Evan Vitale Consulting: Cognizant's consulting bet paying off

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Company’s consulting practice today has 5,500 consultants, perhaps one of the highest numbers when compared to Indian IT players

Shivani Shinde Nadhe | Pune October 5, 2015 Last Updated at 17:46 IST

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For long Indian IT services firms have struggled to increase their presence in the consulting segment, which has also meant low revenues from this business horisontal. But it seems Nadaq-listed Cognisant is finally got a plan in place that is making its consulting strategy work out.

For starters, Cognisant’s consulting practice today has 5,500 consultants, perhaps one of the highest numbers of consultants when compared to Indian IT players. This number has gone up from about 1,000 in 2008. Add to this today consulting is 7-8% of Cognisant’s revenue said a JP Morgan report.

According to Mark Livingston, executive vice president of consulting business, Cognisant, on an average the consulting arms has been able to open up 50 news accounts every year over the past few years.

The shift in Cognisant’s strategy is significant as IT consulting accounts for about 13% of the overall IT services market and is growing faster than the market, said a study by research firm Gartner.

Livingstone who joined the firm in 2008 attributes the success of its consulting practice to the strategy that the company laid out in 2009-2010.

“Initially I had hard time in hiring consultants because there had been technology oriented company who had tried to build consulting arm and had not been too successful with it. We have done a really good job at building an operative model at Cognisant where our consulting team is aligned to the delivery organisation and that is focused to selling consultant work,” said Livingstone.

Cognisant has designed a matrix model where consultants report not only to the consulting practice head but also to the delivery manager. For instance, the banking and finance services (BFS) practice has about 1,000 consultants. These consultants report to Philippe Dintrans, VP, BFS consulting who in turn reports to Livingstone and Chintamaneni Prasad, President, BFS, Cognisant.

“I like the fact that Prasad is also involved in knowing what the 1,000 consultants are doing rather than just me being in the loop. Our consultants are part of the vertical, we jointly go to the market,” said Livingston.

This seamless synergy between consultants and the delivery operations is evident in the growth of the consulting practice. According to Livingstone, the consulting practice has been growing at a compounded annual growth rate of 30% for the past few years. He further states that, according to an internal survey, for the first nine months of the calendar year about 75% of the deals that Cognisant got, it was competing with tier-I consultant players.

“The focus for us is the over 1,100 accounts we have, as we always want to be the choice of partner for their consulting needs. But since we hire senior consultants on an average we are opening 50 new accounts every year,” he added.

According to a JP Morgan report, high-level consulting has not been Indian IT’s cup of tea.

“This brand of consulting, as we call it, pertains to strategy, business model change, organisation change management, M&A -typically, the type that engages the CEO and the board. Legacy consulting brands, such as Deloitte, Accenture, KPMG and E&Y, along with other big players have maintained focus here. Barriers-to-entry are clearly elevated here. Over the recent past, only Cognisant among system integrators has attempted to break into this club of players offering “high-level” strategy,” said Viju George, and Amit Sharma of JP Morgan in their report.

One more aspect that is aiding Cognisant’s consulting business in the rapid change in the technology landscape. Livingstone describes the current period as one of the best ever for consulting business.

“The moment has arrived for companies such as the one created at Cognisant. I believe strategy without technology is no strategy at all, and clients have started to recognise this. A good strategy consultant needs to have a good understanding of the massive changes of technology going on because many of these strategies are built around the changing technology. The difference between consulting now and before is that earlier the strategy was not focused on technology. Today for consultants to have a tech background is an attraction,” said Livingstone.

What differentiates Cognisant to players like TCS and Infosys is its focus and strategy towards consulting. Both TCS and Infosys, explains the JP Morgan report, focus on ground-level consultancy work. Ground-level consulting requires adaptation to thrive: The adaptive approach focuses the consulting practice on, opportunities brought about by the times vis regulation (substantially ongoing) and digitisation of businesses (rapidly emerging as the next frontier for IT Services spending, using technology as an enabler to address more bread-and-butter issues, such as operational excellence, the willingness to undertake outcome-based fees and follow through on implementation) working with a wider constituency of CXOs within the client firm and finally, globalising the consulting delivery model to make it more cost-effective.

What is also different at Cognisant is that though the consultants are part of the verticals, their KRAs, salary hikes etc are different. That may not be the case at TCS and Infosys.

“While Infosys is trying to change its consulting positioning, TCS is consistent in viewing how consulting serves its integrated, outsourcing-oriented business model (TCS’s consulting not given an independent stand-alone agenda unlike say, at Cognisant). The result is TCS’s high-level consulting practice is likely to be rather contained (well within 5% of revenues) even as it participates in the more operational types of consulting, and not so much high level consulting. On the other hand, we feel that Infosys needs to ground its consulting in more basic, “bread-and-butter” issues,” said the JP Morgan report.

Cognizant’s consulting bet paying off

Company’s consulting practice today has 5,500 consultants, perhaps one of the highest numbers when compared to Indian IT players

For long Indian IT services firm have struggled to increase their presence in the consulting segment For long Indian IT services firms have struggled to increase their presence in the consulting segment, which has also meant low revenues from this business horisontal. But it seems Nadaq-listed Cognisant is finally got a plan in place that is making its consulting strategy work out.

Livingstone who joined the firm in 2008 attributes the success of its consulting practice to the strategy that the company laid out in 2009-2010.

According to a JP Morgan report, high-level consulting has not been Indian IT’s cup of tea.

What is also different at Cognisant is that though the consultants are part of the verticals, their KRAs, salary hikes etc are different. That may not be the case at TCS and Infosys.