We are a leading provider of custom IT consulting and technology services as well
as outsourcing services for Global 2000 companies located in North America, Europe
and Asia. Our core competencies include Technology Strategy Consulting, Complex
Systems Development, Enterprise Software Package Implementation and Maintenance,
Data Warehousing & Business Intelligence, Application Testing, Application
Maintenance, Infrastructure Management, and Vertically-Oriented Business Process
Outsourcing (BPO). We tailor our services to specific industries, and utilize
an integrated on-site/offshore business model. This seamless on-site/offshore
business model combines technical and account management teams located on-site
at the customer location and offshore at dedicated development centers located
primarily in India.
Industry Background
Many companies today face intense competitive pressure and rapidly changing
market dynamics, driven by such factors as changes in government regulations,
globalization and technology innovation. In response to these challenges, many
companies are focused on improving productivity, increasing service levels,
lowering costs and accelerating delivery times. In order to achieve these goals,
companies are focusing on a number of technology-centric areas, such as:
' Business and IT alignment and optimization;
' Advanced custom systems development;
' Data Warehousing and Business Intelligence;
' Enterprise Resource Planning;
' Customer and Supply Chain Management; and
' Middleware, Service-Oriented Architectures, Open Source and Radio Frequency
Identification (RFID).
These approaches and technologies facilitate faster, more responsive, lower-cost
business operations. However, their development, integration and on-going maintenance
present major challenges and require a large number of highly skilled professionals
trained in many diverse technologies. In addition, companies also require additional
technical resources to maintain, enhance and re-engineer their core legacy IT
systems and to address application maintenance projects. Increasingly, companies
are relying on custom IT solutions providers, such as us, to provide these services.
In order to respond effectively to a changing and challenging business environment,
IT departments of many companies have focused increasingly on improving returns
on IT investments, lowering costs and accelerating the delivery of new systems
and solutions. To accomplish these objectives, many IT departments have shifted
all or a portion of their IT development, integration and maintenance requirements
to outside service providers operating with on-site/offshore business models.
Global demand for high quality, lower cost IT services from outside providers
has created a significant opportunity for IT service providers that can successfully
leverage the benefits of, and address the challenges in using, an offshore talent
pool. The effective use of offshore personnel can offer a variety of benefits,
including lower costs, faster delivery of new IT solutions and innovations in
vertical solutions, processes and technologies. Certain developing countries,
particularly India, have a large talent pool of highly qualified technical professionals
that can provide high quality IT and BPO services at a lower cost. India is
a leader in IT services, and is regarded as having one of the largest and highest
quality pools of talent in the world. Historically, IT service providers have
used offshore labor pools primarily to supplement the internal staffing needs
of customers. However, evolving customer demands have led to the increasing
acceptance and use of offshore resources for higher value-added services. These
services include application design, development, testing, integration and maintenance,
as well as technology consulting and infrastructure management. India's services
and software exports continue to see significant growth. According to NASSCOM
(India's National Association of Software and Services Companies) and McKinsey
& Company, the IT/BPO sector in India was a $17.2 billion industry in 2004,
and is projected to grow to $50.0 billion by 2009.
Using a globally distributed workforce to provide value-added services presents
a number of challenges to IT service providers. The offshore implementation
of value-added IT services requires that IT service providers continually and
effectively attract, train and retain highly skilled software development professionals
with the advanced technical skills necessary to keep pace with continuing changes
in information technology, evolving industry standards and changing customer
preferences. These skills are necessary to design, develop and deploy high-quality
technology solutions in a cost-effective and timely manner. In addition, IT
service providers must have the methodologies, processes and communications
capabilities to enable offshore workforces to be successfully integrated with
on-site personnel. Service providers must also have strong research and development
capabilities, technology competency centers and relationship management skills
in order to compete effectively.
The Cognizant Approach
Our business is organized and managed primarily around our four vertically-oriented
business segments:
' Financial Services;
' Healthcare;
' Manufacturing, Retail & Logistics; and
' Other ' which includes Telecommunications, Information Services, Media and
High Technology.
This vertical focus has been central to our revenue growth and high-customer
satisfaction. As the IT Services industry continues to mature, clients are looking
for service providers who understand their businesses, industry initiatives,
culture and have solutions tailored to meet their individual business needs.
We have continued to hire experts out of industry, establish a broad base of
business analysts, invest in industry training for our staff, and build out
industry-specific services and solutions. This approach is central to our high-levels
of on-time delivery and customer satisfaction, as we understand the full context
of our clients' challenges and have deep experience in addressing them.
Our key service areas'IT Consulting and Technology Services, and Outsourcing
Services'are delivered in a standardized, high-quality manner through a Global
Delivery Model to our clients across our four business segments. These service
areas include:
' IT Consulting and Technology Services
' Business Process Consulting
' IT Strategy Consulting
' Technology Consulting
' Application Design, Development, Integration and Re-engineering
' Complex Custom Systems Development
' DataWarehousing / Business Intelligence
' Customer Management Relationship (CRM) System implementation
' Enterprise Resource Planning (ERP) System implementation
' Software Testing Services
' Outsourcing Services
' Application Maintenance
' Custom Application Maintenance
' CRM and ERP Maintenance
' IT Infrastructure Outsourcing
' Business Process Outsourcing
Our Solution and Services
We believe that we have developed an effective integrated on-site/offshore
business model, and that this business model will be a critical element of our
continued growth. To support this business model, at December 31, 2005, we employed
over 24,000 IT professionals and support staff globally. We have also established
facilities, technology and communications infrastructure in order to support
our business model.
Across each of our business segments, we provide a broad, and expanding, range
of consulting, information technology and business processing outsourcing services,
including:
IT Consulting and Technology Services
' IT Consulting. Consulting offerings that are based on rigorous and proven
methodologies and scientifically driven frameworks. In the areas of business
processes, technologies and offshoring, we analyze the existing environment,
identify opportunities for optimization and provide a robust roadmap for significant
cost savings and productivity improvement. The broad areas of coverage include:
offshoring strategy, IT strategy, technology rationalization, business process
rationalization, change management and IT solution strategy.
' Application Design, Development, Integration and Re-engineering. Define customer
requirements, write specifications and design, develop, test and integrate software
across multiple platforms including Internet technologies. Modify and test applications
to enable systems to function in new operating environments. In addition, these
services include DataWarehousing / Business Intelligence (BI), ERP and CRM implementation
services, as well as testing services. We follow either of two alternative approaches
to application development and integration:
' full life-cycle application development, in which we assume start-to-finish
responsibility for analysis, design, implementation, testing and integration
of systems; or
' cooperative development, in which our employees work with a customer's in-house
IT personnel to jointly analyze, design, implement, test and integrate new systems.
In both of these approaches, our on-site team members work closely and collaboratively
with our clients. Detailed design, implementation and testing are generally
performed offshore at our 27 IT development centers located in India and China,
as well as our development centers in Chicago, Phoenix, Amsterdam and Toronto.
In addition, we maintain an on-site presence at each customer location in order
to address evolving customer needs and resulting changes to the project.
A key part of our application development and integration offering is a suite
of services to help organizations build and integrate business applications
with the rest of their operations. In this suite of services, we leverage our
skills in business application development and enterprise application integration
to build sophisticated business applications and to integrate these new applications
and Web sites with client server and legacy systems. We build and deploy robust,
scalable and extensible architectures for use in a wide range of industries.
We maintain competency centers specializing in Microsoft, IBM, SAP and JAVA,
among others, in order to be able to provide application development and integration
services to a broad spectrum of customers.
Our re-engineering service offerings assist customers migrating from systems
based on legacy computing environments to newer, open systems-based platforms
and client/server architectures, often in response to the more stringent demands
of business. Our re-engineering tools automate many of the processes required
to implement advanced client/server technologies. We believe that this automation
substantially reduces the time and cost to perform re-engineering services,
savings that benefit both us and our customers. These tools also enable us to
perform source code analysis and to re-design target databases and convert certain
programming languages. If necessary, our programmers also help customers re-design
and convert user interfaces.
' Software Testing Service. Our Software Testing service offering has experienced
significant growth in the past year. Through this practice, we provide an independent
verification and validation service focused exclusively on supporting the software
testing needs of our clients. Our testing service has four key offerings: 1.)
Independent Functional Testing, 2.) Test Automation, 3.) Test Process Consulting,
and 4.) Performance Testing. We utilize our own Managed Test Center process
model to ensure our client's receive the highest quality code possible after
it has been tested by us. We focus our Managed Test Centers on specific domains
(e.g., specific industries and software solutions), ensuring we tailor our testing
solutions to the particular needs of our clients.
Outsourcing
' Application Maintenance. Support some or all of a customer's applications
ensuring that systems remain operational and responsive to changing user requirements,
and to provide on-going enhancement as required by the customer. In addition,
our maintenance services include infrastructure management.
We provide services to help ensure that a customer's core operational systems
are free of defects and responsive to the customer's changing needs. As part
of this process, we are often able to introduce product and process enhancements
and improve service levels to customers requesting modifications and on-going
support.
Our on-site/offshore business model enables us to provide a range of rapid
response and cost-effective support services to our customers. Our on-site team
members often provide help-desk services at the customer's facility. These team
members typically carry pagers in the event of an emergency service request
and are available to quickly resolve customer problems from remote locations.
In the case of more complex maintenance services, including modifications, enhancements
and documentation, which typically have longer turnaround times, we take full
advantage of our offshore resources to develop solutions more cost-effectively
than would be possible relying on higher cost local professionals. The services
provided by our offshore team members are delivered to customers using satellite
and fiber-optic telecommunications.
As part of our application maintenance services, we assist customers in renovating
their core systems to meet the requirements imposed by new regulations, new
standards or other external events. These services include, or have previously
included, Year 2000 compliance, Eurocurrency compliance, decimalization within
the securities industry and compliance with the Health Insurance Portability
and Accountability Act for the healthcare industry.
Application maintenance service contracts are usually long term in nature and,
at times, can include an element of application development.
We seek to anticipate the operational environment of customer's IT systems
as we design and develop such systems. We also offer diagnostic services to
customers to assist them in identifying shortcomings in their IT systems and
optimizing the performance of their systems.
' IT Infrastructure Services. We provide IT Infrastructure Management Outsourcing
services. This is a newer service at Cognizant, but one where we anticipate
growing demand in the coming years. Through our Global Operations Center, we
are able to provide significant scale, quality and cost savings to our clients
in IT Infrastructure Services. We focus on a number of key areas, including
such key areas of infrastructure management as: Networks, Servers, Middleware,
Security, Vendors, Storage, Messaging, Databases, and Desktops. We can provide
these through an IT Service Desk model, focusing on such areas as IT Operations
and IT Help Desk.
' Vertical Business Process Outsourcing (V-BPO). We provide Vertically-Oriented
BPO to our clients. This is a newer service at Cognizant, but one in which we
anticipate future growth. At Cognizant, we made a strategic decision to stay
out of more generic, horizontally-based BPO markets (i.e., call centers) and
instead have focused on value-added processes that are specific to clients in
our key industry segments (particularly in Financial Services, Healthcare and
Manufacturing / Logistics / Retail). Our BPO practice focuses on core back office
services covering: Transaction Processing, Voice Processes, Data Administration,
Data Management and Data Analytics.
In addition to our industry-specific expertise and focus, our strengths, which
we believe differentiate us from other IT service providers, include the following:
Established and Scalable Proprietary Processes. We have developed proprietary
methodologies for integrating on-site and offshore teams to facilitate cost-effective,
on-time delivery of high-quality projects. These methodologies comprise our
proprietary Q'VIEW software engineering process, which is available to all on-site
and offshore programmers. We use this ISO 9001:2000 certified process to define
and implement projects from the design, development and deployment stages through
on-going application maintenance. For most projects, Q'VIEW is used as part
of an initial setting up of processes that allows us to define the scope and
risks of the project and subdivide the project into smaller phases with frequent
deliverables and feedback from customers. We also use our Q'VIEW process to
detect, mitigate and correct possible quality defects and to establish appropriate
contingencies for each project. In order to ensure implementation of the quality
process, we assign a quality facilitator to each project who reports to a centralized
quality assurance and software engineering group. This group performs, on a
sample basis, quality audits, deliverables verifications, metrics collection
and analysis, which are used to improve processes and methodologies. These processes
and methodologies have proven to be scalable, as we have significantly increased
the number of offshore development centers, customers and projects. In addition,
all of our principal development centers have been assessed by KPMG at Level
5 (the highest possible rating) of both the Capability Maturity Model and the
Capability Maturity Model Integration of the Software Engineering Institute
at Carnegie Mellon University, which are widely recognized means of measuring
the quality and maturity of an organization's software development and maintenance
processes.
Customers
The number of customers served by us has increased significantly in recent
years.
We provide services either on a time-and-material basis or on the basis of
an agreed fixed bid. The volume of work performed for specific customers is
likely to vary from year to year, and a significant customer in one year may
not use our services in a subsequent year.
Our customers include:
ACNielsen Corporation, First Data Corporation, ADP Incorporated, IMS Health
Incorporated, Brinker International Incorporated, JPMorgan Chase, CCC Information
Services Incorporated, Metropolitan Life Insurance Company, Computer Sciences
Corporation, Royal & SunAlliance USA, The Dun & Bradstreet Corporation,
United Healthcare
Competition
The intensely competitive IT services market includes a large number of participants
and is subject to rapid change. This market includes participants from a variety
of market segments, including:
' systems integration firms;
' contract programming companies;
' application software companies;
' Internet solutions providers;
' the professional services groups of computer equipment companies; and
' facilities management and outsourcing companies.
Our most direct competitors include, among others, Infosys Technologies, Tata
Consultancy Services and WIPRO, which utilize an integrated on-site/offshore
business model comparable to that used by us. We also compete with large IT
service providers with greater resources, such as Accenture, Computer Sciences
Corporation, Electronic Data Systems and IBM Global Services. In addition, we
compete with numerous smaller local companies in the various geographic markets
in which we operate.
Many of our competitors have significantly greater financial, technical and
marketing resources and greater name recognition than we do. The principal competitive
factors affecting the markets for our services include:
' performance and reliability;
' quality of technical support, training and services;
' responsiveness to customer needs;
' reputation, experience and financial stability; and
' competitive pricing of services.
We rely on the following to compete effectively:
' a well developed recruiting, training and retention model;
' a successful service delivery model;
' a broad referral base;
' continual investment in process improvement and knowledge capture;
' investment in research and development;
' continued focus on responsiveness to customer needs, quality of services,
competitive prices; and
' project management capabilities and technical expertise.