Cog­nizant to Ac­cel­er­ate Pace of Buys

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to use au­to­ma­tion to im­prove mar­gins

also ac­cel­er­at­ing hir­ing in the US – more as a re­sult of its grow­ing dig­i­tal busi­ness Mumbai: Cog­nizant will ac­cel­er­ate its pace of ac­qui­si­tions as it fo­cusses on grow­ing its dig­i­tal rev­enue, the com­pany’s chief strat­egy of­fi­cer told ET. Cog­nizant has been no slouch in the M&A depart­ment. In the fourth quar­ter of 2016, the com­pany an­nounced three ac­qui­si­tions. Ac­cel­er­at­ing the pace, puts the com­pany on tar­get to buy over 12 com­pa­nies a year. “We are go­ing to ac­cel­er­ate the num­ber of ac­qui­si­tions we make, but it isn’t as though we have set up a num­ber that we have to meet,” Mal­colm Frank, chief strat­egy of­fi­cer of Cog­nizant, said. Dig­i­tal con­trib­uted to 23% of the com­pany’s over­all rev­enue in FY16.

Frank also shrugged off crit­i­cism that the IT com­pa­nies have not been coura­geous enough to make big scale ac­qui­si­tions. “I don’t think that is fair. Be­cause, to be hon­est, as an in­dus­try we have done very badly with scale ac­qui­si­tions. This is a cul­ture busi­ness and that is hard to get right with a scale ac­qui­si­tion. With roll-up ac­qui­si­tions it is eas­ier,” Frank said.

The ac­cel­er­a­tion of Cog­nizant’s merger ac­tiv­ity will come even as the com­pany plans to re­turn $3.4 bil­lion in cap­i­tal to share­hold­ers in the next two years in a com­bi­na­tion of buy­backs and div­i­dends. In Novem­ber, hedge fund El­liott Man­age­ment Ser­vices had asked Cog­nizant to in­crease the amount of money it pays out to share­hold­ers.

“We had a very sim­ple value propo­si­tion to our in­vestors, from IPO un­til two weeks ago. We were go­ing to grow like crazy. We are go­ing to grab mar­ket share, and then we are go­ing to stock a lot of cash, have very con­sis­tent mar­gins, and that’s it,” Frank said. “We thought for us, due to the scale we have as a com­pany, we are 2,60,000 as­so­ci­ates. You do a sim­ple math on our growth rates and peo­ple model. It’s not in the best in­ter­est of our clients.”

In the fourth quar­ter of 2016, the com­pany an­nounced three ac­qui­si­tions

Jochelle Men­donca & Surabhi Agar­wal

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