1. EPGP - Strategic Management (LD) Instructor: Prof. Shubhabrata Basu
Submitted by: Rajendra Inani
Roll No. : 27
Dated: 19 January 2010
Cognizant Technology Solutions
Most of the Indian software companies grown during late 1990s as an inexpensive source of
programmers for US corporations working on Y2K assignments. By the end of year 2000, Indian IT
companies earned $6.5 billion, serving more than 200 of the Fortune 500 companies. During the period
2000 to 2006, IT off shoring business has grown collectively at rate of 40% per annum. Currently, 55% of
offshore assignments are software maintenance. Most of the projects have 30-70% of team working at
Indian end for the US client. Tier I firms (major five Indian software companies, Infosys, TCS, Cognizant,
Satyam, Wipro) accounted for one third of Indian IT revenue each year. Their supply of resources was
based on 400,000 graduates coming out of top Indian universities. Due to intense competition from
Multinational IT companies, India’s IT professionals are having average salary increase to the tune of
15%, versus 8% in China, 5% in Europe and 7% in Brazil.
Cognizant, one of the top five IT companies of India, grown on the lines of its peers in Indian software
industry. Founded in 1994, as a captive unit between D&B and Satyam, for software development needs
of D&B’s US operations. By 1997, it emerged as Cognizant Technology Solutions with 575 employees
and $12 million Revenue Company. It got listed on NASDAQ in 1998 and touched revenue of $58 million
by 1999. Initially, it started helping client with Y2K concerns on mainframes. It positioned itself to help
clients with use of the Internet for business applications. By year 2002-03, it was the first company to
organize around business industry verticals, defined as a group of customers in industry sectors with
particularly high revenue potential. The revenue and profitability were tracked along the lines of these
verticals. It created a horizontal technology support using media and systems (ERP and Web) to ensure
client solution delivery.
Cognizant developed “Transform while We Perform” framework based on strategy of long-term client
relationships and innovations in its approach to implementing software solutions at client sites. It
substituted clients’ IT staff with less costly offshore personnel and helped clients to leverage its extensive
IT talent pool to grow their businesses. Clients favored the professional project management, which freed
its resources from issues of project governances and ensured smooth, non-disruptive transfer of projects
between onsite and offshore.
Cognizant pursued strategy of “Client Centricity” as a key point of differentiation. It approached its clients
tailoring its business model to be a partner and not be a vendor. It tried to establish itself as an “Employer
of Choice” to attract best talents from top Indian schools.
The rapidity of Cognizant’s growth was a management challenge. It ensured a single corporate culture
(Cognizant culture) out of distinct cultures due to rapid employee growth. It used a strong employee
referral program insuring 80% senior hire and 20% junior hires comes from this route. It developed a
client relationship model called “Two in a Box” (TIB), a crucial mechanism by which cognizant delivered
consistency and quality to its clients as the company itself broadened and globalized its scale, scope and
reach. It delivered a superior customer experience, and assured a better return from outsourcing. TIB
proved to be a true partnership model that set common goals with an aligned incentive structure and open
communication.
A typical problem of offshore IT industry is due to two common issues. First “Pass the baton”, due to
change of contact person at offshore and “thrown over the wall” due to client inability to see into details of
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2. progress of projects at offshore. These issues resulted in cost overrun, failed relationships and missed
opportunities for many such engagements. Cognizant’s TIB global software delivery model helped it to
overcome these issues successfully. TIB helped Cognizant move up in the IT services value chain
enabling it to offer its client service level comparable to those offered by leading US consulting firms at
offshore prices.
By year 2007, Cognizant had implemented TIB for all of its strategic US and UK clients. With the
developments in technology and online social networking Cognizant made global delivery model using a
number of phenomena namely “Decoupling of work and geography”, “Mobility of knowledge”, “Web 2.0”,
“Second work and Going Atomically Global”. It created its next generation delivery model, Cognizant 2.0
(C2), described as an “Intelligent Delivery Ecosystem” to take advantage of these trends. It provided real
time knowledge management, real time workflow, real time process guidance and real time collaboration
among the major elements offered by this system.
Overall, Cognizant is planning to get solutions to customers by working its people in different parts of the
world on disaggregated customer problems. As observed by its clients, C2 needed an environment where
people felt comfortable working remotely with professionals belonging to different geographies and
cultures. But it mandates, an organizational culture to exist that would seek to adopt practices and
solutions from other professional from across the globe. Without such a culture in place, the value of C2
might not be fully recognized and the platform might fail.
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