India: Cognizant bets on M&As to expand digital business

Photo: Cognizant's Facebook page

Cognizant Technology Solutions Corp is betting on mergers & acquisitions (M&A) as a strategy to build its digital business, which the company believes is in a nascent stage.

“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% on digital,” said Brian Humphries, CEO, Cognizant.

The Nasdaq-listed company has made five digital-based acquisitions so far this year, all of which are primarily in the cloud-computing space.

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

In February, it acquired Code Zero, provider of cloud-based billing solutions and the French operations of EI-Technologies, a Paris-based independent Salesforce specialist. Later, in March, it acquired Lev, a digital marketing consultancy that helps businesses modernize their marketing campaigns with data-driven insights.

Except EI Technologies, the rest are based in the US, Cognizant’s largest market which contributed 75.8% to the overall revenue in 2019.

“Cognizant’s digital bookings grew almost 50% in the first half of the year fuelled by digital engineering, artificial intelligence & analytics, interactive and software-as-a-service (SaaS),” Humphries said.

Analysts believe 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.

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,” Humphries said in a post-earnings call.

Cognizant’s digital business grew 14% y-o-y for the quarter ended June and accounted for 42% of the total revenues. This compares with Infosys Ltd’s digital revenue growth of 25.5% y-o-y in constant currency and a contribution of 44.5% to total revenues. Of late, Tata Consultancy Services (TCS) Ltd and Wipro Ltd have stopped reporting digital revenues separately.

This article was first published on livemint.com.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.