{"id":1107,"date":"2014-09-17T12:55:00","date_gmt":"2014-09-17T12:55:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/cognizant-trizetto-implications_091714\/"},"modified":"2014-09-17T12:55:00","modified_gmt":"2014-09-17T12:55:00","slug":"cognizant-trizetto-implications_091714","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/cognizant-trizetto-implications_091714\/","title":{"rendered":"Cognizant makes the biggest bet ever by an Indian services provider. This is a big bloody deal…"},"content":{"rendered":"

What ever happened to the days of the tiddly little sub-$10m “tuck-in” acquisitions that Indian providers used to make (and we all forgot about pretty quickly afterwards)? \u00a0Well, the game has changed forever as Cognizant shelled out a whopping $2.7 Billion on healthcare technology firm TriZetto (read our research POV here<\/a>).<\/p>\n

This wasn’t only Cog’s largest acquisition – it’s the largest one – by a country mile – from any Indian IT\/BPO services major. \u00a0Ever:<\/p>\n

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Click to Enlarge<\/p>\n<\/div>\n

Four reasons why this changes the game for services:<\/span><\/strong><\/p>\n

1. Cognizant becomes a true BPaaS, software and services firm. \u00a0<\/strong>Most of the pureplay services firms buy little technology tucks-in to improve their services, and have technology tools and platforms that differentiate them with proprietary workflow and IP. \u00a0However, services firms have always sold services first and foremost, with software as the value differentiator that creates client stickiness and allows greater scalability of skills and standard processes. \u00a0By acquiring a platform the size and scale of TriZetto, suddenly Cognizant is adapting to selling software<\/em>, and not just service provision. In my opinion, the only way true BPaaS will ultimately be successful is when the services firms elect to sell the software first<\/em> and then figure out with the client how to implement it, redesign the processes, do the change management etc. \u00a0I call this the “Workday effect”. \u00a0Essentially, have the client fall in love with the software, slam it in, then figure out the rest afterwards. It’s like buying Google – they just force you to figure it all out after<\/em> you’ve been bought into using their platform.<\/p>\n

2. BPaaS will replace legacy outsourcing – it’s just a matter if time.<\/strong> \u00a0As our new State of Outsourcing data<\/a> illustrates,\u00a0close to one-in-three enterprises are already using (or about to use) BPaaS \/ cloud as an alternative to legacy<\/em> outsourcing in areas such as HR, industry-specific operations (such as TriZetto), finance and accounting and procurement:<\/p>\n

\"\"<\/a><\/p>\n

Click to Enlarge<\/p>\n<\/div>\n

Having a provider which understands – and can implement – a cloud platform,\u00a0support the transformation and provide the necessary services that add real value to the front-office is the Holy Grail for many buyers. \u00a0With half of today’s outsourcing contracts potentially up for grabs<\/a>, those providers with genuine platform plays are in pole position to pick off legacy outsourcing contracts that have hit the wall, in terms of finding future value.<\/p>\n

3. Healthcare becomes the new “financial services” for IT\/BPO.<\/strong> \u00a0In the past, most of the big bucks in industry-specific IT\/BPO was in sorting out the quagmire of complexity, dysfunction and legacy in the banking and financial services space. Now, with the ACA hitting us in full-force, it’s plainly apparent that there’s a ton of opportunity taking healthcare payers and providers into BPaaS and sophisticated outsourcing models. \u00a0Watch this space for further acquisitive moves in this sector, where tech-centric healthcare suppliers, such as Emdeon<\/a> and McKesson<\/a>,\u00a0are becoming increasingly attractive targets.<\/p>\n

4. The BPaaS gauntlet in thrown down to Accenture, TCS, Infosys and Wipro to respond.<\/strong> \u00a0Cognizant’s main competitors are rocked by this one – and they need to figure out how to raise the ante with their own BPaaS plays. Infosys is enjoying a return of its mojo, with a software innovator Vishal Sikka<\/a> now at the helm and figuring out its\u00a0EdgeVerve<\/a> strategy, Accenture has brought together Operations (including BPO) and Cloud Infrastructure to form a super group<\/a> of BPaaS potential, Wipro has enjoyed a solid rebirth under TK Kurien and has been doing some cool things with Base))) and its mortgage platform play<\/a>, \u00a0while TCS has long been a pioneer of “PlatformBPO” with a series of developing offerings, notably in the insurance<\/a> and banking space. \u00a0Oh – and let’s not forget dear old IBM, who’s off trying to cure cancer with Watson<\/a>…<\/p>\n

The Bottom-line: \u00a0Cognizant has upped the ante… Now it’s time for the ambitious providers to open their\u00a0<\/span><\/strong>war-chests<\/strong><\/span><\/p>\n

You can just feel it in the air, can’t you? \u00a0The global economy’s buzzing again, ambitious enterprises are willing to spend again. \u00a0Meanwhile, the ITO labor arbitrage game is finally showing signs of drying up – and Cognizant, a major bell-weather for the health of offshore services, has responded with a massive, massive bet on the future of the industry – and few would dare to fault this move.<\/p>\n

Now the winners need to place their bets on the solutions and industries where they can find new growth opportunities – they all have serious funds available, and can likely get access to even more capital if they need to. \u00a0There are clear yawning gaps in the market for (more) winning BPaaS offerings in areas such as finance and accounting, supply chain, retail and manufacturing… not to mention healthcare, life sciences and financial services. \u00a0The future path for BPaaS is really starting to unravel and we’ll likely know in the next 18 months who’s willing to make the investments and business model changes needed to evolve with it.<\/p>\n","protected":false},"excerpt":{"rendered":"

What ever happened to the days of the tiddly little sub-$10m “tuck-in” acquisitions that Indian providers used to make (and…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,51,64,74,78,81,838,91,831,830,837],"tags":[787],"ppma_author":[19],"yoast_head":"\nCognizant makes the biggest bet ever by an Indian services provider. This is a big bloody deal... - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/cognizant-trizetto-implications_091714\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Cognizant makes the biggest bet ever by an Indian services provider. 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