Ramkumar Ramamoorthy was recently appointed as Chairman and Managing Director of tech major Cognizant’s India operations. With new CEO Brian Humphries taking charge at the global level, Cognizant has brought about changes to its strategy and operations. After leading industry growth over a little more than a decade, during which time it overtook Wipro and Infosys in revenue, Cognizant went through a period of low revenue growth. Now aiming to get its mojo back, the company is betting on talent in its India software delivery centres with their 2 lakh-plus headcount that services clients in the U.S., Europe and West Asia. Mr. Ramamoorthy also has views on the education system and what the country needs, to make the best of its demographic dividend. Excerpts from a two-part interview:
What are your priorities for Cognizant India?
For more than a decade, Cognizant was the bellwether of the IT industry, defining newer benchmarks. This was made possible by our unique business model that combined high-touch client relationship management with superior delivery excellence.
In my new role as the head of India operations, my focus is on helping strengthen our most admired delivery engine, blending efficiency and innovation. In order for us to do this, we need to attract and retain the best talent, continuously re-skill them, use tools, bots and processes for higher efficiency as well as innovative delivery models, and create a leaner and simpler operating structure to stay nimble to our clients’ needs.
Do you have any strategic approaches such as your two-in-a-box approach?
As soon as Brian Humphries, our new CEO took charge, he established a Transformation Office to identify, prioritise and launch initiatives to re-accelerate revenue growth. With more than 250 of our global leaders participating in this initiative, we now have clearly defined strategic focus, operating and commercial models and global delivery structure. We just need to execute against it.
Our strategy is two-fold. First, we will protect and optimize our heritage business which accounts for about 65 percent of our revenue. This includes driving efficiency, automation and tooling, delivery optimization, and protecting renewal deals, strengthening our industry focus, as well as scaling our international footprint. Today, our international revenues are about 25 percent of global revenues. Second, we will significantly invest in four key digital battlegrounds that we have identified. These are data, digital engineering, cloud, and IoT.
Digital today is about a third of our revenues and growing at over 20%. Our focus is on accelerating the digital mix of our revenues while protecting our core business.
Have digital technologies actually moved to the core of the enterprise compared to 5 years ago when they were still viewed as being in the periphery?
Digital is front and centre of everything our clients are doing today. Let me give you examples from our battle grounds I cited.
Data is the core of our clients’ competitiveness. Across all industries, clients need to get better at storing, managing, reporting, analysing, and reusing their data. Clients need to leverage enormous amounts of data to build Artificial Intelligence-based platforms that can transform customer experiences. We are helping clients shift from systems of record to systems of engagement. In other words, we are helping clients transition from hindsight to insight to foresight.
Coming to cloud, it is estimated that 50% of all workloads sit on public and private clouds today. This number is set to increase to 80% in the next two years. Likewise, a recent forecast from IDC indicates that 42 billion devices are expected to be IoT-connected by 2025.
Each one of these digital technologies is helping clients re-imagine their business, operating and technology models. Technology is no longer an enabler, technology is the business. That’s why we see CEOs of many large global banks come out and say, “We are a technology company with a banking license”. This is true of every industry.
I see IT services companies buying out niche consultancies. What value do you see there that you’d rather not build yourself?
Niche consultancies bring in capabilities, tools, methodologies and platforms that helps us rapidly scale our nascent portfolios or quickly expand our existing portfolios.
Our recent agreement to acquire Contino helps us to enable Global 2000 clients to speed their digital transformation programs by leveraging enterprise DevOps methodologies and advanced data platforms. Contino’s approach to cloud migration, core modernization, and cloud security is reshaping how enterprises build their infrastructures. When this acquisition is closed, the added cloud capabilities will help us offer transformative cloud-based solutions to our clients.
Likewise, our earlier acquisition of Softvision helped us consolidate our position as one of the largest players in digital engineering with over 11,000 employees in a market that’s growing at over 20 percent. Both Softvision and Contino also bring to us an opportunity to expand into new logos and deepen client relationships where there is an overlap.
Is upskilling at all possible at scale?
As an industry, we have done upskilling at scale for decades. It’s not new to us. During transitions from Mainframe to Minis to client-server to e-commerce, our employees have all been re-skilled and upskilled. Learnagility (agile and iterative learning) is a core competence of this industry and that’s something we need to preserve and build upon. For example, Cognizant re-skilled and upskilled over 150,000 employees in newer digital technologies in just the past 18 months.
I think we need to see what’s happening in the IT industry in the larger context of the huge employee base and higher attrition in the twenties. Any role elimination or exit is not more than 1-2% of the headcount.
It’s also important to note that the industry will be a net hirer of talent. Let’s take the Cognizant example. In the past six years, Cognizant saw its net headcount in India go up by 75,000 professionals. In other words, on average, we added 1,000 employees every month in India in the past six years. Today, Cognizant has over 200,000 employees in India and is arguably the second largest employer in the private sector in India.
Has the top management shuffle sort of settled at Cognizant now? You have come in new into your role, we saw a new CPO, and a healthcare chief had to quit on compliance grounds.
It’s natural for leadership changes to happen with any new external CEO. If one looks at our financial performance over the past two quarters, you will see that we have managed the transition very well while refining our strategic roadmap. In fact, in the just ended quarter, we added sequential incremental revenues of $107 million. This is the highest among our key competitors.
While it may not be appropriate for me to comment on every individual transition, let me tell you that Jim Lennox, our CPO retired from Cognizant after an extraordinary 16 years with the company. He will be replaced by Becky Schmitt who has over 24 years of global experience in senior HR leadership roles in leading companies such as Accenture, and Sam’s Club, the $59 billion division of Walmart.
Can you elaborate on the ‘Fit for Growth’ mantra that is the buzz now at Cognizant?
Our ‘Fit for Growth’ initiative is focused on re-accelerating our revenue growth and bringing to bear the full potential of Cognizant. Because of the pace at which we grew, we did not look into the mirror often enough as we should have. This initiative is to take a close look at our business and operations, and tone up those unused muscles, if you will.
This initiative covers our strategic focus and direction, operating and commercial models, delivery structure, cost base, and process and tools. These will help us protect and optimize our core portfolio and invest in our key digital battlegrounds and in areas such as skilling at scale, marketing and branding, and sales management.
