How Frank did IT at Cognizant

Investors reckoned Indian IT was a two-horse race between Infosys and TCS, where Natarajan Chandrasekaran was being groomed to succeed Ramadorai as CEO. Chandra is now Tata Sons chairman! That’s how long D’Souza’s CEO-run has been! Plus, it is surreal for me to imagine Robin with grey hair.

I once asked Narayanan how the board of directors appointed D’Souza, at 37, as CEO of a $1.4 billion IT firm listed on the NASDAQ. While 80 percent of Cognizant’s operations were in cities like Chennai, Bengaluru and Hyderabad like their Indian counterparts, its headquarters was in Teaneck, New Jersey. Cognizant had aspirations to globalise its management and board. (Humphries’ appointment as CEO is a logical step in that direction—something neither TCS nor Infosys has managed to do)

Narayanan talked about two things: a company that wants to breach $10 billion in revenue needs a different mindset from a company that has crossed $1 billion. He had taken the company to $1 billion, and passed the baton to D’Souza. Two—and this is important: “It is only here (in India) that age figures in the (succession) equation. Look at the (CEO) successes there.” Narayanan was committed to Cognizant developing a global mindset.

Still, how did D’Souza stand out in its founding team? In 2000, Narayanan and he often went on sales calls together. “These are fearless people,” Narayanan said, referring to D’Souza’s peers. “Even in those days, Frank (as D’Souza is called) would tell enterprise CXO or CEO, ‘These are my credentials. Why can’t we be connected?’ It was a bold and direct approach in an open and respectful manner. It was needed to build a relationship. If you go with an agenda, customers see through you. Frank would convince customers that he was genuinely interested in doing something for them.”

The most conspicuous market change that D’Souza’s Cognizant demonstrated was overtaking Wipro (in 2011-12) and Infosys (2014-15), each of which had breached the billion-dollar mark before it. It had a lot to do with the sales hunger, and management that had the likes of Raj Mehta and Malcolm Frank, chief marketing officer (and a stellar storyteller).

By then, D’Souza had evolved from a tenacious salesman to a data-driven decision-maker. “He is an incredibly logical person,” a colleague once told me. “He may not be the best seller in the world. But he is incredibly logical. Every decision Cognizant takes is backed up with supreme data, very strong analysis. You cannot get an emotional response from Francisco, or even an intuitive decision from him. He is very data-driven.”

For a change, D’Souza did get reflective at the earnings call on Wednesday. “I've spent half my life here and had the privilege of serving as CEO for the past 12 years.” Cognizant is now a $16 billion company of 282,000 people.

“As technology permeates organisations, we are able to tap into new budgets,” he told analysts. “Almost every budget is now somewhat a technology budget—whether it's the R&D budget, whether it's the marketing budget, all of these become new sources of opportunity for us.” That is extraordinary for a corporation that, under Kumar Mahadeva in 1994, set out to be the best outsourcing factory nobody can beat.

The evolution has also had to do with D’Souza’s sense of creative destruction. Between 2008 and 2016, Cognizant built a consulting practice to enhance its prowess to win large transformational deals. He took that story to investors in 2010, continuing to justify the lower operating margins expectation. It was a tough promise to keep in the pre-2010 era, when consulting firms like McKinsey and Bain still wielded clout, and Accenture (with its consulting ancestry) was taking the battle to IBM.

“As a go-to-market (story), it is one thing,” Narayanan said in 2014. “But building the capability—in terms of getting business analysts, into the chosen verticals when strategy was defined—that had to be taken to market. Frank (D’Souza) was the person taking it to market.” However, client budgets were affected in 2015, as enterprises began to explore how to make their digital dollar count for productivity—and to compete with the Amazons and Ubers of the world.

And this is the thing: by 2014, D’Souza was personally spending time on Cognizant’s Emerging Business Accelerator that was honing its mindset for the digitalised IT industry, where deals sizes would come down as enterprises wanted more bang for the technology buck. Cognizant had to target the innovation budgets of an enterprise. “The environment and technologies are changing so fast, economies are so volatile, that more companies are turning to a more rapid cycle of long-range but marked by far more frequent sense-and-respond cycles of “how do we course correct”,” he told me in 2014. “Then, (clients) quickly modify and change technologies based on a dynamic strategy. Those cycles are becoming shorter and shorter, making technology and strategy two sides of the same coin in that sense.”

Now, in the Indian peer group, Cognizant is second to only TCS. On the Wednesday call, D’Souza made the ultimate admission. “I don't think we are dependent on winning large transformational deals. The business is built on this idea of continuing to grow with our clients in a methodical way. That usually involves many, many small and medium-sized projects with each client to continue to grow.” That is the technology-led consulting approach, D’Souza had promised investors, but with a remarkable difference. While he had built out consulting, he has also overseen it being subsumed by technology. That’s how long he has been around as CEO!