Once the revenue starts kicking in again, everything starts humming: Cognizant CEO
There are some things that exceeded expectations. The client centricity, the fact that clients love the brand.
In an interview with ET’s Jochelle Mendonca and Raghu Krishnan, Humphries outlined his new sales strategy and the digital battlegrounds he intends to win.
Cognizant has been in restructuring mode for about the last three years. You’ve been meeting customers over the last six months. Have your clients brought this up in your meetings?
Whatever has been happening at Cognizant hasn’t impacted our customers, and every CEO joining a company will inherit an organization, a culture, a set of values, a set of cards. I took a close look at the values and I have really aligned behind customer centricity and decided to embody that. To lead by example, I spend 90% of my time on the road and try and get in front of clients all the time. Before I go, I read a brief and it has who has seen that client recently, so that is the tone at the top and it gets replicated throughout the organization, because if people know the CEO is in that country frequently, then I better be in that country frequently. Clients do want us to embrace digital and help them with their digital journey, and that is where we will accelerate our position in the years ahead.
What have employees said about the restructuring?
There is noise in the system that is an unnecessary distraction. As I stand in front of clients every day and our associates, I say the single biggest thing we can do to help ourselves is get back to growth. Growth in any company solves a lot of issues and covers the cost base. So, by fueling customer centricity, and investing in growth, we will get back to an accelerated growth rate and amazing things happen thereafter. There are good leading indicators to that. For example, our digital growth is almost twice that of the industry overall. Some of our peers are also growing well on digital. The overall digital market is growing 10-11%, and we are growing at 19%. There is opportunity for us to make digital a bigger portion of our mix, because right now it is about 30%. And, as the digital mix grows, we will get back to better growth
What are your key focus areas going to be in digital?
There are key digital battlegrounds that we need to win in, that we have the right to win in. We have identified a strategy around protecting and optimizing the existing business and investing in four key digital battlegrounds — cloud, digital engineering, data and Internet of Things (IoT) and I truly believe IOT will be unlocked by the power of 5G.
You’ve talked about adding expectations to Cognizant’s values. Could you elaborate?
I talk about values with expectations and that is around culture in which we take talent management very seriously. Arguably, the single biggest thing I can do is decide whom to promote, to hire, or whom to demote. And that goes back to the core of some of my leadership beliefs, which are clarity of communication, clarity of role, who is responsible for what. That gives off empowerment which is really compelling to our associates. They want to be held accountable and be empowered and if you believe talent is good enough to have the role, then you want them to be able to fulfil their potential. It also enables a performance culture, because if I know the role clarity is there then I know who is responsible for what. So, I know who took over a business and turned it around and I know who took over a healthy business and damaged it. Our sales (teams) have a very high fixed base, and a very low leverage. I would like to make the leverage greater, so it enables our sales teams to make substantially higher earnings per year, but it also requires them to perform. If they underperform in a meritocracy, they don’t get paid as much as a person who over-performs. These are leadership principles I stand behind but the values of Cognizant are exceptional, you will not see me changing the values. It is what led the company to the success it saw over 25 years.
When you took over on April 1, were there things that surprised you either positively or negatively?
There are some things that exceeded expectations. The client centricity, and the fact that clients love the brand. On my first trip to India, what I found here is much more than delivery, it is about customer co-creation and delivery. Calling it delivery is maybe not even doing it justice. It is a virtuous cycle, as you sell you deliver, but as you deliver you see opportunities to sell more, please the customer more. There is winning spirit, and that isn’t something that happens overnight, that happens after 25 years of success. Those were all wonderful attributes. I would like more of a performance culture, more of a meritocracy, I would like to turn the dial a little more on how we manage talent, how we skill. You will see us spending more money on skilling that we have historically. North America is so strong for us. It is three-quarters of our revenue, but we haven’t invested enough in international markets and that is also what I will do.
What are your growth plans for international markets? How will you get those clients?
Some of it is international clients, where we deploy for international markets, some of it is domestic. We have the UK, Benelux, the Nordics. Here we are sitting in India, I have challenged our team right now to ask why can’t we make our India operations even more successful, not just as a talent source for the rest of the world but to look at the domestic market in India. We should be bigger here. The Cognizant brand is huge. We are the single largest MNC in India in headcount. We deliver complex solutions for customers throughout the world from India. We can take the references and the lessons from global companies and deploy them locally.
Cognizant’s client concentration has often been listed as a key concern. How do you look at this?
That’s good, but balance is important. That’s good because it gives us confidence that we acquire a new logo, customers speak with their wallets. Time and time again, we have seen because we exceed their expectations, they give us another project and then another and that is why we end up with a lot of clients that are $50 million, $80 million, $100 million. But, we also saw in the first quarter, which I inherited when I joined, four of our largest clients in healthcare merged and that affected our quarter materially because there was a slowdown in spend and they were trying to get rate concessions. That is one of the reasons I am trying to bring in a methodology to Cognizant in the years ahead around RAD - retention, acquisition and development. It’s a classic 9 box, where you tier your customers by potential spend and whether they are an acquisition customer, retention customer or development customer. You may have heard terms like hunter and farmer, this is a more sophisticated model of doing it. We would like to have more customers. When I wake up in the morning, I don’t think about margin rate. I think about clients and logos and what we can do bring in more logos
You’ve said you are hiring 500 people in sales and sales enablement. Will they be looking at new logos?
RAD will be implemented on January 1, so will the new sales programme. The 500 sales and sales support people will be enablers of all of that. Not just new customers, but putting more coverage on existing customers. It isn’t just about the sales. You will see me investing more in brand and making sure we get the brand attributes right, more aligned with digital. We are actually trying to take every step of the ecosystem and make it right. So, our entry level trainees in India, we have added about 30% more this year, than last year, and we have increased the salaries 18% proactively. We want to go back to basics, which is having the best talent in the world want to join Cognizant. It’s like a population pyramid in a country; if people are having lots of kids they can pay the pensions of the elderly. The problem happens when the population pyramid is the wrong way. We want to be a growth company; it starts with having customer centricity and a cost base that enables us to invest in growth. And then, once the revenue starts kicking in again, everything starts humming and it falls into place that is what we are setting out to achieve.
and it falls into place, that is what we are setting out to achieve.