Dear Shareholders,
On January 12, 2023, I became the fifth Chief Executive Officer of Cognizant since its founding 29 years ago. My appointment is one of the proudest moments of my life. I am excited and humbled by the opportunity to lead Cognizant, a company I have long admired, into its next era of growth. The Board of Directors and I are focused on two interrelated, long-term priorities: first, to help Cognizant become the employer of choice in its industry; and second, to meaningfully accelerate revenue growth. Cognizant’s ability to sustain growth in the global IT services industry hinges largely on the quality, dedication and scale of its talent base. We stay relevant to our clients and create value for them by drawing on the knowledge, skills and passion of our more than 355,000 associates—the largest workforce in Cognizant’s history.
Since the client and employee experience are interdependent, we believe we can create a self-reinforcing cycle. When associates feel valued and respected, so do clients. Highly engaged associates, who are passionate about applying their expertise to serve clients, tend to attract sophisticated clients whose complex challenges require a deep, strategic engagement. These clients in turn attract more dynamic people who are interested in doing high-value work, turning the flywheel faster.
Encouraging a growth mindset
One of my most important roles as CEO is to create conditions for all our associates to thrive. Cognizant has long been a “big, small company,” proving that it is possible to build an organization that is both disciplined and empowering as well as efficient and enterprising. To enhance this trait, we have set in motion plans to catalyze our entrepreneurial spirit that emphasizes being agile, adaptable and ambitious.
To our shareholders
Our starting point is to calibrate our collective thinking to emphasize a growth mindset and foster a belief in our aggregate potential to keep learning, innovating and advancing. To that end, we plan to further simplify our operating model, organization and objectives, and ensure globally consistent ways of working. In 2022, Cognizant established a number of new practice areas to better serve our clients through integrated solutions and delivery. Our drive for simplification will also include operating with fewer layers and moving more decision-making to those associates closest to our clients. I am committed to providing our teams with continuous training, upskilling and professional development. I am just as dedicated to building a modern workplace to help the company respond quickly to an ever-changing world.
The pandemic has sped up the decoupling of work from workplaces and the dispersal of work globally. Hybrid workplaces are becoming the norm, which means moving work to where people are rather than moving people to where the work is. At Cognizant, we are implementing a hybrid work model that strikes a balance between how clients want to interact with our teams and how associates can achieve the flexibility they want along with the opportunity to build their social capital with colleagues to advance their careers.
A growth mindset also requires diversity of thought and perspective. We believe having a multiethnic, multigenerational, multigeographic team is the best way to challenge established ways of thinking and keep innovating. We are resolved to accelerate our progress in building a diverse and inclusive workplace and to place special emphasis on hiring and retaining women in leadership roles.
Building on Cognizant’s strong foundation
I have been leading the company for more than three months and have spent much of my time on a listening and learning tour, meeting with a hundred large clients and visiting many of our global teams, virtually and in person. This included an extended trip to India, which is home to over 70% of our workforce. I am deeply impressed with the knowledge, skills and motivation of our associates. They are dedicated to helping clients succeed and determined to compete and win to expand our global leadership in technology services.
We have a large base of global clients with whom we have enduring strategic partnerships. The trust and longevity of these relationships have enabled us to become deeply knowledgeable about clients’ businesses, customers, IT environments and cultures. We see plenty of opportunity to further strengthen and grow these relationships.
Having assessed Cognizant’s business operations and the needs of our clients and partners, I believe the company can accelerate growth without going back to the drawing board. We are building on a strong foundation that includes the continuing execution of our strategy to advance our capabilities to design, integrate and deliver solutions for global clients. Clients today need not only technology capabilities but also business outcomes that can help them stay relevant to their customers.
To deliver outcomes, we have developed a broad portfolio of digital services and continue to extend our leadership in AI, data, digital engineering, cloud and IoT through organic investments and a strengthened partner ecosystem, coupled with more than $3 billion in acquisitions since 2019. Just as important, we are creating value for clients at the intersection of technology and industry use cases such as digital health, software-defined vehicles, drone-based inventory audits, smart manufacturing and utility grid modernization.
I believe Cognizant’s ability to integrate business and technology know-how to create solutions, facilitated by advisory strength, is a source of competitive advantage.
Our capabilities are in demand as clients navigate a challenging macroeconomic environment and seek help reducing operating costs. They can then apply these savings to building digital operating models designed to improve their customer and employee experiences and modernize their operations. Cognizant is one of a small number of companies in the world with the deep understanding of business processes combined with the people, portfolio and partnerships across the technology stack to help clients prosper, whether they aim to achieve efficiency gains, higher levels of innovation, or the transformation of their business.
That is why we define the Cognizant brand platform with the words “intuition engineered,” which is our commitment to engineer clients’ businesses so they can anticipate and meet their customers’ needs with the insight and speed of intuition.
The keystone of Cognizant’s foundation is a robust and resilient global delivery network. We have been increasing our nearshore and onshore capabilities by establishing global technology and service delivery centers across the world. During 2022, we opened centers in Halifax, Canada; Adelaide, Australia; and Leeds, UK, to provide clients with more direct access to highly-skilled technology experts who are based locally and therefore attuned to their needs. Cognizant also has a substantial network of studios in nearshore and onsite locations where we use a rigorous agile software methodology, deliver complex software projects and co-create solutions with clients. While India remains our main hub for delivery, we will continue to build out our global delivery network to provide greater resilience in our capabilities and greater access to local talent.
I see a substantial opportunity to expand our business internationally through targeted organic and inorganic investments in select countries. To that end, we have been allocating more capital to international opportunities for investment in acquisitions, sales, marketing and talent as we expand our delivery capabilities in these markets.
Cognizant is a knowledge-rich company. To stay that way we have built one of the industry’s most comprehensive digital learning and development ecosystems. Our learning and development professionals oversee access-from-anywhere learning platforms, prominent content curation partnerships and relationships with the world’s leading educational and technology partners. We strive to support our associates through all stages of their career journey, from campus hire training through capability assurance programs and leadership development programs.
In 2022, our associates completed more than 25 million hours of learning and more than 150,000 associates developed digital skills. During the year, the Brandon Hall Group, an independent professional development company, awarded Cognizant 42 Human Capital Management Awards for learning and development.
Another distinctive strength is our large presence in India, where we have approximately 260,000 associates. I believe India will be the world’s technology talent hub for the next decade. Its population has a demographic profile and digital talent pool currently unmatched by any other country. We plan to continue capitalizing on India’s rich IT talent pool as we intensify efforts to recruit not only in the largest cities but also in midsize metropolitan areas. The Cognizant brand is well-known on India’s college campuses.
Focusing on enablers of growth
As confident as we are in Cognizant’s prospects, the executive leadership team and I are fully aware that we have a great deal of work ahead of us. It will take time to replenish our pipeline and go after larger opportunities. To help deliver the outcomes we seek, I have asked our global teams to focus initially on the following growth enablers.
We are working to refine the way we go to market and enhance our ability to win large deals. Accelerating large deal bookings that align with our risk appetite is essential to building commercial momentum and enhancing Cognizant’s stature as a provider of business outcomes aligned by industry.
Over the past year, Cognizant has established a comprehensive approach to large deals that spans the development of strategic pursuits and large deals, deal management and closure, and fit-for-purpose solutions and delivery models. The company saw the first fruits of this effort in the fourth quarter of 2022 with the signing of a 10-year, $1 billion renewal contract with CoreLogic, a leading global provider of property information, analytics and data-enabled solutions.
We are building on these capabilities to reenergize our efforts. This will include instilling a greater sense of pride and empowerment among our client partners and delivery teams to encourage a more rapid and agile response to clients’ needs. We intend to apply our digital transformation expertise particularly in cloud migration, automation and industry-specific platform innovation, to drive a superior customer experience through operational excellence.
We also plan to continue strengthening our portfolio of digital services by embedding the latest advances in AI and automation to improve reliability and resilience while reducing the complexity and costs of technology operations and infrastructure. At the same time, we are working with our partner ecosystem, building an innovation network, industrializing delivery, and leveraging our delivery teams, market consortiums and market influencers.
Cognizant has put special emphasis on its relationships with the world’s leading hyperscalers and SaaS companies. With our dedicated business groups for Microsoft Azure, Amazon Web Services and Google Cloud Platform, we have become skilled at helping clients run their core applications and create more agile workflows in the cloud. In addition, we are aligning our horizontal and industry-specific offerings with the capabilities and offerings of hyperscalers and other partners.
In recent quarters, Cognizant has revitalized its acquisition engine. Targeted acquisitions are a means to increase our digital revenue mix, build new capabilities and gain access to specialized digital talent. During the fourth quarter of 2022, we acquired AustinCSI, a digital transformation consultancy specializing in enterprise cloud and data analytics advisory services. In addition, we acquired Utegration, a consulting and solutions provider specializing in SAP® technology and SAP-certified products for the energy and utilities sectors. Earlier this year, we acquired the professional services and management practices of Workday partner OneSource Virtual. We also acquired Mobica, an IoT software engineering provider that strengthens our nearshoring capabilities in Eastern Europe, which was already home to nearly 8,000 of our associates.
As a longtime student of technology and IT services trends, I believe we are in a golden era of technology and that software is the new alchemy for nearly every business, industry and country. Those organizations that want to stay relevant to their customers are embedding digital technologies into the core of their businesses, products and services. Clients recognize that digital platforms are now the norm for building and running a modern business. That is why they are interested in bringing AI into the heart of their businesses. We expect AI will come to reengineer enterprises as completely as enterprise software did three decades ago. We also believe the cloud will continue to remain the biggest general-purpose technology of the last few decades and be deeply embedded as a digital pillar in every business.
What could these developments mean for Cognizant? With nearly every industry now reliant on technology, the use of deep software engineering capabilities to transform the core of businesses will be important for technology services firms like Cognizant. We also expect clients to continue turning to Cognizant for help orchestrating their cloud capabilities, including new services like data on cloud, data exchanges, SaaS services and cloud security services.
What matters most to clients is the ability to stay attuned to shifts in the external environment and respond accordingly. We believe Cognizant is in a strong position to help clients get enhanced value from accelerating technology adoption and data-intensive ways of working and prepare their workforces for the new kinds of work brought on by a digital mindset.
Cognizant takes seriously the responsibility to use its knowledge and resources to serve the global public good and help address the effects of climate change. Our ESG commitments extend to the environment, with a focus on climate; to social, with a focus on talent and diversity and inclusion; and to governance, with a focus on data privacy and security.
The company is deeply engaged with its communities, especially through the Cognizant Outreach program, which mobilizes associates’ expertise and enthusiasm through volunteer work. During 2022, over 47,500 unique associates around the globe contributed over 171,900 volunteer hours as part of Cognizant Outreach. We believe our community work is a key value proposition for our associates, who do so much good preparing underrepresented populations with the skills and knowledge needed for technology careers while promoting sustainable living practices in people’s homes and communities. I believe we have an opportunity to apply Cognizant’s reskilling and learning infrastructure to help our communities improve human capital at scale.
For my part, I will continue to listen, learn, act and lead. I’m grateful for the Board of Directors’ trust and support. I am fortunate to be surrounded by a deeply experienced leadership team and my ardently client-focused colleagues around the world who are the heart and spirit of this wonderful company.
I am thrilled to be serving as Cognizant’s CEO and super energized to lead Cognizant into its next era of growth. I will put everything I have into making this happen.
Thank you for the opportunity to earn your confidence and trust.
Sincerely,
Ravi Kumar S
Chief Executive Officer
April 21, 2023
Read the original letter here.
