Global IT Services growth in 2012 down to 2%

 

 

Gartner’s latest report says that the global IT services industry grew by 2 percent in 2012, down from 7.7 percent in 2011. The report also mentions that the top Indian IT service providers grew faster and Cognizant has overtaken Infosys as the number 2.

 

The top five Indian providers* grew 13.3 percent to reach $34.3 billion in 2012, exceeding the IT services industry growth of 2 percent according to Gartner, Inc. The growth decelerated for both industry groups, from 21.8 percent and 7.7 percent, in 2011.

“Cognizant displaced Infosys to become the second-largest Indian IT services provider (see Table 1), and Cognizant experienced the highest growth rate among the top five providers with an increase of 20.1 percent in 2012,“ said Arup Roy, research director at Gartner. ” TCS closed in on the top 10 worldwide market share leader, with less than $1.5 billion separating it from the 10th ranked provider, Hitachi.”

Indian IT Marketshare

Image via Gartner

 

 

See the original report here.

Cognizant’s successful acquisition strategy

Cognizant’s CFO says that their acquisition strategy is to acquire specific technology and service skills, competencies and capabilities through focused, small-sized acquisitions. The maximum size of these acquisitions is $200 million – 3.3% of its approximately $6 billion revenues. Cognizant’s acquisition of Zaffera is the most recent in a series of such strategic acquisitions aimed at gaining specific knowledge.

Our acquisition strategy is towards very targeted tuck-in small deals which are targeted towards geographic expansion, building industry expertise and lastly, to acquire technology and services capability. For example, our PIPC acquisition was a very targeted acquisition. PIPC has expertise in large program management capability. It also had geographic presence in the UK and Australia. It has helped us in getting large development projects. Our sweet spot is $20-80 million deals and at the upper end it is $200 million. It is far easier to integrate.

Image via Business Today

via Cognizant’s CFO on acquisition strategy – Business Today – Business News.

Cognizant gaining capabilities through acquisitions

Cognizant has acquired Zaffera, a New Jersey based SAP consulting firm. Through this acquisition, Cognizant aims to gain capabilities in the area of SAP Retail Consulting. Like other such focused technology acquisitions, a large technology firm (Cognizant has 118,000 employees) is acquiring a much smaller technology firm (100 employees of Zaffera), for the purpose of gaining knowledge and capabilities.

Tacit knowledge vs. Explicit knowledge

Image via Wikipedia

Cognizant will gain SAP solutions & accelerators (artifacts of best practices), knowledge about these solutions and other retail domain specific competencies (tacit knowledge) from the acquisition.

The acquisition will significantly expand Cognizant’s ability to provide industry-focused SAP consulting and software solutions to help major retailers gain better insights into their business, streamline operations, enhance customer satisfaction, and improve responsiveness to changing market conditions. Terms of the transaction were not disclosed.

 

Like Cognizant, Zaffera helps the world’s top retail brands navigate the rapid changes in the retail sector brought about by new technology and demographic shifts. With more than 100 professionals, Zaffera has a rich pool of highly experienced SAP retail consulting talent. To provide retailers with real-time visibility into what products are on their shelves, the rate at which they are selling, and who is buying them, Zaffera has developed a portfolio of SAP retail solutions and accelerators in areas such as business analytics, retail planning, point-of-sale (POS) integration, and store operations.

via Cognizant to Strengthen Retail Industry Capabilities with Acquisition of Zaffera, a Leading SAP Retail Consulting and Solutions Firm – Sep 27, 2011.