Industry still has a few more years of disruption ahead: Cognizant CEO Francisco D'Souza
US-headquartered Cognizant Technologies Solutions does not believe success is guaranteed as the IT industry begins to make investments in newer technologies.
We’ve seen a number of obituaries written about the Indian IT industry. What do you make of the prospects for the sector?
The world is in the first innings of the big digital build-out that is happening and services firms have a big role to play in that. Having said that, services firms, like any other business, have to innovate; they have to build out. They have to change the model to be able to cater to this new demand and I think there will be different degrees of success as firms embark on that journey. I think we have done a lot to accelerate that shift to business, as I think our results show. But I don’t think success is guaranteed, as the industry goes through this transition.
The IT industry has gone through several transitions. Is this one different? And how long would you say it will take before the disruptions give way to a sort of steady state?
This one is different. In the past technology transitions, you’ve generally seen a pattern where there is this big technology disruption once every decade or so. And it was generally characterised by a brief period of very, very intense innovation, lots of change and then a seven- or eightyear period of adoption, which was steady state, and so on. What we have seen in digital is that it isn’t one thing.
So we have had now, a period of four-five years of intense innovation, and it does not appear like it is slowing down. So my guess is we are going to see another few years of very intense innovation. Areas like artificial intelligence are still in the very early stages. My best prediction, though I don’t have a crystal ball, is that we still have a few more years of disruption.
How does Cognizant see the demand for digital? Is the work with traditional large enterprises or with digital companies? And are the contract sizes getting larger?
Our strategy has always been to serve a small number of clients and serve them deeply. The relationships we have tend to be long-term businesses. So although we do some work in our technology business for the digital natives, the bulk of what we are doing is taking the innovation that is happening in places like Silicon Valley and deploying that innovation on the part of our clients, the traditional clients.
Over the past, say, 12 months or so, we have seen digital go from clients piloting and trying things to moving to digital at scale. So our clients are understanding that digital is necessary and are doing digital scale initiatives. So we are seeing much larger digital projects. What I can tell you is that digital, as we define it, is over 25% of our revenue. Last quarter, it grew in the neighbourhood of 30% year-on-year. So it’s a big business and it is growing fast.
We’ve seen a slew of IT companies unveil large hiring plans in the US and other markets. What is driving this change?
India is still our largest employee location. It is still our largest hiring location. We are actively hiring in many other parts of the world, which is being driven by the move into more digital business. We are having to hire different skills — data skills, design — and those are required close to the customers. We are also creating regional centres in other countries because talented people such as data scientists and designers tend to be concentrated in certain parts of the US and Europe. And the talent isn’t mobile or is, rather, less mobile. So we are creating good homes for them as we need them. Having said all of that, I don’t see the global distribution of workforce meaningfully changing over the next few years. I don’t think these shifts are tectonic shifts that are going to move the distribution of the workforce.
We’ve seen a lot of IT companies talk about making the organisation innovative. How does Cognizant look at balancing the need for innovation with having to run large amounts of still traditional IT loads?
It’s a false choice to try to say that some things are innovative and others are not. The mindset we try to cultivate is that you can bring innovation to anything that you are doing, and frankly, that has never been truer than it is today. If you think about tasks that are more routine or repetitive, those are the perfect tasks for automation, new tools and techniques. So across the spectrum, there are opportunities to innovate. The Cognizant Accelerator focusses on some big opportunities, but we expect innovation everywhere.