M+E Connections

Cognizant’s Communications, Media and Technology revenue was a bright spot for the company in its fourth quarter (ended Dec. 31), with revenue increasing 4.6% to $661 million in that business from a year ago, it said Feb. 3.

Growth was “driven by double-digit constant currency growth in both technology and communications and media, which benefitted from our recent acquisitions,” the company said in its earnings announcement, noting CM&T accounted for 15.8% of its total revenue in Q4.

CM&T “continues to grow double digits year over year,” with “macro trends [that] are largely unchanged from those” in Q3, Brian Humphries, the company’s CEO, said during an earnings call with analysts.

“Clients are making investment decisions,” he noted, adding: “They know they must be agile, innovative, software-driven enterprises. We see continued focus on customer and employee experience initiatives, customer 360, cloud acceleration, packaged applications, platform capabilities and automation.”

Meanwhile, “hyper-personalisation and the need for intelligent decision-making are fuelling significant demand in analytics,” artificial intelligence (AI) and machine learning (ML), he said.

“Clients are embracing new ways of working, including distributed agile,” he said, noting Cognizant’s strategy to “focus on industry-specific and horizontal digital workflows is resonating with clients.”

For clients, the “next phase of digital is about transforming processes to become agile, data-driven and automated and always with an eye on customer experience,” he told analysts. “This moves digital beyond technology and into the heart of business operating models and processes,” he said.

Moving on to another trend, he said: “We continue to see clients determine their strategic partners. Cognizant stands to benefit from this trend, given our high levels of customer satisfaction, our enhanced portfolio and our growing reputation in digital.   I’m particularly pleased by our growing client momentum.”

Cognizant also sees “meaningful opportunity for cross-selling in our existing accounts, given our refreshed client-facing teams, stronger portfolio and enhanced account planning,” he said.

He pointed, as a recent example, to a Fortune 500 resources company that he noted “sought to digitally transform its workplace experience for employees while eliminating the operational inefficiencies caused by an over-reliance on multiple in-country outsourcers and contractors.”

Cognizant’s WorkNEXT digital workplace solutions suite “matched the client’s requirement for transformation through self-service and automation,” he said, adding that “led to a 45 percent reduction in operating costs and higher levels of customer satisfaction.”

Although Cognizant sees a “huge opportunity to cross-sell in our existing accounts and are naturally focused on that, we’re also focused on extending our market coverage by leveraging the commercial investments made in 2020,” he said. Over the past year, Cognizant “broke into more than 40 new Global 2000 accounts, providing meaningful cross-sell opportunities,” he said.

To achieve revenue growth, the company is now “several quarters into executing a strategy focused on four priorities: repositioning the Cognizant brand, globalising Cognizant, accelerating digital and increasing our client relevance,” he noted.

Over the coming months, the company plans to launch a “breakthrough global brand campaign that will increase the stature of our brands,” he said, adding: “With a focus on scaling Cognizant’s brand globally, we will execute a series of experiential marketing initiatives and sponsorships.”

On that front, Cognizant recently announced it is the title partner of the Aston Martin Cognizant Formula One team. Cognizant will also partner with Aston Martin to “evolve its facilities into smart factories, leveraging 5G” and the Internet of Things (IoT), Humphries said.

Cognizant also recently agreed to acquire Servian, an Australia-based enterprise transformation consultancy that specialises in data analytics, AI, digital services, experience design and cloud, he noted. “Servian expands our integrated end-to-end digital transformation capabilities in both Australia and New Zealand,” he said.

Turning to the strategy to accelerate digital, he said: “Over the last 18 months, we’ve sharpened our ability to support clients as they transform into software-driven enterprises. Since January 2020, we’ve announced approximately $1.6 billion in acquisitions, all focused on our strategic priorities of digital engineering, data and AI, cloud and IoT, which together enable clients to compete as modern digital businesses.”

Earlier in the week, Cognizant closed on its acquisition of Magenic, a 25-year-old custom software development services company that he said “will broaden our global software product engineering network, adding hundreds of engineers in the U.S. and the Philippines.”

Magenic is Cognizant’s “second digital engineering acquisition in recent months, making us one of the world’s largest digital engineering firms,” he said, noting his company also recently closed on its acquisition of Linium. That latter purchase “broadens our enterprise service management capabilities and complements our ServiceNow practice,” he said.