Cognizant Technology Solutions Corp. is an American multinational provider of custom information technology, consulting and business process outsourcing services. It is headquartered in Teaneck, New Jersey, USA. Cognizant is included in the NASDAQ-100 and the S&P 500 indices.

 

Originally founded as an in-house technology unit of Dun & Bradstreet in 1994, Cognizant started serving external clients in 1996. Cognizant's IPO was launched in 1998, after a series of corporate splits and restructures of its parent companies. 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 saw a period of fast growth during the 2000s, becoming a Fortune 500 company in 2011. In 2011, the Fortune magazine named it as the world's third most admired IT services company after Accenture and IBM. 

 

 

History

The company that is now called Cognizant has its roots in The Dun & Bradstreet Corporation, a joint venture between Dun & Bradstreet (76%) and Satyam Computers (24%). Srini Raju was the CEO of this company established in 1994. Kumar Mahadeva played a major role in convincing D&B to invest $2 million in the joint venture. He was born in Sri Lanka, where his father led his nation's civil service. Mahadeva traveled to England for his studies, earning a master's degree in electrical engineering from Cambridge in 1973. Originally called DBSS, the unit was established as an in-house technology unit, and focused on implementing large-scale IT projects for D&B businesses. In 1996, the company started pursuing customers beyond the D&B fold.

 

In 1996, Dun & Bradstreet (D&B) 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 was renamed as Cognizant Technology Solutions. In July 1997, D&B 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 was 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. The money was earmarked for debt payments and upgrading of the company's 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 ERP 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. 

Acquisitions

Company acquired	Date	Business
C1 group (6 companies)	December 2012	btconsult GmbH [process and technology consulting, SAP]; C:1 Solutions GmbH [consulting and enterprise solutions: SAP, BPM, ECM, ERM]; psc Management Consulting GmbH [process and technology consulting]; C:1 SetCon GmbH [software engineering and testing]; Enterprise Services AG [a Swiss company focused on process and IT consulting]; C:1 Holding GmbH
Zaffera	September 2011	SAP Consulting
CoreLogic India	July 2011	Mortgage processing
Galileo Performance	June 2010	Consulting related to the measurement, management and continuous optimization of IT system performance
PIPC Group	May 2010	Program & Project Management Consulting
UBS India Service Center	October 2009	Business process outsourcing, industry research
Pepperweed Advisors	8 September 2009	Business Consulting, Program Management
Active Intelligence	February 2009	Consulting, implementation and support services for Oracle Retail Merchandising, Planning and Optimization suite
Strategic Vision Consulting	June 2008	Business Consulting for media and entertainment companies
marketRx	16 November 2007	Life Sciences Analytics, healthcare KPO
AimNet	September 2006	IT infrastructure services
Fathom Consulting	April 2005	Telecom & Automotive IT Services
Ygyan Consulting	February 2004	SAP consulting
Infopulse	December 2003	IT services
Aces International	April 2003	Siebel CRM consulting
American Express Travel-related Services account from Silverline Technologies	Sep 2002	Financial services
UnitedHealthcare Ireland Limited	June 2002	Healthcare services (a subsidiary of the UnitedHealth Group)

Services

Cognizant provides information technology, consulting and BPO services. These include business & technology consulting, systems integration, application development & maintenance, IT infrastructure services, analytics, business intelligence, data warehousing, CRM, supply chain management, engineering & manufacturing Solutions, ERP, R&D outsourcing, and testing solutions.
 

In 2011, the company's revenue from IT services was split roughly evenly between application development and application maintenance. Its business process outsourcing portfolio leans towards "higher-end" services i.e., work that involves domain knowledge and skills, such as legal services or healthcare claims processing rather than simple voice-based support services.
 

In the 2012 earnings announcements, the CEO Frank D'Souza categorized the company's service offerings in three groups: Horizon 1 (application development and maintenance), Horizon 2 (BPO, IT Infrastructure Services & business consulting) and Horizon 3 ("SMAC" - Social, Mobile, Analytics and Cloud).[32] As of September 2012, the Horizon 1 services accounted for over 75% of the company's revenues, and Horizon 2 services about 20%.
 

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 D&B 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.

 

Offshoring and hiring in the U.S.

Cognizant is among the 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.[36] The company paid $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, and stated, "This level of cooperation sets a standard for others in the industry."

 

Operations

Geographies

In addition to its headquarters and delivery center in Teaneck, N.J., Cognizant has five additional U.S. delivery centers: Bentonville, Arkansas; Bridgewater, New Jersey; Chicago, Illinois; Holliston, Massachusetts; and Phoenix, Arizona. The company has more than 150,000 employees globally, of which over 100,000 are in India across 10 locations with a major chunk in Chennai. The other centers of the company are in Bangalore, Coimbatore, Gurgaon, Hyderabad, Kochi, Kolkata, Mangalore (CoreLogic), Mumbai and Pune. The company also has local, regional and global delivery centers in the UK, Hungary, China, The Philippines, Canada, 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 2011 financial statements, the major portion of Cognizant's revenues is derived from clients in the Financial Services (42.3%) and Healthcare (25.9%) industries. Other substantial revenue sources include clients from Manufacturing, Retail & Logistics (18.6%) and Communications, Information, Media & Entertainment and Technology (13.2%) industries. By geography, most of the revenue is derived from North America (77.2%) and Europe (19.2%). 

 

Corporate affairs

Marketing and branding

The company's flagship customer conference is Cognizant Community—sometimes simply called 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 to be in excellent financial health, reporting over $2.6 billion in cash and short term investments for the quarter ending 30 September 2012. 

 

Corporate Social Responsibility

Cognizant's philanthropic and corporate social responsibility (CSR) initiatives are conducted through the voluntary efforts of Cognizant employees and 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's 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. 

 

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.