Big deal is what matters for Cognizant CEO Kumar

Ravi Kumar, who assumed the role of CEO after the company’s board asked his predecessor Brian Humphries to resign on 9 January, has hit the ground running as he meets 1,000 senior leaders at the company’s annual strategy planning event in Abu Dhabi.

“It just takes a few quick wins to create a positive momentum flywheel, and I believe that flywheel can drive a multiplier effect for our company: to capture an extraordinary market opportunity, to become the employer of choice for our industry," Kumar wrote in a note after he arrived at a hotel in Yas Marina in Abu Dhabi.

You might also like 

How growth stories of India and China stack up

The history of capital gains tax in India

For Avenue Supermarts, muted growth or speedy recovery?

“Over the next few days, the CEO would get an understanding of each of the service offerings and what we as a company should focus on," said a senior executive on the condition of anonymity. “The brief, for now, is to maintain continuity and not to get distracted by the leadership changes."

Last week, in addition to naming a new chief executive, Cognizant also appointed former Accenture executive Stephen Rohleder as the new chairman, replacing Michael Patsalos-Fox.

Rohleder had joined the Cognizant board in March.

“For the first time in my life, I’ve barely slept, and I’m more energized than ever. It’s because the opportunity I see before me is incredible. I believe Cognizant’s potential is unlimited," wrote Kumar.

Calling it “the golden era of technology", Kumar emphasized that this company has a startup culture and founders’ mentality, and it is ready to achieve its “bold ambitions".

On 17 October, Cognizant first announced Kumar would join as president of the business in the US, which accounted for about three-fourths of the company’s total business, starting 16 January.

But the board surprised everyone last week when it put the former Infosys executive at the helm.

“We think investors wanted new leadership, and we think the stock is moving higher this morning largely on this news rather than the results," Keith Bachman, an analyst with BMO Capital Markets, wrote in a 12 January note after Cognizant shares jumped 9% following the announcement of a new chief executive.

Still, the appointment of the new CEO and chairman was unexpected for Cognizant, which started as a software services arm of Dun & Bradstreet Corp. in 1994.

Kumar, 48, is the fifth CEO after co-founder Wijeyaraj Kumar Mahadeva steered the company for a little over eight years until 2003.

Lakshmi Narayanan presided over the company for the next two-and-a-half years before he passed on the baton to another co-founder Francisco D’Souza in 2006.

During D’Souza’s tenure, Cognizant consistently outperformed its peers, marking a golden age for the company as its revenue surged from $1.42 billion in 2006 to $16.12 billion in 2018.

Cognizant expects to end with $19.4 billion in revenue last year. It is expected to declare its fourth-quarter results next month.

But since announcing Humphries as D’Souza’s successor on 6 February 2019, Cognizant has faced a decline, marked by senior-level departures, industry-leading attrition, and clients reducing engagements, all of which impacted growth.

All this eroded investor sentiment as Cognizant shares underperformed tech-heavy Nasdaq: Cognizant shares were down 16% even as the Nasdaq returned 50% between 6 February 2019 and 11 January 2023.

Some executives believe Kumar could bring stability and potentially change the company’s fortunes.

“There are two qualities in Ravi that make me confident that he is the right leader and that he can actually revive the company," said a former CEO of a mid-tier IT services firm. “First, he has a collaborative mindset. This is essential for any leader taking over a company that has lost much ground of late. Second, in almost every large deal at Infosys in the last few years, Ravi played a pivotal role. He knows how these deals are structured and can possibly help Cognizant once again get back its mojo."

However, Kumar must first build a senior leadership team, which may see some churn in the near future. This suggests that Cognizant will require 18-24 months to match industry growth.

Elsewhere in Mint

In Opinion, Madan Sabnavis says the upcoming budget may not spring any big surprise. Pramit Bhattacharya reveals what data says about the great Indian middle class. Rajat Dhawan writes about five priorities for India Inc. Long Story delves deep into India's ongoing pension battle.