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Horses for Sources, US: Cognizant’s Chief Executive Officer Says We’re Experiencing the Biggest Shift Since the Internet

“With every day that goes by, if you think about a company’s enterprise model (the business model, the operating model and the technology model), it’s now become clear what is the implication of digital technology at each layer in that stack and by industry,” says Francisco D’Souza in an interview with Phil Fersht, CEO and Chief Analyst of Horses for Sources. Excerpts:

“Last year, we reorganized the business ― we took all our capabilities and grouped them into three big practice areas: digital business, digital operations, digital systems and technology. Within that, we really focused and emphasized the key digital themes and trends in each of those areas.

The implications for Cognizant and for our clients, as we go through the shift on breadth of skills and capabilities that you need to enable digital transformation, is very interesting. For example, we have always been big employers of data scientists. Design talent is increasingly becoming a bigger part of the company. Industry domain expertise has always been an important capability, but now we are looking to deepen this knowledge. Consulting is incredibly important and technology is always the core.

Our view is that to create digital solutions, you must bring together multi-disciplinary teams around data science, design, industry, domain expertise, consulting and technology. That talent is dispersed around the world. Just as a decade ago India was and continues to be a concentration of technology talent. You are starting to see concentrations of data science talent in Eastern Europe, design in certain hubs in Europe and the US, and so on. That requires us to be more dispersed than we have been in the past.

Secondly, the type of work we are doing now is co-creation/co-innovation that requires us to be more proximate to clients in those practice areas. That is also creating the phenomenon that we are closer to the customers and therefore getting a little bit more distributed as an organization.

As part of our roadmap for accelerating our shift to digital, we’ve talked about moving away from our historical approach of industry leading growth at a constant margin. We had this 19-20% non-GAAP operating margin target for a long time. What we have said now is we will continue to drive high quality, durable growth, and will gradually increasing margins. As we look at our opportunity set, we think that we can pivot the business to higher value digital work and we are going to drive that. We think that’s the long-term direction of our clients and therefore that’s where we want to be. We are also taking the opportunity to simplify and streamline the business in places where that’s appropriate.

We are going to look back at this period of time, 10 years from now, and we are going to say technology literally changed everything. We are right in the middle of that. Compared to 10 years ago, we have the big shift in technology. We have an incredible position in the marketplace. We have got great clients in the industries that we serve. We serve the biggest, most significant, most substantial clients in those industries and we serve them in big meaningful ways so it gives us the platform to have a substantial dialogue with them.

The innovation seems to be happening continuously and faster than it ever has before. We are living through a time when the ground is shifting faster than I have ever seen it and that’s challenging, but it also creates opportunity for those who learn and react fast.”

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