Cognizant Introduces 'New Strategy' to Build Digital Business; 'Best so far for Employees'- Details!

As a strategy to build its digital business, IT major Cognizant Technology Solutions Corp is betting on mergers and acquisitions (M&A), which the company believes in a nascent stage. Cognizant has made five digital-based acquisitions so far in 2020, all of which are primarily in the cloud-computing space.    

"I believe we are in the early stages of digital and that COVID-19 has accelerated digital adoption. Digital creates an enormous opportunity for Cognizant, and we intend to capture this. We have complemented organic investments with a targeted M&A strategy focused 100 percent on digital," said Brian Humphries, CEO, Cognizant.

“Cloud computing has changed the way IT is delivered across infrastructure applications and platforms," Humphries added.

As per Live Mint report, earlier in February, Cognizant had acquired Code Zero, which was a provider of cloud-based billing solutions and the French operations of EI-Technologies. It was a Paris-based independent Salesforce specialist. Then in March, the company acquired Lev, a digital marketing consultancy that helps businesses modernize their marketing campaigns with data-driven insights. 

Two months later in May, Cognizant acquired Collaborative Solutions which is expected to add new finance and HR advisory and implementation services to its cloud offerings. Then in June, the firm entered into an agreement to acquire New Signature, an independent Microsoft public cloud transformation specialist, Live Mint further reported. 

Looking into the revenue factor, except for EI Technologies, the rest are based in the US, which is Cognizant’s largest market that contributed 75.8 percent to the overall revenue in 2019. "Cognizant’s digital bookings grew almost 50 percent in the first half of the year fuelled by digital engineering, artificial intelligence and analytics, interactive and software-as-a-service (SaaS)," Humphries later stated.

Giving an insight into digital business, analysts believe that acquisitions are an efficient way to achieve fast growth in digital business. "When organic growth is complemented with acquisitions, it helps with faster time-to-market and also provides ready access to skills and clientele," a Mumbai-based IT analyst said. 

However, Humphries in a post-earnings call said that clients’ requirement of digital technologies to stay competitive in a post-covid world aligns directly with our strategy to win in digital, including cloud, AI and analytics, digital engineering and IoT. 

So far, Cognizant’s digital business grew 14 percent y-o-y for the quarter ended June and accounted for 42 percent of the total revenues. Of late, Tata Consultancy Services (TCS) Ltd and Wipro Ltd have stopped reporting digital revenues separately, Live Mint further reported.