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Cognizant stepping into China

By K. T. Jagannathan and Shanthi Kannan

By K. T. Jagannathan

and Shanthi Kannan

CHENNAI, SEPT. 29. In what is seen as a precursor to a possible development centre in China, Cognizant has quietly established relationships with a couple of U.S.-based multi-national financial firms which have set up shop in that country. The total size of the engagement is `insignificant', according to Lakshmi Narayanan, President and CEO.

In an interaction with The Hindu, he said Cognizant had a small marketing outfit in China, headed by a native. The company was looking at the option of setting up a development centre. If all went well, a 100-people centre could be in place by 2005 in Shanghai, he added. The China centre was conceived more with an eye on leveraging the long-term opportunities and exploiting any possible low cost option. Mr. Narayanan said Cognizant would focus on BFSI (banking, financial services and insurance) segment in the Chinese market. The President said the China strategy would focus on MNCs which were lot comfortable partnering an incumbent client rather than courting a local partner.

He felt that Chinese were adequate to address the need of local firms, justifying Cognizant's exploration of MNC space in China.

Fielding a range of questions, Mr. Narayanan indicated that Cognizant was in no hurry to get into the BPO (business process outsourcing) field. He asserted that his company would enter only the high-end verticals where margins were high and where only limited players operated. Nevertheless, he admitted that it would be difficult to break into this area, especially in view of the marked disinclination shown by major firms to enrol a third party to do work that involved parting of information on their competitive advantage.

Cognizant had 213 active customers, Mr. Lakshmi Narayanan said. The company would lay much store by mining its strategic customers who numbered around 40 and contributed $30-40 million annual revenue each, he added. Though the U.S. had been a big revenue fetcher at 87 per cent, he insisted that Cognizant would explore limited number of deep ties in Europe, which currently accounted for 12 per cent of the revenue. Cognizant today announced that it had developed a port management system for the Japanese operations of Ford to support vehicle tracking, vehicle prioritisation for the pre-delivery inspection operations and efficient cost management.

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