sometimes even competitors, to get access to fresh business. This has saved marketing dollars for the company, but more importantly, given it scale in markets like Europe.
Above all, the way D’Souza is building consulting capability at Cognizant marks the biggest change happening within the organisation. His prescription for Cognizant Business Consulting (CBC) has been quite different from the traditional model pursued by Indian software companies.
And he has been doing all this in the midst of the worst economic crisis in living memwory. Think of it like changing the wheels on a car that’s going uphill. If D’Souza’s gamble pays off, then Cognizant could come out of the recession stronger; if not, it could disrupt one of the last decade’s biggest success stories in the offshore industry.