Move over, Hindustan Unilever! Cognizant is truly the CEO factory

(Image Courtesy: Wikimedia Commons)

In 2005, when I entered the fast-growing Indian IT services sector, leaders groomed at Tata Consultancy Services were at the helm of affairs in many leading companies, including Cognizant. Fast-forward 15 years and there seems to have been a role reversal, with Cognizant taking over the mantle of the “CEO factory.”

Former Cognizant leaders who played key roles in building the company into a $17 billion entity have now become the preferred choice of private equity firms and global IT/BPM services companies that are looking for next-gen CEOs to help catapult them into the next league.

In the past two years alone, eight companies – Mindtree, Firstsource, Bristlecone (part of Mahindra & Mahindra), Collabera, Hitachi Vantara, Zensar, Qualitest and Virtusa – have handpicked ex-Cognizant leaders as their CEOs. Others have joined as managing directors or CEOs of large private equity firms and startups.

The response of the stock markets – only two of these companies are listed on Indian stock exchanges – to these appointments has been favourable. Debashis Chatterjee took over as CEO of Mindtree and Vipul Khanna became CEO of Firstsource in August 2019. The shares of both companies have gained more than threefold since August 2019 – Mindtree advancing to Rs 2,460+ and Firstsource to Rs 165+ this month.

The response of the stock market is an endorsement of these leaders and their ability to create inflection points not just for the organisations they lead but for the entire Indian and MNC IT services sector. For long, only a handful of IT services companies had crossed the magical revenue milestones of $1 billion, $5 billion or $10 billion. This could well be a turning point for the entire sector, with many companies set to cross these thresholds, thanks to these leaders from the Cognizant stable.

The Cognizant Edge

For outsiders, these CEO postings might come as a surprise. For Cognizant insiders, though, this could be considered a delayed external endorsement of the organisation’s strong depth of leadership talent.

In a sector where arguably fewer than 100 leaders globally have built businesses from scratch or managed and scaled up businesses to multi-billion dollar levels, it’s no surprise that these Cognizant leaders are sought after. The track record of these leaders in building and scaling businesses across geographies, industry practices and service lines will prove to be a differentiator for all those hiring them, especially when all of them are locking horns to attract top leadership talent.

So, what’s the “secret sauce”?

Those who have been a part of Cognizant during its “hyper growth phase” will vouch for the strong leadership talent that the company has always prided itself about. Not only was Cognizant able to attract the best “culture-fit” talent from the market, it also retained them for decades. These leaders stayed with Cognizant not just for monetary gains and they were driven by a passion to make a difference to clients, their teams and the organisation itself.

So, what was Cognizant’s “secret sauce” in building such a leadership talent bench?

- Grooming “Mini-CEOs” within Cognizant: Lakshmi Narayanan, ex-CEO and vice chairman of Cognizant, has always said that his focus was to create “mini CEOs” within the company to manage end-to-end business and talent strategies for their business units. When Cognizant hit the billion-dollar revenue run rate in 2005, media headlines acknowledged the entrepreneurial spirit of the organisation. These leaders were enabled with an entrepreneurial environment that helped them to “fail fast,” shake themselves up and re-start running towards the finish line. Interesting episodes of the tenacious entrepreneurial spirits of these leaders are part of Cognizant folklore. “Growth” is in the DNA of these leaders and scaling businesses comes naturally to them.

- Ability to attract multi-faceted, complementary talent: Cognizant pioneered the “two-in-a-box” model of the “onsite account lead” working closely with the “offshore delivery lead.” A domain-focused consulting approach also created the unique “three-in-a-box“ approach later. These pioneering approaches helped attract multifaceted talent with complementary skillsets. This created a unique blend of global leadership talent (wherever they were located) that competed against each other while working together to solve customer problems.

- Employee growth is always proportional to company growth: Leaders and their teams are constantly seeking newer roles and responsibilities to satiate their hunger for learning and growth. When Cognizant experienced hyper growth, its people too experienced immense personal progression. That played a major role in retaining, engaging and grooming these leaders. These eight CEOs, put together, have 150 years of Cognizant experience, at an average of 20 years. And each one has managed billion-dollar businesses.

- Wealth creation for employees: Cognizant was always known for its employee-friendly stock reward plans. With reward mechanisms tied to the individual and company’s performance, it created a symbiotic and win-win partnership that helped retain leadership talent. The wealth creation has been immense for all stakeholders, and more specifically for its employees and leaders vested with stock options.

The Road Ahead

If one were to look beyond CEOs, there are at least 50+ Cognizant leaders who have taken on CXO and prominent global leadership roles in the past couple of years. Brillio, Bristlecone, Collabera, Epam, Firstsource, Global Logic, Hitachi Vantara, L&T Group (L&T Infotech, Mindtree), Straive (earlier SPi Global), TechMahindra and Wipro have been the biggest beneficiaries of the leadership churn at Cognizant.

With DK Sinha, who managed the largest Cognizant geography, Malcolm Frank, who managed the largest service line, and Pradeep Shilige, who managed Cognizant’s global delivery, having announced their exit or having left, this could well turn out to be a bounty for progressive companies looking to hit the billion dollar milestone.

Rather than looking at it parochially as a loss of talent for Cognizant, there is a need to change the optics. The Cognizant leadership bench is now proving to be a strong anchor and a catalyst for growth of the entire sector.

While Hindustan Unilever has been known as the “CEO factory” for contributing to the company leadership ecosystem across industries, Cognizant could soon become the new case study in business schools, materially overtaking Hindustan Unilever in sheer numbers and perhaps even impact.