“Industry analysts credit Cognizant for having the best mix of local and Indian workforce.”
Rather than being in the race to overtake this IT major or that, Cognizant is focused on being known as “No 1 in the minds of our customers in terms of capability,” says Lakshmi Narayanan, Vice Chariman, Cognizant in an interview with eWorld. He added that the Eurozone crisis was only a blip on the radar and would not affect the Indian IT industry in the long run.
eW: How is the Eurozone crisis affecting the Indian IT industry?
LN: This is the early stage of a mega trend. Given the size of the opportunity and the trends these are minor bumps. But the underlying trend is strong; of course periodically there will be some blips. Given the kind of role that the Indian IT industry is playing I don't think factors such as debt, fiscal deficit etc, which those countries are trying to solve, impact us that much. We are serving private sector companies and their investments and strategies don't change day to day; they are for the long term.
eW: What about Barrack Obama's fresh rant against outsourcing? Is it an election stunt?
LN: It was much stronger during the last elections. Then it did have an impact though officially there were no instructions. This time also, we think there will be an impact but much less, because we are prepared thanks to the experience four years ago. That surprised us, and we were worried. But then the industry tweaked the model and so did we…. to hire locally. We've always been hiring a lot in the US.
eW: So one solution is to hire locally?
LN: Yes; once you understand the broad sentiment, it gives us a direction… what Obama does today in US, surely Europe is going to do tomorrow. And the Asian countries will follow suit. If the US is asking us to create jobs there, we might as well do that! Industry analysts credit Cognizant for having the best mix of local and Indian workforce, clearly because of the acquisitions we did in UK, Germany, France, and the local, multicultural and diversified staff.
eW: Are you still in the race for Oracle Financial?
LN: Suddenly that story came up, we don't know from where; we sat up and looked at it and now it has gone! Its' just a story!
eW: Surely Cognizant is looking at new markets beyond Europe and US?
LN: Yes, we are looking at the Asia Pacific region; our strategy has been to invest. We did not have investment dollars for all the geographies at the same time. Also, focus is lost if you go to multiple areas. Our initial focus was on the US. In the US we are the second largest, after TCS. And we have a good reputation, the money we invested has produced good results and we are comfortable there. Three to four years back we started investing and acquiring companies in Europe.
eW: How critical is M&A to your success and growth path?
LN: Very critical, particularly in Europe, because along with local talent you also get the culture and way of doing business. We learnt that... and the returns are there to see. So we will continue with these acquisitions. Only this year we are looking at emerging markets… Singapore, Australia, China, and also Japan, which is not an emerging market.
eW: After overtaking Wipro this calendar, is it Infosys next? And isn't your goal to become number one?
LN: When people say “overtake” it sounds like a run rate! The gap is narrowing but that is not really what we are focused on. Internally we've said for a long time that to be known as No 1 in the minds of our customers in terms of capability is far more important. Somebody can acquire another company and become big overnight and beat us so that chase is not sustainable. But if you are delivering value to your customers and the market respects you, that gives satisfaction. Satisfaction comes out of earning respect, not merely numbers. What matters most is the customer saying: ‘Among all the companies I've worked with your people and culture are the best.'
eW: That's fine, but you must have definite plans for growth?
LN: Yes, growth is very important for us. We are focused on growing faster than other companies so we can tell people that if you join us, your growth in this company will be faster than elsewhere. That's the way to attract good talent. And once you have talented people coming in, they fuel the growth and you get into a virtuous cycle, which is important.
eW: You were one of the first to combine IT services with consultancy. Is that model working?
LN: Yes. We said everybody knows that in technology Indians are fantastic. But then we trained our technologists to understand consulting and solving business problems. It didn't work so we hired people with industry experience from outside as well as from business schools, IIMs, ISB, etc, in large numbers and integrated them. We told the technologists that even though these might be your batchmates, they are going to get a higher pay because the profile of their work is very different. It took a couple of years for people to adjust to that, but it happened.
eW: Talking of hiring, IT companies are on the hiring path again; so things are looking up?
LN: Yes. The segment we don't see... people think the IT industry is only Cognizant, Infosys, TCS or Wipro, but you should look at the number of captives. So many of these overseas companies are investing, banks are setting up facilities. Cisco has its captive centre hiring large numbers, IBM is hiring probably more people in India than any other Indian IT company. That's the scale. Dell, HP, etc are all investing and hiring in India. Those numbers don't get reported. When you see the employment in the IT sector it's a combination of all these companies, including domestic players. We normally joke that there is far more hiring that happens between these companies than the new recruitment. What gets reported in the media is Cognizant went to the Universities and hired so many!
eW: But attrition levels continue to remain high too.
LN: Yes 15- 20 per cent… the net new hiring is not 20 per cent.
eW: There is perception that the second level leadership is not in place in Cognizant. Your comments.
LN: The lines of leadership are there; they are not visible because of our culture… we are a very, very quiet company.
eW: Or is it because you are not listed here?
LN: Probably, at least that's what the media attributes it to. In an even bigger company like Accenture we don't even know who the CEO is in India. They too are not listed here and the Indian media tends to look at companies listed here.
eW: Is the profile of the company related to your personality?
LN: (Smiles) Part of it may be due to the way I am! But more importantly, the Board too would like it that way. They say you don't have to promote yourself. Of course without selling nobody ever buys. However good you may be, you have to sell. So do that for your customers, but stop there. You produce the results, the investors will automatically come.