Cognizant

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Cognizant Technology Solutions Corporation
Type Public
Traded as NASDAQ: CTSH
NASDAQ-100 Component
S&P 500 Component
Industry IT services, IT consulting
Predecessor(s) Dun & Bradstreet
Founded January 26, 1994
Founder(s) Kumar Mahadeva
Headquarters Teaneck, New Jersey, United States
Area served Worldwide
Key people John E. Klein (Chairman)
Francisco D'Souza (CEO)
Services IT, business consulting and outsourcing services
Revenue Increase US$ 8.843189 billion (2013)[1]
Operating income Increase US$ 1.36 billion (2012)[1]
Profit Increase US$ 1.23 billion (2013)[1]
Total assets Increase US$ 8.21 billion (2013)[1]
Total equity Increase US$ 6.14 billion (2013)[1]
Employees 171,400 (Dec 2013)[1]
Website www.cognizant.com

Cognizant Technology Solutions Corporation is an American multinational information technology, consulting and business process outsourcing company. It is headquartered in Teaneck, New Jersey, United States, North America. 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, with headquarters in Chennai, India,[2] Cognizant started serving external clients in 1996. In 1997, the headquarters were moved from Chennai to Teaneck, New Jersey.[2] Cognizant's IPO was launched in 1998, after a series of corporate splits and restructures of its parent companies, the first Indian software services firm to be listed on the Nasdaq.[2] 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.[3] In 2011, the Fortune magazine named it as the world's third most admired IT services company after Accenture and IBM.[4]

History

Cognizant has its roots in The Dun & Bradstreet Corporation, a joint venture between Dun & Bradstreet (76%) and Satyam Computers (24%).[5] Srini Raju was the CEO of this company established in 1994.[6] 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.[7]

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.[5][8] Headquarters were moved to the United States, and in March 1998, Kumar Mahadeva was named CEO.[9] Operating as a division of the Cognizant Corporation, the company mainly focused on Y2K-related projects and web development.[10]

In 1998, the parent company Cognizant Corporation was split into two companies: IMS Health and Nielsen Media Research.[11] 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.[10]

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.[7] Cognizant's revenues in 2002 were $229 million, and the company had zero debt with $100 million in the bank.[10] During the dotcom bust, the company grew by taking on the maintenance projects that larger IT services companies did not want.[12]

In 2003, IMS Health sold its entire 56% stake in Cognizant, which instituted a poison pill provision to prevent hostile takeover attempts.[10][13] Kumar Mahadeva resigned as the CEO in 2003, and was replaced by Lakshmi Narayanan.[14] 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.[15][16]

Acquisitions

Company acquired Country Date Business Reference
ValueSource Technologies India India October 2013 IT services [17]
Equinox Consulting France France October 2013 Financial Services Consulting Firm [18]
C1 group (6 companies) Germany Germany 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 [19]
Zaffera United States USA September 2011 SAP Consulting [20]
CoreLogic India India India July 2011 Mortgage processing [21]
Galileo Performance France France June 2010 Consulting related to the measurement, management and continuous optimization of IT system performance [22]
PIPC Group United Kingdom UK May 2010 Program & Project Management Consulting [23]
UBS India Service Center India India October 2009 Business process outsourcing, industry research [24]
Pepperweed Advisors United States US 8 September 2009 Business Consulting, Program Management [25]
Active Intelligence Canada Canada February 2009 Consulting, implementation and support services for Oracle Retail Merchandising, Planning and Optimization suite [26]
Strategic Vision Consulting United States US June 2008 Business Consulting for media and entertainment companies [27]
marketRx United States US 16 November 2007 Life Sciences Analytics, healthcare KPO [28]
AimNet United States US September 2006 IT infrastructure services [29]
Fathom Consulting Canada Canada April 2005 Telecom & Automotive IT Services [30]
Ygyan Consulting India India February 2004 SAP consulting [31]
Infopulse Netherlands Netherlands December 2003 IT services [32]
Aces International United States US April 2003 Siebel CRM consulting [30]
American Express Travel-related Services account from Silverline Technologies United States US Sep 2002 Financial services [33]
UnitedHealthcare Ireland Limited Republic of Ireland Ireland June 2002 Healthcare services (a subsidiary of the UnitedHealth Group) [34]

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 Francisco 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).[35] 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

Cognizant's original corporate headquarters in Chennai, now an offshore delivery center.

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.[36]

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.[37] In February 2011, Cognizant said it had 60 full-time recruiters actively hiring in the U.S.[38]

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.[39] 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."[40]

Operations

Geographies

In addition to its global headquarters and delivery center in Teaneck, N.J., as well as the U.S. headquarters in College Station, Texas, Cognizant has nine additional U.S. delivery centers: Bentonville, Arkansas; Bridgewater, New Jersey; Chicago, Illinois; Des Moines, Iowa; Holliston, Massachusetts; Minot, North Dakota; Phoenix, Arizona; Southfield, Michigan; and Tampa, Florida.[41]

The company has more than 150,000 employees globally, of which over 100,000 are in India across 10 locations with a plurality in Chennai. The other centers of the company are in Bangalore, Coimbatore, Gurgaon, Hyderabad, Kochi, Kolkata,[42] Mangalore (CoreLogic), Mumbai, and Pune. The company has local, regional, and global delivery centers in the UK, Hungary, China, The Philippines, Canada, Brazil, Argentina, and Mexico.[citation needed]

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%).[43]

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".[44]

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.[45]

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.[46][47] 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.[48][49]

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.[50][51]

Environmental record

Cognizant's sustainability efforts include a Go Green initiative launched in 2008 focused on energy conservation, recycling, and responsible waste management.[52] In October 2012, Newsweek magazine ranked Cognizant 50th among the 500 largest publicly traded companies in America, in its annual Green Rankings.[53]

Fortune 500

Year Rank
2013 352[54]
2012 398[55]
2011 484[56]

See also

References

  1. ↑ 1.0 1.1 1.2 1.3 1.4 1.5 "Cognizant Financial Statements". Google. Retrieved 27 June 2012. 
  2. ↑ 2.0 2.1 2.2 Mishra, Pankaj (2013-03-21). Cognizant’s Francisco D’Souza: The horizon chaser. Live Mint and the Wall Street Journal, 21 March 2013. Retrieved on 2013-07-30 from http://www.livemint.com/Companies/VduU2oUfVOTxR4MYarjjiJ/Cognizants-Francisco-DSouza-The-horizon-chaser.html.
  3. ↑ "Cognizant joins the Fortune 500 club". rediff. 6 May 2011. Retrieved 27 June 2012. 
  4. ↑ "World's Most Admired Companies (Information Technology services), 2011". Fortune. Retrieved 27 June 2012. 
  5. ↑ 5.0 5.1 "No modest ambitions for Cognizant". Express Computer. 8 October 2011. Retrieved 27 June 2012. 
  6. ↑ Swati Anand & Ishan Srivastava (6 November 2010). "'Cognizant is like a $4-billion tech startup'". Times of India. Retrieved 27 June 2012. 
  7. ↑ 7.0 7.1 Silvia Sansoni (14 June 1999). "The contrarian]". Forbes. 
  8. ↑ "Cognizant back in search of Satyam". Business Standard. 4 April 2009. Retrieved 27 June 2012. 
  9. ↑ Kumar Mahadeva quits as Cognizant chief
  10. ↑ 10.0 10.1 10.2 10.3 International Directory of Company Histories, Vol.59. St. James Press, 2004.
  11. ↑ "Dun & Bradstreet Spinoff Will Split in Two". The New York Times. 16 January 1998. Retrieved 27 June 2012. 
  12. ↑ Rasheeda Bhagat (9 February 2012). "Cognizant rising by Chennai beach". The Hindu. Retrieved 27 June 2012. 
  13. ↑ IMS sees some positive impact from Cognizant sale by Eric Auchard. Rediff, 16 November 2002 | 1149 IST.
  14. ↑ "Cognizant founder steps down". The Hindu Business Line. Retrieved 27 June 2012. 
  15. ↑ Anne VanderMey (14 September 2011). "Fastest-growing: 16 all-stars". Forbes. Retrieved 27 June 2012. 
  16. ↑ "Cognizant in Fortune 500". Fortune. Retrieved 27 June 2012. 
  17. ↑ "KBC verkoopt ValueSource aan Cognizant". 3 October 2013. Retrieved 3 October 2013. 
  18. ↑ "Cognizant Acquires Equinox Consulting, a Financial Services Consulting Firm in France". 2 October 2013. Retrieved 2 October 2013. 
  19. ↑ "Cognizant to Acquire Six Companies of the C1 Group, a Leading German Consulting and IT Services Group". 21 December 2012. Retrieved 5 January 2013. 
  20. ↑ "Cognizant buys Zaffera,a US SAP consulting Company for an undisclosed value". The Economic Times. 28 September 2011. Retrieved 27 June 2012. 
  21. ↑ Suparna Goswami Bhattacharya (27 July 2011). "Cognizant to acquire CoreLogic’s Indian business". DNA. Retrieved 27 June 2012. 
  22. ↑ "Cognizant buys Paris-based Galileo Performance". Business Standard. 18 June 2010. Retrieved 27 June 2012. 
  23. ↑ "Cognizant acquires PIPC". The Economic Times. 10 May 2009. Retrieved 27 June 2012. 
  24. ↑ "Cognizant acquires India unit of UBS for $75m". The Times of India. 16 October 2010. Retrieved 27 June 2012. 
  25. ↑ "Cognizant buys Pepperweed Advisors". The Hindu. 9 September 2009. Retrieved 27 June 2012. 
  26. ↑ Chandra Ranganathan (11 February 2009). "Cognizant acquires Canada consulting firm Active Intelligence". Economic Times. Retrieved 27 June 2012. 
  27. ↑ "Cognizant acquires US firm SVC". The Economic Times. 10 June 2008. Retrieved 27 June 2012. 
  28. ↑ Narayanan Madhavan (20 October 2007). "Cognizant to acquire marketRX for $135 m". Hindustan Times. Retrieved 27 June 2012. 
  29. ↑ "Cognizant acquires US co AimNet". The Hindu Business Line. 7 September 2006. Retrieved 27 June 2012. 
  30. ↑ 30.0 30.1 "Cognizant buys Fathom for $35 mn". rediff.com. 18 April 2005. Retrieved 27 June 2012. 
  31. ↑ "Cognizant Tech Acquires Pune SAP Firm For $2 Mn". The Financial Express. 23 February 2004. Retrieved 27 June 2012. 
  32. ↑ "Cognizant Acquires Infopulse For $5 M". The Financial Express. 3 December 2003. Retrieved 27 June 2012. 
  33. ↑ "Cognizant Acquires American Express". The Financial Express. 22 September 2012. Retrieved 27 June 2012. 
  34. ↑ "Cognizant centre in Ireland". The Hindu Business Line. 11 June 2002. Retrieved 27 June 2012. 
  35. ↑ "Cognizant Technology Solutions Corporation Q1 2012 Earnings Call Transcript". Morningstar. Retrieved 27 June 2012. 
  36. ↑ Peter Cappelli; Michael Useem, Harbir Singh, Jitendra Singh (2010). The India way. Harvard Business Press. pp. 138–143. ISBN 978-1-4221-4759-7. 
  37. ↑ "Cognizant Expands North American Delivery Center Footprint to Accommodate Rapid Growth". Retrieved 27 June 2012. 
  38. ↑ "Twitter status". Cognizant. 24 February 2011. Retrieved 27 June 2012. 
  39. ↑ "Audit Results". Cognizant. Retrieved 27 June 2012. 
  40. ↑ "Teaneck N.J. information technology company agrees to pay more than $509,000 in back wages following U.S. Labor Department investigation". 30 March 2009. Retrieved 27 June 2012. 
  41. ↑ Cognizant (2013). Office & Locations – Cognizant Technology Solutions. Retrieved on 2013-08-22 from http://www.cognizant.com/contactus/office-locations.
  42. ↑ Bengal IT minister tells Cognizant growth story to lure Infy, Wipro
  43. ↑ 2011 Corporate Fact Sheet
  44. ↑ "Cognizant Community: a model industry event". Vinnie Mirchandani. 15 March 2011. Retrieved 27 June 2012. 
  45. ↑ "Cognizant (CTSH) Financials". Google Finance. Retrieved 4 January 2013. 
  46. ↑ CSR World. Last accessed on 6 March 2012.
  47. ↑ Cognizant Foundation extends aid to five NGOs
  48. ↑ "Cognizant Outreach distributes notebooks". The Hindu. 27 June 2010. Retrieved 27 June 2012. 
  49. ↑ "Industry insights from Cognizant for AUT faculty". The Hindu. 14 May 2011. Retrieved 27 June 2012. 
  50. ↑ "Cognizant to Unveil 'Making the Future' STEM Education Initiative at World Maker Faire, New York Hall of Science". Retrieved 27 June 2012. 
  51. ↑ Mary Moore (12 December 2011). "Cognizant to donate $810K to Museum of Science for STEM". Boston Business Journal. Retrieved 27 June 2012. 
  52. ↑ Cognizant goes for green I.T. Manila Bulletin. 15 August 2011.
  53. ↑ "Newsweek Green Rankings 2012". Retrieved 5 January 2013. 
  54. ↑ "2012 Fortune 500 rank". CNN Money. Retrieved 13 May 2013. 
  55. ↑ "2012 Fortune 500 rank". CNN Money. Retrieved 13 May 2013. 
  56. ↑ "2011 Fortune 500 rank". CNN Money. Retrieved 29 May 2013. 

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