Cognizant is #3: the How and What of it

Last updated on Aug 4, 2011

Posted on Aug 4, 2011

How did Cognizant become #3 of the Indian IT companies?  That’s an interesting question.  Here are three reason that “First Post” identifies:

  1. Long-standing emphasis on the quality of its work-force.
  2. Wipro, the company it toppled, has been preoccupied with a host of problems stemming from a corporate restructuring, leading to a loss of business focus and the resignation or exit of several top executives.
  3. It is highly likely that being headquartered in the US, Cognizant’s main market, the company has been able to focus better on servicing clients and bagging orders in the industries it serves.

In another article on the same site, Mitu Jayashankar (an MBA school friend) suggests that becoming #3 is not as significant as it is made out to be.  If at all, it impacts the employees and their work life balance and nothing more.

From my personal experience of CTSH, here are my thoughts:

Cognizant’s major strengths are:

  1. It being very nimble.  Very very nimble.  At an earlier client, decisions that took one hour for Cognizant to reach the client after he had asked for it; took a week in case of WIPRO.  That made a HUGE difference.
  2. Its nimbleness is because of its decentralized decision making.  It is not unusual for a Practice lead to partner with a small boutique firm to bring a combined set of capabilities to the client’s table.  WIPROand Infosys are too staid and closed to such maneuvering.  No wonder Cognizant has won so many projects.
  3. It has probably the smartest, most aggressive and most professional sales force.
  4. Now, COgnizant’s success is because of the business it has won in the last year.  Winning business and successfully executing it are two different things.  And that is where Cognizant lacks.  It is a master at winning business – because its sales force is awesome – but its delivery lacks terribly!  In the area of delivery, Infosys is miles ahead of others.  WIPRO though the weakest of its traditional rivals, is still far better than Cognizant.

So, unlike what Mitu says, I would contend that becoming #3 is very significant for the Stock Market and for everyone else.  Not because of its ranking now, but because of the move from where it was to where it is.  Mitu calls it “momentum”.  But beyond the momentum is the DNA of that organization that is to be closely gauged.

In the coming years, a lot of upheaval in the Indian IT industry is assured.  Who wins in this market is to be seen.  But it would be better if all these companies stop competing against each other and start competing against Accenture and IBM, for they are the ones who will eat the Indian IT industries dinner!

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