Cognizant Racing Past Competitors

The Indian IT industry has been surrounded by weakening demand from key growth drivers and at the same time the industry is presented with new drivers to work on. This demands IT companies to take tactically dynamic steps in order to cope with the ever-changing trends in the IT industry so as to maintain the kind of growth that has been seen in the past and to capture the potential that the advancing technological changes have to offer. While companies like Infosys and Wipro have been underperforming, companies like TCS and Cognizant have been posting robust growth. So what is it that makes companies like Cognizant soar past its competitors?

The demand for IT products and services has been reducing from key geographies like U.S. and Europe and from key segments like Banking, Financial Services and Insurance (BFSI). “In addition, businesses are also faced with secular changes driven by the mega trends of digitalization, consolidation, consumerization, globalization, demographic shifts, government mandated change, and new disruptive SMAC (social, mobile, analytics and cloud) technologies,” said R Chandrasekaran, Group Chief Executive – Technology and Operations, Cognizant. The cumulative effect of this has been added pressure on companies and a need to become more customer-centric in their approach.

Having said this, clients have been focussing on the development of integrated platforms and tailored solutions for their businesses. With this, the importance of cost savings is gaining larger magnitude. In this dynamic environment, Cognizant’s strategy has been focussed on distributing investments across three horizons of demand. Their strategy goes as follows:

“Success in the market today requires that we make the investments, build the capabilities and execute successfully across all three horizons of demand simultaneously. One of our key priorities is to continue to make sure our teams are laser-focused on working with our customers in order to ensure that we maintain our track record of winning a disproportionate share of opportunities in our robust pipeline,” said Chandrasekaran.

Cognizant, nearly a year ago raced past Wipro to become the third largest IT player in terms of revenue. Following a similar trend, it left Infosys behind in Q2 CY2012 in terms of revenues. Cognizant posted revenues of USD 1.795 billion while Infosys had revenues of USD 1.752 billion. This translates into a sequential growth of 4.97 per cent for Cognizant and -1.07 per cent for Infosys. Even the guidance given by Cognizant has not been subdued and pessimistic. It stands at 4.5 per cent for the next quarter and 20 per cent for the year. With the strategy in place for the company to focus on the existing portfolio and to give justice to new opportunities offering long-term growth is certainly working wonders and would continue to do so.