Who Is This Key Vendor Assessment For?
NelsonHall’s Key Vendor Assessment for Cognizant is a comprehensive assessment of Cognizant’s offerings and capabilities designed for:
- Sourcing managers monitoring the capabilities of existing suppliers of business process and IT outsourcing and identifying vendor suitability for BPO and IT services
- Consultants advising clients on vendor selection
- Vendor marketing, sales and business managers looking to benchmark themselves against their peers
- Financial analysts and investors specializing in BPO/IT services sector
- Marketing, sales and business managers developing strategies to target service opportunities within the BPO/IT Services markets.
Key Findings & Highlights
Activist investor forces change in financial strategy
Two months after the open letter to its management published by Elliott Management in November 2016, Cognizant released an 8K stating it had reached a cooperation agreement with Elliott, and that
- There would be 3 new independent directors appointed to the board
- It would form a Financial Policy Committee (comprised of 3 directors: Francisco D’Souza, an incumbent director with operational experience, the third a new director identified by Elliott) to assist and advise the board and oversee the implementation of the new margin plan
Cognizant has also agreed to major changes in its financial strategy including:
- Returning $3.4bn to shareholders over the next two years through a combination of share buybacks and dividends
- Increasing its historical (non-GAAP) operating margin target range.
Central positioning around digital
Cognizant has realigned its offerings along three broad practice areas, each headed by a President, with a central positioning on helping clients with their digital transformation agendas. The practices are:
- Digital Business: includes the Digital Works unit set up in 2015
- Digital Systems & Technology
- Digital Operations
Cognizant Business Consulting (CBC) is woven into all three practice areas, and provides ‘tip of the spear’ activities.
Tuck-in acquisitions to enhance new capabilities and accelerate transition to digital
In Q2 2016, Cognizant repatriated $2.6bn of cash from India This repatriation brought $1bn additional cash to its U.S. operations and $1.6bn to other international locations to enable M&A.
Cognizant made five acquisitions in 2016 and one in Q1 2017..
Scope of the Report
The report provides a comprehensive and objective analysis of Cognizant’s IT and business process services offerings, capabilities, and market and financial strength, including:
- Analysis of the company’s offerings and key service components
- Revenue estimates
- Identification of the company’s strategy, emphasis and new developments
- Analysis of the profile of the company’s customer base including the company’s targeting strategy and examples of current contracts
- Analysis of the company’s strengths, weaknesses and outlook.
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