Bangalore: Not many firms in India’s information technology industry are growing faster than Cognizant Technology Solutions Corp., the US-headquartered firm that has most of its staff in India. Mark G. Livingston , who leads Cognizant’s consulting business, is growing the unit 15-20% faster than the company’s growth.
Livingston spoke in an interview about the blurring lines between consulting and traditional information technology (IT) services work and said keeping up with Cognizant’s pace is his biggest challenge. Edited excerpts:
What has it been like building a consulting business inside a software services organization?
Everything we do today at Cognizant, compared with five years ago, is consulting-led. Consulting is driving the transformation of the company on how we interact with our clients, sell services, value employees. Frank (Francisco D’Souza, Cognizant chief executive) is transforming the company with consulting, and that’s made us a lot more valuable. I don’t think there is any other consulting business out there that’s done what we have in four-five years. We are growing at 15-20% faster than the company, our margin contribution is substantial, our revenue, headcounts have been increasing at a rate that nobody else in the marketplace is doing.
We do 55% of our work with chief information officers (CIOs) and 45% with CXOs and business organizations. We were doing $50,000 projects a few years ago, and now we do projects that are $2-3 million.
This wasn’t too many years ago, when you had to convince clients on outsourcing and offshoring, and how would it work. We are long past those discussions and clients today have their own offshore capabilities in India and the Philippines. What we are seeing today in the market impacting consulting and IT services is business without boundaries and an un-bundling of the entire value chain in terms of somebody saying “I will do the back-office” and another one taking IT services, and so on. Customers are saying somebody “will do my entire distribution” and somebody else all of manufacturing. This has had a massive impact on the entire IT services. Companies are saying this is core, that is context, and starting to give away chunks to third-party providers.
The other thing we are seeing is that IT and business have become almost one today. For instance, mobility is not about technology but how businesses deal with customers, their employees. We are actually seeing that in order to sell technology-based services, you can’t be dealing with an IT organization, but different businesses.
The line between high-end consulting and IT services seems to be blurring.
Typically, IT services have been priced on commodity basis. So it’s about selling rate cards, it’s about if I win the work at $60 (per man hour), and if you’re $60 and 25 cent—you lose the work. Consulting work is not sold that way. Consulting work is actually a relationship sales, sold on not the cheapest price in the room but to the person with the most innovative answer.
So the question about the lines between IT services and consulting blurring is more on what’s the pricing model. In consulting, I am not saying people don’t care about pricing at all, but in a lot of ways, they actually don’t. They buy the best value proposition, the most creative solution in the room, and that’s how consulting is sold.
What are external and internal challenges you face being part of a large services organization?
In 1985, no firms had their own internal consulting departments. The one way we sold consulting was by offering to help define a problem, putting some organizational structure to it. But today, clients do that themselves. I think it’s much harder to sell consulting today than a few years ago because of these massive, internal consulting departments. Now you have to come up with a much better value proposition; it’s not around structure or just program management.
Generic program management does not sell any more. What we sell is, for instance, integrating IT systems of retail banks, or we have experience in building a military base in Kandahar, Afghanistan.
We solve business problems through highly customized solutions and services. For bigger players, it becomes a lot more monolithic. We are agile and customize hard, and I don’t want to lose this approach even as we grow.
We are told we are better listeners than our competitors. And not just better listeners but because when I make notes I can translate them into solutions to solve a problem. I incorporate what a client wants and not just what I think they need.
What has really worked for you at Cognizant?
I would say that we are one of the few to have done it successfully. Being a good student of the industry, I avoided mistakes that the others committed. But you cannot take our model, structure to another company and implement it. It’s not about what I have on this paper, but more about the culture of Cognizant.
It’s a challenge for other companies because consulting is not the largest portion of the revenue pool and becomes relatively unimportant.
The reason we have been successful is because it’s one of the top agenda items for our CEO and he appreciates that consulting organizations have different compensation and structures. I frankly would not have joined Cognizant if I were not convinced that he got that. My challenge sometimes is that Frank understands consulting better than me. He recently told me that in his five years of being CEO of Cognizant, building consulting is among two-three of the biggest accomplishments. I don’t think many other CEOs can say that.
Secondly, the thing that we did here internally, and something the others have ignored, is that we value our client partners—the main channel to the market. They (client partners) like us, they want us to grow faster. I believe you cannot be truly successful in a large IT services firm unless you build this relationship. It offers challenges in terms of corroborating, but at the end of the day, we wouldn’t be successful if we did not do that. We didn’t separate consulting totally away from the company; we kept it as a matrix model. I think I am one of the only five direct leaders reporting to the CEO; it really matters.
What challenges do you face and how would you like to measure your performance a few years down the line?
When I go to US campuses to recruit talent competing against the Deloitte, A.T. Kearney, I tell them it would be like working in a well-funded startup. I challenge them to go and ask rivals if they are also growing at over 30% year after year. One way I would measure success a few years down is when I go to those campuses in the US, I don’t have to explain what Cognizant is.
Just keeping up with the growth rate of Cognizant is a big, daunting challenge for me. We are expanding footprint beyond the US to keep up with that pace. We just won our first consulting assignment in Japan the other day. We are now taking our offshore base of consultants and selling consulting in India. My prior firms have been around for 80-90 years, we (Cognizant) have been around for eight-nine years. We still win against them because clients like us better.
What’s the future of consulting? Can it be disrupted?
Consulting has been around for 90 years. I don’t think it’s going to change. We had a re-engineering craze, and then we went to mid-range computers, and then it was ERP (enterprise resource planning), now we are into analytics. I think as long as there are businesses, clients are going to need advice.