Different metric for digital: Cognizant

BENGALURU: Cognizant has given different financial metrics to its digital business so that it can compete better in the market and become a suitable place to house its digital acquisitions, the IT services provider’s digital business unit chief told ET.The Teaneck, New Jersey-based company is structured into three units — digital business, digital operations and digital systems and technology. The digital business unit houses its cloud and Software as a Service (SaaS) acquisitions and a slew of other units such as interactive, which is focused on marketing technology. “The operating rhythm and financial model of the digital business is different. The clock-speed of the business is four to five times faster than the normal business. You have to be able to have an operating model where you can assemble teams quickly and be agile,” Malcolm Frank, the president of Cognizant Digital Business, told ET.“That flows through the whole P&L (profit and loss statement). The utilisation model is different, the gross margin models are different, how we source talent is different and you can make up for it with the bill rates,” Frank added.Digital contributes more than 30% to Cognizant’s revenue and is growing at over 20% year on year. Digital is a key area for Cognizant under CEO Brian Humphries. Since Humphries took over last April, the company has begun a process of cutting thousands of jobs and has removed or let go a significant number of senior level talent as it begins to flatten its hierarchy.Frank said the company was beginning to recover from earlier distractions, such as complying with activist hedge fund Elliott Management’s demands. “The soul of Cognizant is being client-first and we are just getting back to that. We are pivoting to a digital portfolio and have a set of services that are relevant to what clients need,” Frank said.The company also looks at acquisitions differently now. Humphries has previously likened acquisitions to puppies given as Christmas gifts, which then become hard to manage a few months later.

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