Cognizant is struggling with a spate of top-tier exits
Premium- Humphries is in a difficult situation where even top executives hired by him are leaving
BENGALURU : When it comes to senior leadership at Cognizant, it is becoming a game of musical chairs.
In less than two weeks, Cognizant Technology Solutions Corp. was rocked by the departure of two leaders entrusted to oversee the entire $18.5 billion business, forcing it to scramble to appoint new heads, the third time under chief executive Brian Humphries.
First, president of Global Growth Market, Ursula Morgenstern quit in the second week of June, according to an executive privy to the development. Morgenstern, who was hired in December 2020, oversaw Cognizant’s $3.5 billion in revenue from Europe and $1.3 billion in business from emerging economies. This was followed by Cognizant sacking Gregory Hyttenrauch, who was in charge of the business in America, over what it said was “behavior inconsistent with company policy."
US customers accounted for the remaining three-fourths of Cognizant’s $18.5 billion revenue in the year ended December 2021. Cognizant appointed Rob Walker as a successor to Morgenstern and made Surya Gummadi an interim head for US.
Humphries, who was appointed CEO in February 2019, first entrusted D.K. Sinha as head of the US business in 2019. He also put Santosh Thomas in charge of Global Growth Markets in the same year. Both executives soon quit.
Thomas left in 2020 and was succeeded by Morgenstern. Sinha quit last year which made Cognizant hire Hyttenrauch from Vodafone Plc.
“In addition to the high attrition at the junior level, Cognizant is the only large IT services company that continues to face a senior management churn," a Mumbai-based analyst at a domestic brokerage said on the condition of anonymity. “Exodus of senior leadership obviously has a much larger impact as it not only impacts client relationships but leads to further instability in senior management team."
Beyond the old guard, 17 of the 18 senior executives listed in the 2019 annual report have moved out of Cognizant since Humphries took over. Rather, Humphries now finds himself in a unique situation where even senior executives hired by him are heading for the exit.
Humphries entrusted Prasad Chintamaneni as the head of the banking and financial services business division. Banks account for a third of Cognizant’s total business. Chintamaneni quit, following which Daniel Cohen was appointed in 2019. Cohen was sacked in September last year. Cognizant appointed Pradeep Shilige as head of global delivery in 2019; Shilige quit in September 2020, leading the company to appoint Andrew Stafford as his successor.
Mint first reported on Humphries’s struggle to build a stable leadership team on 27 September.
“With a company of our size and scale, we will see change in our executive talent from time to time, prompted by a variety of reasons, including the continuing evolution and growth of the business, or people altering their career journeys. We have a deep executive bench in place, pay a lot of attention to succession management, and will continue to augment our team with high-performing, skilled leaders as we move toward realizing our vision of becoming the pre-eminent technology services provider to the Global 2000 C-Suite," a spokesperson for Cognizant said.
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Beginning 6 February 2019, when Humphries was named as the successor to Francisco D’Souza and until 29 June 2022, Cognizant’s market cap has declined by 8.1% to $35.7billion. This, despite the company spending $4.6 billion and $1.4 billion, on share repurchase and dividends, respectively, in the last three years. In comparison, shares of Accenture Plc, Infosys, Tata Consultancy Services Ltd, and Wipro Ltd were up 76.5%, 65% 59% and 14.7%, respectively in the same period. “Our organic revenue growth was less than 6% last year," said a former executive. “First, you should have hired the best people. Once you join, you realize that there is still no firm strategic direction. The only option is to leave and join another company when the market is still doing well."
Mid and lower-level employees too have abruptly left, with Cognizant reporting attrition of 29% during the January-March period.
High attrition is hurting growth: Cognizant’s full-year revenue grew 11% last year, following a 0.76% dip in 2020 and 4% growth in 2019. In contrast, Infosys, under Salil Parekh, posted revenue growth of 7.9%, 8.3%, 6.1% and 20.3% in FY19, FY20, FY21 and FY22, respectively.