From Outsourcing to Consulting

On the penthouse floor of an office building in Midtown Manhattan, Cognizant has furnished a suite of rooms with hardwood floors and vintage furniture that wouldn’t look out of place in East Egg. Dotting the walls are framed photos of Elvis Costello, Charles Darwin, Martha Graham, and Pablo Picasso, and the office’s two terraces have views of the East River and the Chrysler Building. It’s a long way from the meeting rooms at Cognizant’s headquarters in Teaneck, N.J., and even farther from the cubicles that fill the company’s offices in India, where three-quarters of its 220,000 employees work.

The Manhattan setup is part of Cognizant’s effort to remake itself as a technology consultant instead of a cheap data-processing workhorse. In India, wages are rising and competition for labor is growing, so hiring tens of thousands of employees each year is no longer a guaranteed way to expand the business. In the U.S., congressional efforts to reduce the number of temporary visas outsourcing companies receive each year would further complicate Cognizant’s traditional business model. And worldwide, corporate clients that once relied on outsourcers to manage big SAP and Oracle databases have begun shifting the work to cloud services that require less hands-on management. New demand for the traditional outsourcing work “has ground to a halt,” says Bloomberg Intelligence analyst Anurag Rana. “IT budgets at best are flat to slightly up.”