The secret behind Cognizant’s amazing success
R Chandrasekaran, the IT major’s president, shares the inside story of the
Fortune 500 company with Shobha Warrier
that at some point, the industry will converge around 19 to
20 percent. And we really wanted to take the lead.
If you look at the other offshore players in the industry,
we see that their margins are dropping and the margin has
come down to 27 to 28 percent. We believe that our model
is right in the middle and everybody will converge to a 19 to
20 percent model. We have kept our margin stable at 19 to
20 percent all these 12 years.
Three years ago, you were in the Fortune 1000. Now, you
are in the Fortune500. What are the reasons you attribute
to this phenomenal growth?
Definitely to the model we follow. Fortune is more on
growth and financial performance, company revenues and
the ability of a company to grow faster. Our financial model
has helped us grow and be in the Fortune 500 in such a
short period. That is reason number one.
In addition to this, the operating model also has brought
in fresh air. Most of our customers think that we are very
different. We bring not only the cost advantage and value of
being an offshore service provider, we are also able to bring
good customer relationship. It is a unique blend of consult-ing-driven, relationship-driven management, backed by
very solid delivery capability. We keep investing in technology to continuously upgrading ourselves.
So, it is a unique blend of what the big four consulting
The Business Interview
Fortune magazine’s latest ranking of America’s largest companies shows that Cognizant has joined the Fortune 500 (ranked at number 484), with $4.59 billion in annual revenue for 2010. Considering it was only in
2008 that the company entered the Fortune 1000 ranking
at 859th position, the growth is phenomenal. It was also
ranked among Fortune’s ‘World’s Most Admired
Companies’ in this year for the third year in a row.
R Chandrasekaran, president and managing director,
global delivery, Cognizant, spoke to India Abroad about
how the company rose to such heights.
Cognizant has achieved 45 percent growth in the last
quarter. Is it because of the low margin-high growth model?
This definitely is a reason for our high growth, but I don’t
want to categories ours as a low-margin business… Our
business is as profitable as, or more profitable than, our
peers’. What we have told our investors is that anything in
excess of 19 to 20 percent will be invested back in the busi-
ness, so that we can hire high-caliber relationship man-
agers and good partners. We can also invest in creating
technology and domain capabilities and build industry spe-