In The New Polymath I had profiled Francisco D’Souza and the company he helped found, Cognizant as “born global”. The son of a diplomat, he has lived and worked around the world and has grown Cognizant into a nearly $ 15 billion global technology company. I had a chance to converse with him recently about political changes around the world and impact on global trade and technology adoption.
Here is Part 1
The excitement in the US seems to be about repatriation of trillions in overseas corporate profits. In China it is about their One Belt, One Road initiative with trillions in infrastructure and other investments in Asia, Africa etc. The contrast is quite dramatic - one focused on flows back, one outwards. In your view, how will this affect global businesses in the next few years?
We believe these monetary flows are a sign of much larger change under way in the global economy. That larger story for global businesses is that they’re moving into a new economic era powered by machines that think and learn—or what we at Cognizant refer to as “systems of intelligence.” The combination of today’s advanced digital technologies has removed much of the friction of industrial processes, collapsed time zones and distances, and sped up and broadened the flow of knowledge, ideas, innovation, and collaboration. As a result, we have a truly boundary-less global economy where the key to competing effectively is fourfold: 1) to be “glocal”—thinking global and acting local, 2) to become technology-enabled across your businesses, 3) to speed your pace of innovation and learning, and 4) to recruit the best talent from anywhere in the world you can find it.
At SapphireNow recently, SAP CEO Bill McDermott was asked about nationalistic trends. He said "we are prepared for anything, but with the recent French elections, we think the EU is going to hold and we have not seen free trade inhibited in the US". As you talk to client CEOs what are you hearing? A sense of relief or continued anxiety about limits to global trade?
Although the global economy is more integrated than ever and digital flows of information, ideas, and innovation are soaring, support for free trade at a policy level remains important if we are to continue to advance in this direction. In discussions with client company CEOs, we’ve heard expressions mostly of optimism about the future of global trade. These CEOs recognize that in our increasingly digital era, the source of value for customers, employees, partners, and investors has shifted from hard to soft assets and from the physical to the digital. And these digital assets—whether they take the form of compute power, design tools, applications, education and skills, or e-commerce—can and do flow anywhere and everywhere and can come together in amazing combinations.
These days, it’s never been easier to imagine a product, design it, manufacture it, and sell it—and do each of these steps in different locations. Consider additive manufacturing, the process of making a 3-D object from a computer-aided design model. By harnessing additive technologies, industry leaders worldwide can reduce the time to market of their products, improve quality, shorten their supply chains, and achieve production at scale. The clients we speak with also recognize that operating with a business model that can transcend geographical boundaries creates competitive advantage. They know that those industries where employees can move work around internationally—where the core work processes are fluid and knowledge-based—tend to grow faster. For countries and companies, artificial intelligence, algorithms, software bots, and big data are bringing the outside world in—and there is simply no stopping this trend.
Digital Transformations should be a major opportunity for many professional services firms. Are you seeing regional differences in adoption levels and therefore opportunities?
We do see regional differences in the pace of digital adoption, and that’s to be expected. Cognizant’s Center for the Future of Work studied 2,000 companies from across the globe — with a combined total revenue of more than $7 trillion — and found that business leaders are already feeling the ground shifting beneath their feet from the power of new technologies. Executives expect the total potential revenue impact to more than double between 2015 and 2018 to 11.4% of total revenue, unlocking value of about $770 billion per year.
In North America, when we ask executives to look out to 2020, big data and analytics rank near the top in importance, but other technologies — such as sensors/Internet of Things, digital security and AI — move up dramatically and stay there. Almost everyone in our survey (97%) agrees that “jobs and required skills will change significantly” because of digital transformation. With few exceptions, respondents see that the main impact of digital technologies will be to make their work more strategic
In Europe, the hundreds of executives we surveyed understand that digital transformation is a must-do. As part of Cognizant’s research, we’ve learned that business analytics and the science of meaning-making are set to dominate Europe’s economic cycle for the next 30 to 50 years and beyond.
We asked executives to rate the impact of several forces on the nature of work by 2020. Artificial intelligence ranked almost as important (98%) as big data analytics (99%) for our respondents. Cloud delivery of services came in just a little bit lower at 96%. As for inhibitors to their digital ambitions, two forces got a lot of attention: data privacy and security and the looming shortage of digital talent across the region. Three-quarters of our survey respondents in Europe worry about there being enough people in the workforce with the right skill sets as the shift to digital accelerates.
In Asia, things are moving faster. In our study of 300 companies with combined total revenue of about $660 billion across the Asia Pacific region, we found that digital has moved from potential to mainstream status. No longer just another channel, digital has become the channel to master. Companies are digitizing every aspect of their business, building new revenue models, reaching new customers, and making big money doing so. The companies we surveyed are making on average $263 million a year by leveraging digital technologies. Most compelling is that 97% of them started as brick-and-mortar enterprises and only recently turned the digital revolution in their favor. Approximately 12% of the net revenue of the Asia Pacific companies we surveyed was driven by digital during the last year, compared with the global average of 4.6%. Our regional respondents predict the percent of revenues derived from digital will nearly double by the end of 2018.
Labor mobility around the globe is critical for the professional services industry. Are you seeing constraints on such mobility across borders? Do you expect to see more regional hiring like Infosys' announcement to hire 10,000 staff in the US in reaction to potential H-1B visa changes? How are you preparing for more travel restrictions on laptops and other devices?
It’s in Cognizant’s nature, perhaps because we were born global, to have our eyes focused on anticipating and preparing for what’s next. As a leading professional services firm, we’ve had to be expert right from the beginning at mobilizing talent to serve the needs of our global clients. And that means ensuring we have the right skill sets (which change over time) and pursuing specialized talent wherever in the world it lives to ensure client access to their knowledge. We are continually evolving our workforce and delivery globally.
Over the last three years, and well ahead of any talk of potential changes to the H1-B visa program, we hired more than 10,000 professionals locally in the U.S. In just the past year, we’ve hired 4,000 U.S. citizens and residents. And this year we expect to ramp up our U.S.-based workforce by hiring experienced professionals in the open market and by making more use of university, veteran, and related programs. This shift in our workforce is in response to clients’ increasing need for co-innovation and co-location. Another way in which we localize our talent is through acquisitions and the rebadging of the client employees we absorb.
Over the past two years, thousands of employees have joined us in the U.S., Europe, and Asia Pacific as a result of our acquisition of TriZetto, Idea Couture, Mirabeau, Adaptra, Brilliant Service, and other companies as well as through the rebadging of employees from our client organizations. We’re also helping the world create tomorrow’s digital transformation experts through our support of STEM programs. In a global marketplace, global sourcing is imperative. Our company prides itself on our ability to adapt and bring our knowledge to clients wherever they may be.
Part 2 follows tomorrow
