The leadership changes announced on Thursday also mark the return of Indian-origin top-deckers, including 24-year veteran Surya Gummadi, at the helm of the company. Before outgoing CEO Brian Humphries, Cognizant has had Asian CEOs–Francisco D’ Souza and Lakshmi Narayanan. The company’s founder, Kumar Mahadeva, from Sri Lanka, was the first CEO.
US-based analyst Moshe Katri, who had predicted board action, told ET that former Infosys president Ravi Kumar’s appointment as CEO at Cognizant is an “important event” aimed at resolving challenges like “record attrition rates, delivery constraints as well as lagging peer-like growth”.
“India has always been the soul of Cognizant,” a former senior executive of Cognizant told ET, requesting not to be named. “The region is where over 70% of the workforce sits and has contributed significantly to global leadership. Being sensitive to what Indian talent can offer is important for the company’s sustenance and growth,” the executive said. “The company now has two leaders who understand India immensely.”
Humphries’ leadership at Cognizant turned controversial at several points in his four-year journey at the company. The debate spiked around senior executives’ move to tier-II peers (Debashis Chaterjee to Mindtree, for example), attrition rates that touched a high of 36%, including fired employees, and a decision to stay away from some deals. Nevertheless, Cognizant had reasoned that it was in the midst of a “reorganisation” that would position the company to leverage high-margin digital deals rather than servicing clients dependent on legacy technology.
In the second quarter of 2020, Cognizant’s involuntary exits—mostly fired employees and a small number of those who failed background verification—stood at 13%.
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To ET’s email queries, Cognizant said Kumar is the “right person to take Cognizant into its next phase of growth. He is the right leader at the right time”.On Humphries, the company said he steered a “fundamental transformation” of business, “which has set the foundation for accelerated growth”.
Analysts say Cognizant had put itself on a path to transform from an IT services to a digital transformation company. In a post on LinkedIn on Thursday, Humphries said the company posted its highest revenue growth rate in 2021, thanks to the “repositioning” and decision to get after high-growth categories like digital, which account for more than 50% of revenue. Comparatively, Infosys fared better at 63% of total revenue, indicating how IT service providers have managed to tip the balance towards high-margin businesses over the years.
Constellation Research CEO Ray Wang told ET that Ravi Kumar faces the task of steadying the boat after several quarters of transformation-induced chaos.
“Cognizant needs a leader who can stabilise the confidence with clients, attract and retain top talent, and bring the intellectual capabilities needed to chart a post-digital course,” he said.
Phil Fersht, founder, CEO and chief analyst at HFS Research, said Kumar’s appointment brings immediate credibility and stability to Cognizant, “with deep enterprise leadership contacts, respect across the industry and an insatiable and relentless appetite for success”.
Fersht said Kumar is well known for leading some of the largest enterprise deals in history, such as Daimler with Infosys.
Last year, Cognizant cut annual revenue guidance for the third straight quarter in the three months ending September, even as attrition seemed to bottom out, sequentially, to 29%. The company faces lowering bookings, which declined 2% year-on-year in Q3 of FY22; its largest vertical, financial services, grew only 1.6% constant currency, underscoring room for growth in the coming quarters for the company.
Employees at Cognizant, nevertheless, were caught unawares by Thursday’s announcements. “We were given to understand that he (Ravi Kumar) would take over the Americas, but we had no clue about the change of CEO,” a mid-level executive at the company said, requesting not to be named.
