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Cognizant CEO sees a rainmaker in hybrid cloud

“We’re doubling our investment in cloud year-over-year. We want to grow faster and have stronger relationships with Microsoft, Amazon, Google but also leading Software-as-a-Service cloud vendors like Salesforce or Workday or SuccessFactors or SAP, and that is what our M&A strategy has been about,” Brian Humphries told.

Last Updated: Feb 28, 2020, 10.34 AM IST
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Brian Humphries, CEO, Cognizant
CHENNAI: Software services exporter Cognizant will double investments in building cloud capabilities this year, CEO Brian Humphries told ET, as the company pushes to grow faster in digital technologies and regain its bellwether status.

"We're doubling our investment in cloud year over year. We want to grow faster and have stronger relationships with Microsoft, Amazon, Google but also leading Software-as-a-Service cloud vendors like Salesforce or Workday or SuccessFactors or SAP, and that is what our M&A strategy has been about," Humphries told ET in Chennai, the southern Indian metropolis that is the largest delivery hub for the Teaneck, New Jersey-based IT company.

While traditional legacy services would continue to expand globally, capabilities in digital, cloud, data and analytics, digital engineering and IoT are target frontiers for Cognizant.

"Our strategic ambition is to scale international business, but also scale digital battlegrounds. One of those priority battlegrounds is cloud. We foresee a world where we end up with multi-hybrid cloud,” he said.

Cognizant acquired two Salesforce partners in the last three weeks — one in the United States and another in France, and Humphries termed the acquisitions a natural intersection point between the company’s international and cloud ambitions.

“SaaS…is where the momentum is and that's why we are doubling down with partners like Salesforce or Workday or ServiceNow, who are growing 20,30 or 40% year-on-year and through association, we are accelerating our growth rates as well; same with Microsoft Azure, AWS and Google Cloud," Humphries pointed out.

He said mergers and acquisitions will be key to achieving its growth ambitions but qualified them as "a means to an end" rather than a strategy. Cognizant will continue to acquire companies in the coming year to strengthen its capabilities, he said.

While North America (US and Canada) — which form 76% of its business — is still a primary focus, the opportunity that international markets provide is promising, he added.

"I foresee a future where Cognizant's revenue mix continues to scale to more international arenas," he said. "Logically the international business should grow at least twice as fast as North America if not three times."

The Middle East, certain areas in Asia, India, China, Japan, Australia, New Zealand and continental Europe are among the major international markets that the company is looking to tap. The Middle East in particular, owing to its proximity to India and a high growth market with a lot of focus on data, smart cities and cloud capabilities, is being seen as a huge opportunity.

Talent acquisition is another crucial aspect of the company's strategy and Humphries said it would hire or re-skill approximately 25,000 employees this year.

It will double investment in Cognizant Academy in 2020 which will facilitate re-skilling and redeploying employees for projects. In India, the company will continue to expand in tier II cities. The company recently set up a large facility in Mangaluru, which can accommodate around 1,100 employees.

Commenting on Cognizant's switchover to the new corporate tax rates, Ramkumar Ramamoorthy, CMD of Cognizant India, said it will opt for the same once its MAT (Minimum Alternate Tax) assets are substantially utilized, which is expected to occur over the next three-to-four years.

"All in, we expect the lower tax rate to be a modest benefit to our corporate tax rate once our MAT assets are substantially utilized. Until that time, we do not expect a meaningful change to our current tax structure,” he said.

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