Cognizant Technology Solutions - Business Model

Business Model

Like many other IT services firms, Cognizant follows a global delivery model based on offshore software R&D and offshore outsourcing. The company has a number of offshore development centers outside the United States, mainly in India.

In its early years, Cognizant gained business from a number of American and European companies with the help of the D&B brand. The company's senior executives envisaged it as a firm which provided high-end customer services on-par with the six contemporary major system integrators (Accenture, BearingPoint, Capgemini, E&Y, Deloitte and IBM), but at lower prices.

In order to deal with the fierce competition from the Indian IT service companies and the major American system integrators, Cognizant decided to focus more on developing deeper relationships with existing customers than on acquiring new customers. The company resorted to what it calls a "two-in-a-box" engagement model: its US and Europe-based leaders (often from consulting backgrounds) manage the customer relationships, while the India-based managers oversee offshore delivery services. The managers who were geographically closest to the customers were given more power and responsibility. However, the time zone differences forced the customer-facing managers to work late in nights in order to resolve issues with the India-based teams. In order to solve this problem, the company instituted another scheme, in which the responsibility was divided equally between the onsite and the offshore managers. In the late 2000s, the company started experimenting with what it calls the "three-in-a-box" model, which adds a business consulting layer to its "two-in-a-box" model (as opposed to a separate concern).

Compared to other major IT services firms, Cognizant has a heavy focus on a few verticals.