History
The company that is now called Cognizant has its roots in The Dun & Bradstreet Corporation, an India-based joint venture between Dun & Bradstreet (76%) and Satyam Computers (24%). Srini Raju was the CEO of this company established in 1994. Kumar Mahadeva played a major role in convincing D&B to invest $2 million in the joint venture. DBSS was set up as an in-house technology unit, and focused on implementing large-scale IT projects for the D&B businesses. In 1996, the company started pursuing the Y2K-related projects, and won two large accounts outside of D&B: Northwest Airlines and Aetna. It put in one of the lowest bids for a Y2K-compliance project for Pacific Exchange, and delivered the work a month before the May 1997 deadline.
In 1996, Dun & Bradstreet (D&B) spun off several of its subsidiaries including Erisco, IMS International, Nielsen Media Research, Pilot Software, Strategic Technologies and DBSS, to form a new company called Cognizant Corporation. Three months later, in 1997, DBSS was renamed to Cognizant Technology Solutions. In July 1997, D&B bought Satyam's 24% stake in DBSS for $3.4 million. The headquarters were moved back to the United States, and in March 1998, Kumar Mahadeva was named the CEO. Operating as a division of the Cognizant Corporation, the company mainly focused on Y2K-related projects and web development at this stage.
In 1998, the parent company Cognizant Corporation was split into two companies: IMS Health and Nielsen Media Research. After this restructuring, Cognizant Technology Solutions became a public subsidiary of IMS Health. In June 1998, IMS Health partially spun off the company, conducting an initial public offering of the Cognizant stock. The company raised $34 million, less than what the IMS Health underwriters had hoped for. The money was earmarked for debt payments and upgradation of the company's Indian offices.
Kumar Mahadeva decided to reduce the company's dependence on Y2K projects: by Q1 1999, 26% of company's revenues came from Y2K projects, compared to 49% in early 1998. Believing that the $16.6 billion ERP software was saturated, Mahadeva decided to stay away from the large-scale ERP implementation projects. Instead, he focused on applications management, which accounted for 37% of Cognizant's revenue in Q1 1999. Cognizant's revenues in 2002 were $229 million, and the company had zero debt with $100 million in the bank. During the dotcom bust, the company grew by taking on the maintenance projects that the bigger companies did not want.
In 2003, IMS Health sold its entire 56% stake in Cognizant, which instituted a poison pill provision to prevent hostile takeover attempts. Kumar Mahadeva resigned as the CEO in 2003, and was replaced by Lakshmi Narayanan. Gradually, the Company's service portfolio has expanded to IT services, BPO and business consulting. Lakshmi Narayanan was succeeded by the Kenya-born Francisco D'Souza in 2006. Cognizant saw a period of fast growth during the 2000s, appearing in the Fortune magazine's "100 Fastest-Growing Companies" list for nine consecutive years from 2003 to 2011. Due to strong competition from Accenture and IBM, Cognizant had to offer lower prices as a differentiator in the early 2000s. To overcome this problem, in the late 2000s, it decided to venture into higher-end technology consulting like these companies.
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