Cognizant - Cognizant Technology Solutions

Cognizant Technology Solutions Corp is an American multinational corporation that provides custom information technology, information security, consulting, information technology outsourcing (ITO) and business process outsourcing (BPO) services. It is headquartered in Teaneck, New Jersey, United States. Cognizant is listed in the NASDAQ-100 and the S&P 500 indices. It was founded as an in-house technology unit of Dun & Bradstreet in 1994, and started serving external clients in 1996.

It made an initial public offering in 1998, after a series of corporate splits and restructures of its parent companies. It was the first software services firm listed on the NASDAQ. During the dot com bust, it grew by accepting the application maintenance work that the bigger players were unwilling to perform. Gradually, it ventured into application development, complex systems integration and consulting work. Cognizant had a period of fast growth during the 2000s, becoming a Fortune 500 company in 2011. In 2015, the Fortune magazine named it as the world's fourth most admired IT services company.

History

Cognizant began as Dun & Bradstreet Satyam Software (DBSS), established as Dun & Bradstreet's in-house technology unit focused on implementing large-scale IT projects for Dun & Bradstreet businesses. In 1996, the company started pursuing customers beyond Dun & Bradstreet.

In 1996, Dun & Bradstreet spun off several of its subsidiaries including Erisco, IMS International, Nielsen Media Research, Pilot Software, Strategic Technologies and DBSS, to form a new company called Cognizant Corporation. Three months later, in 1997, DBSS renamed itself to Cognizant Technology Solutions. In July 1997, Dun & Bradstreet bought Satyam's 24% stake in DBSS for $3.4 million. Headquarters were moved to the United States, and in March 1998, Kumar Mahadeva was named CEO. Operating as a division of the Cognizant Corporation, the company mainly focused on Y2K-related projects and web development.

In 1998, the parent company, Cognizant Corporation, split into two companies: IMS Health and Nielsen Media Research. After this restructuring, Cognizant Technology Solutions became a public subsidiary of IMS Health. In June 1998, IMS Health partially spun off the company, conducting an initial public offering of the Cognizant stock. The company raised $34 million, less than what the IMS Health underwriters had hoped for. They earmarked the money for debt payments and upgrading company offices.

Kumar Mahadeva decided to reduce the company's dependence on Y2K projects: by Q1 1999, 26% of company's revenues came from Y2K projects, compared with 49% in early 1998. Believing that the $16.6 billion enterprise resource planning software market was saturated, Mahadeva decided to refrain from large-scale ERP implementation projects. Instead, he focused on applications management, which accounted for 37% of Cognizant's revenue in Q1 1999. Cognizant's revenues in 2002 were $229 million, and the company had zero debt with $100 million in the bank. During the dotcom bust, the company grew by taking on the maintenance projects that larger IT services companies did not want.

In 2003, IMS Health sold its entire 56% stake in Cognizant, which instituted a poison pill provision to prevent hostile takeover attempts. Kumar Mahadeva resigned as the CEO in 2003, and was replaced by Lakshmi Narayanan. Gradually, the company's services portfolio expanded across the IT services landscape and into business process outsourcing (BPO) and business consulting. Lakshmi Narayanan was succeeded by the Kenya-born Francisco D'Souza in 2006. Cognizant experienced a period of fast growth during the 2000s, as reflected by its appearance in Fortune magazine's "100 Fastest-Growing Companies" list for ten consecutive years from 2003 to 2012.

In September 2014, Cognizant struck its biggest deal, acquiring healthcare IT services provider TriZetto Corp for $2.7 billion. Cognizant Shares, rose nearly 3 percent in premarket trading.

Acquisitions

Services

Cognizant provides information technology, information security, consulting, ITO and BPO services. These include business & technology consulting, systems integration, application development & maintenance, IT infrastructure services, analytics, business intelligence, data warehousing, customer relationship management, supply chain management, engineering & manufacturing solutions, enterprise resource planning, research and development outsourcing, and testing solutions.

Cognizant Digital Works â€" created to help clients rapidly build, pilot and scale enterprise-level digital initiatives â€" is central to Cognizant's efforts to help clients drive business change across their operations and inform their go-to-market activities.

Business model

Like many other IT services firms, Cognizant follows a global delivery model based on offshore software R&D and offshore outsourcing. The company has a number of offshore development centers outside the United States and near-shore centers in the U.S., Europe and South America.

In its early years, Cognizant gained business from a number of American and European companies with the help of the Dun & Bradstreet brand. The company's senior executives envisaged the firm as a provider of high-end customer services on-par with the six contemporary major system integrators (Accenture, BearingPoint, Capgemini, E&Y, Deloitte and IBM), but at lower prices.

Outsourcing controversy and hiring in the U.S.

Cognizant is number one in Top 10 companies receiving H-1B visas to bring immigrant workers to the United States. The company has been steadily increasing its U.S. work force. In January 2011, the company announced plans to expand its U.S. delivery centers, including a new 1,000-person facility in Phoenix, Arizona. In February 2011, Cognizant said it had 60 full-time recruiters actively hiring in the U.S.

In 2009, an investigation by the US Department of Labor (DoL) found Cognizant in violation of the H-1B provisions of the Immigration and Nationality Administrative Act. DoL found that 67 of its workers hired under the H-1B program were underpaid. According to Cognizant, this was due to unintentional administrative errors. The DoL investigation revealed that Cognizant had achieved 99.7% compliance in its management of H-1B visa-related issues. The company paid US$509,607 in back wages to the 67 employees. No fines or visa restrictions were imposed, since DoL did not discover any willful violations. Joseph Petrecca, the director of the Wage and Hour Division's Northern New Jersey District Office, praised the company for taking immediate steps to correct the violations: "This level of cooperation sets a standard for others in the industry."

In 2016, the company was the subject of a lawsuit by workers for Walt Disney World who said workers from India were brought into the United States on H-1B visas in order to replace them. However in October 2016, federal Judge "Gregory A. Presnel" of the United States District Court in Orlando has dismissed the lawsuits stating "none of the allegedly false statements put at issue in the complaint are adequate".

Operations

Regions

In addition to its global headquarters and delivery center in Teaneck, New Jersey, and the U.S. headquarters in College Station, Texas, Cognizant has 21 other U.S. delivery centers: Bentonville, Arkansas; Bridgewater, New Jersey; Des Moines, Iowa; Holliston, Massachusetts; Minot, North Dakota; Phoenix, Arizona; Southfield, Michigan; Williston, Vermont; St. Louis, Missouri; Union, New Jersey; Sacramento, California; Charlotte, North Carolina; Oklahoma City, Oklahoma; Washington, Pennsylvania; Malvern, Pennsylvania; Naperville, Illinois; Carmel, Indiana Linthicum, Maryland and Tampa, Florida.

The company has more than 233,000 employees globally, of which over 150,000 are in India across 10 locations with a plurality in Chennai. The other centers of the company are in Bangalore, Coimbatore, Gurgaon, Noida, Hyderabad, Kochi, Kolkata, Mangalore (CoreLogic), Mumbai, and Pune. The company has local, regional, and global delivery centers in the UK, Hungary, Spain, China, Philippines, Canada, Brazil, Argentina, and Mexico.

Business units

Cognizant is organized into several verticals and horizontal units. The vertical units focus on specific industries such as Banking & Financial Services, Healthcare, Manufacturing and Retail. The horizontals focus on specific technologies or process areas such as Analytics, mobile computing, BPO and Testing. Both horizontal and vertical units have business consultants, who together form the organization-wide Cognizant Business Consulting (CBC) team. Cognizant is among the largest recruiters of MBAs in the industry; they are involved in business development and business analysis for IT services projects.

According to the 2015 financial statements, the major portion of Cognizant's revenues is derived from clients in the Financial Services (40.3%) and Healthcare (29.5%) industries. Other substantial revenue sources include clients from Manufacturing, Retail & Logistics (18.9%) and Communications, Information, Media & Entertainment and Technology (11.3%) industries. By geography, most of the revenue is derived from North America (78.6%) and Europe (16.2%).

Corporate affairs

Marketing and branding

The company's flagship customer conference is Cognizant Community. It is held annually in the United States, Europe, Australia and Asia (Singapore, India and Japan). The summit, which features notable keynote speakers in the world of business, technology, economics and even adventure sports, has been praised as "a model industry event".

Finance

Cognizant was listed on NASDAQ in 1998, and added to the NASDAQ-100 Index in 2004. After the close of trading on 16 November 2006, Cognizant moved from the mid cap S&P 400 to the S&P 500. The company claims it is in excellent financial health, reporting over $2.6 billion in cash and short term investments for the quarter ending 30 September 2012. Net income for 2014 was $1.44 billion as against $1.23 billion in 2013 and 11.9 percent up in the fourth quarter to $363 million.

Corporate social responsibility

Cognizant's philanthropic and corporate social responsibility (CSR) initiatives are conducted through the Cognizant employees for the financial and administrative support of the Cognizant Foundation. Registered in March 2005 as a "Charitable Company" under the Indian Companies Act, the Cognizant Foundation aims to help "unprivileged members of society gain access to quality education and healthcare by providing financial and technical support; designing and implementing educational and healthcare improvement programs; and partnering with Non-Government Organizations (NGOs), educational institutions, healthcare institutions, government agencies and corporations".

Cognizant has a grassroots corporate social responsibility project called Outreach, for which Cognizant's employees volunteer to support schools and orphanages.

At the 2011 Maker Faire, the company announced plans to fund a Maker Space at the New York Hall of Science, a Making the Future after-school program and a partnership with Citizen Schools to promote STEM education in the United States.

In 2012 Cognizant Foundation made donation to Vidnyanvahini, a not-for-profit organization located in Pune in India for its Mobile Science Laboratory (MSL).

Environmental record

Cognizant's sustainability efforts include a Go Green initiative launched in 2008 focused on energy conservation, recycling, and responsible waste management. In October 2012, Newsweek magazine ranked Cognizant 50th among the 500 largest publicly traded companies in America, in its annual Green Rankings.

Fortune 500

Others

• On 24 June 2015, the company signed a multimillion-dollar agreement with Escorts Group in India to help Escorts' businesses in digital transformation and modernizing its operations across all business segments.
• On 30 June 2015, it partnered with Singapore-based supermarket retailer NTUC FairPrice to perform digital transformation in NTUC's business to improve personalized and consistent customer service across multiple channels.