New leadership will stick to mid-term growth strategy: Cognizant CEO

We have focused on high-quality sustainable revenue growth, but at the same time focused on running the business efficiently, he said

Francisco D’Souza, co-founder and current CEO, Cognizant, in a conversation with Debasis Mohapatra & Peerzada Abrar, exudes confidence about a smooth leadership transition and higher growth. Edited excerpts:

What prompted you to step down? What is the rationale behind the reshuffle at this juncture? 

I spent 25 years in Cognizant, literally half of my life. I spent the last 12 years as CEO. I am proud of what the team has built. In these 12 years, Cognizant's revenues grew from $1.4 billion to $16 billion. We moved Cognizant into the Fortune 200 (list). Our employee base rose from 39,000 to 282,000. Since the IPO, the market cap increased 100 fold — from less than $100 million to about $40 billion. So, I thought the time was right and spoke to fellow board members and informed that I was considering stepping down in 2019. What we announced today is the result of that process. 

Do you feel your continuance in some form would have helped Cognizant, given the disruption the industry is going through? 

I will continue as CEO till April 1. After that, I will take the role of executive vice-chairman to assist the new CEO and the board in the transition. And after that, I will remain on the board. In that capacity, I will be available to provide the required guidance. 

President Rajeev Mehta, who was largely seen as the next CEO, is leaving. Any specific reason?

I will not comment on Raj's reasons for stepping down. But I will say that he made countless contribution to the success of Cognizant. He joined when we were just $20 million in revenue and for that entire time — from $20 million to $16 billion — he provided Cognizant leadership, operational skills. I think he has decided that he is ready for a new challenge and has agreed to help with the transition.

Will priorities of Cognizant change with the new CEO? 

Three months ago we laid out a mid-term strategy before investors. That was developed by the management and our board of directors. That is the strategy we would continue to execute. Of course, it will be shaped by Brian’s perspectives.

Has profitability taken precedence over revenue with the company becoming choosy about quality of revenue?

There is no direct trade-off between profitability and revenue growth. We have focused on high-quality sustainable revenue growth, but at the same time focused on running the business efficiently, which drives higher margins. We are investing heavily in the business to drive growth. At the same time, we are building operating discipline and muscle to make the firm better.