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Industrial Products India, Industrial Manufacturers & Suppliers
 




 
   
 
 
 

Cognisant of Cognizant....

Cognisant of Cognizant


Cognizant’s race past information technology major Wipro marks an inflection point in the evolution of India’s software industry. The entire industry may have been hit by global trends since 2008, but it is the way each company has responded to external challenges that has separated the front runners from the rest. Wipro has been affected by three factors. One, despite establishing itself as the world’s largest design services house, it has not made a mark in serving the global financial services sector, the main customers of India’s leading software companies. When the global economy, particularly the battered financial services industry, began to recover, software firms that were first to come to the latter’s aid and help finance companies reduce costs were the quickest to recover. Two, Wipro cut costs drastically during the recession by reducing the sales and marketing staff. When the recovery began, those with heavy marketing artillery were able to ramp up customer acquisition quickly. Three, the leadership change at Wipro, as at Infosys, has not been a smooth affair and seems to have hurt the company.
Cognizant, on the other hand, has had several factors going for it, enabling it to steadily clock 30 per cent-plus topline growth. First, it is strong on partnering the financial services and healthcare industries. While the former is a traditional provider of bread and butter, the attempt by the US to reform healthcare and cut costs is creating a strong demand for IT services in healthcare. Second, it handled succession quite well by putting in place a young leader, Francisco D’Souza, four years ago. Third, Cognizant is unique in that it is a US-registered firm with a strong sales and marketing team there and a factory or development capability in India. This makes it a cross between TCS (efficient volume delivery) and Accenture (strong customer industry knowledge and consulting skills). Thus, when the recovery began, it was able to grasp opportunities by the horns. While Cognizant may be basking in its well-deserved glory, two caveats are in order: it is way behind Indian challengers in delivering business margins (net margin of 16 per cent compared to 23 per cent-plus of Indian leaders) and, at a time when the rupee is strong, its US dollar numbers look better than the rupee numbers of Indian firms. But the future looks good for Cognizant.

Finally, the relative rise of Chennai’s Cognizant and Mumbai’s TCS and the setbacks faced by Bangalore’s Wipro and Infosys (after Hyderabad’s Satyam) mean that the geographical footprint of the Indian IT and software services business is spreading out from its original homes. While Bangalore retains its impressive agglomeration of technology skills, its days as a volume-driven IT leader may be numbered.

 
     
 
   
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