Wipro lost its CFO to Cognizant. Then it lost a big client

Nasdaq-listed Cognizant announced last week that it would manage the IT infrastructure of Japan’s Takeda Pharmaceutical Co. Ltd, Asia’s biggest healthcare company. Cognizant did not disclose the financials and the tenure of the contract.

“Cognizant’s long-standing relationship with Takeda combined with our digital transformation expertise will ensure that we are able to support Takeda’s aspiration to become one of the most trusted, science-driven, digital biopharmaceutical companies," said Surya Gummadi, executive vice-president and president of Cognizant Americas, in a 25 January statement.

Mint could not independently ascertain why Takeda chose Cognizant over Wipro, but some analysts believe it is on account of a more stable leadership at Cognizant and also the latter’s strength in the life sciences segment.

“Cognizant’s gain with Takeda is definitely Wipro’s loss and can be attributed to its stronger leadership in the life sciences market, its clearer narrative and vision for its life sciences business, backed up with recent investments," said Phil Fersht, chief executive officer of US-based research firm HFS Research.

Cognizant reported $1.41 billion in revenue from its health sciences business segment in the July-September period, accounting for 29% of its $4.9 billion total revenue. In contrast, healthcare clients brought in $369.7 million, or about 14%, of Wipro’s $2.66 billion revenue in the third quarter, according to the company’s quarterly results.

In addition, Wipro has struggled with senior leadership attrition since the incumbent chief executive officer (CEO) took charge about three years ago.

Queries sent to Cognizant, Wipro and Takeda were unanswered till press time.

New Jersey-headquartered Cognizant’s latest deal win underscores how under CEO S. Ravi Kumar the company is looking to get both talent and business from homegrown IT giants.

Less than a week after he took over as CEO in January 2023, Ravi Kumar outlined the importance of large deals in an internal note to staff. “It just takes a few quick wins to create a positive momentum flywheel, and I believe that flywheel can drive a multiplier effect for our company: to capture an extraordinary market opportunity, to become the employer of choice for our industry," he wrote in the memo dated 15 January.

Cognizant, which follows a January-December financial year, expects revenue to grow at best 1% in the current financial year. So far, in the January-September 2023 period, revenues of $14.595 billion have barely topped the $14.589 billion of the year-ago period.

Net income fell 11% in the same period to $1.57 billion year-on-year.

Meanwhile, Cognizant has hired at least eight senior executives from Indian IT giants, including two from Wipro, over the past 12 months.

In August, Cognizant hired Mohd Haque, a former head of the healthcare and medical devices business segments for the Americas region at Wipro. This was followed by Wipro’s former chief financial officer Jatin Dalal, who quit to join Cognizant in December.

Wipro subsequently filed legal cases against Haque in a New Jersey court and against Dalal in Bengaluru, seeking to enforce employment agreements that have a non-compete clause with rival firms.

In contrast, this setback to Wipro comes as CEO Thierry Delaporte battles to retain senior management and struggles to bring about a turnaround at the firm he joined in July 2020.

At the heart of troubles inside Wipro is the reported leadership style of Delaporte, the lack of the company’s ability to win a single large mega deal (IT contract valued at over $1 billion) in the past three years, and an exodus of top-level talent.

At least 22 executives of senior vice president and above have left Wipro under Delaporte’s watch. Wipro, which follows an April-March financial year, expects its full-year revenue to decline 2-3% from $11.2 billion in FY23. In the April-December 2023 period, revenue growth is down 2.3% year-on-year.