technology

Cognizant merges two service lines into one new unit, appoints Malcolm Frank incharge


In a major development, New Jersey headquartered Cognizant will merge two out of three service lines – Digital Business and Digital Systems and Technology – into a single, new service line, CEO Brian Humphries told employees in a note on Wednesday.

ET has reviewed the note. This represents a big change in the way the company will carry out its digital business.

The new service line — Digital Business and Technology — will be headed by current president and head of digital business, Malcolm Frank.

The new line aims to create a more agile working model, according to Humphries.

“With greater clarity about roles and responsibilities within our service lines and in relation to our commercial markets, we will reduce internal channel conflicts, improve our internal accountability and speed our execution,” he said in the note.

Unlike reorganisations done previously, Humphries stressed that this was “not a cost reduction” exercise and that there would not be any significant workforce reduction. The company was in the news for a number of restructuring moves including layoffs of thousands of executives last year.

“Our current service line structure in place for the past five years is no longer optimal for serving today’s primary buyers of technology or how they deploy technology to solve their business problems. Our new structure will be fully aligned to selling outcomes to business buyers with integrated offerings across applications, data and cloud,” Humphries added.

The company’s third service line, Digital Operations, has been rechristened ‘Digital Business Operations’ and will continue to be led by Ganesh Ayyar.

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The merged service line will be a significant step towards aggressive expansion of Cognizant’s digital sales and revenue, analysts said.

Phil Fersht, chief executive of HfS Research, hailed the move, saying it comes at a time when competitors have a more siloed approach to digital business.

“This is a very smart move by Cognizant as digital permeates all IT services engagements. Clients are demanding a portfolio approach to address their needs in a rapid fashion and all Cognizant’s chief competitors still separate too many solutions areas, which creates silos and inconsistencies that negatively impact solution pricing, development and speed of implementation,” he said.

Frank’s leadership of the new unit will also help the company address the market better, added Fersht.

“Frank is a hugely popular figure with CIOs and his decades of experience in IT services, combined with his vision, is a powerful statement of intent from Humphries,” he added.

The pricing authority of IT services and solutions will be delegated to the commercial teams by the new merged entity to close deals faster, Humphries said.

Peter Bendor-Samuel, CEO of IT consultancy Everest Group, is of the view that the“delegation and empowering of the client facing organization will yield a significant return.”

The merged service line would simplify the organization, eliminate internal competition and improve execution, he said.

“It will also go a long way to simplify the customer experience which at the moment is confusing with two different digital organizations competing for the clients’ attention,” Bendor-Samuel added.

In a separate development, DK Sinha, president of the company’s largest market, North America, will retire in July. He will be replaced by Gregory Hyttenrauch, currently head of the Digital Systems and Technology service.

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