Cognizant acquires AustinCSI to better serve client demand for cloud, AI, and analytics

The COVID-19 pandemic significantly impacted the cloud and analytics industry, accelerating trends already underway and driving new ones. Organizations are investing in artificial intelligence (AI) and machine learning (ML) to automate processes, increase efficiency, and gain actionable insights from data.

This skyrocketing demand for cloud services and the compelling mandate for enterprises to make data-driven decisions are driving a host of changes in service providers’ strategies to get closer to fulfilling them. Cognizant’s acquisition of AustinCSI in 2022 and several others since 2020 (see Exhibit 1) speak of its blueprint-in-making to gain a greater share of the cloud and analytics services market.

Acquisition of AustinCSI helps Cognizant boost its cloud, AI, and data analytics offerings

AustinCSI is a digital transformation consultancy specializing in enterprise cloud and data analytics advisory services. It offers digital services like cloud migration and optimization, cloud orchestration, data engineering and optimization, and enterprise modernization capabilities.

It brings a customer base across financial services, healthcare, telecommunications, media, technology, products and resources, and the public sector, which aligns with Cognizant’s domain expertise and offers potential growth in new domains. As part of the acquisition, Cognizant also secures 175 cloud and automation consultants offering industry and Big 4 consulting experience, market understanding, business acumen, and technical competence in delivering end-to-end digital transformation strategy and industry-led solutions.

One aspect that HFS believes the market should pay attention to is AustinCSI’s product and portfolio mindset around business transformation and digital services. AustinCSI is not a body shop of software engineers to be tucked away into Cognizant. If given the opportunity, this mindset can benefit Cognizant as it seeks to close gaps in how it engages with its customers to address product-centric and front-office solutions, thus further allowing Cognizant to move beyond its historical BPO and ITO heritage.

At acquisition, AustinCSI continues to operate with its current leadership team and under its own name as “a Cognizant company.” How AustinCSI is ultimately integrated with Cognizant will decide if the product mindset dissipates as AustinCSI is ingested or instead brings a new flavor to spread throughout its new owner.

Exhibit 1: Cognizant’s cloud and analytics-focused acquisitions since 2020 indicate a strategy in motion

Source: HFS Research, 2023

AustinCSI’s blue-chip clientele strengthens Cognizant’s client roster and revenue stream

With 92% of client accounts in 2021 being Fortune 100 companies and their subsidiaries, AustinCSI is expected to be an important acquisition for Cognizant. Its offerings include board-level strategic consulting, strategic planning and implementation, engineering and development, and managed services. One of the main differentiators for AustinCSI has been the fixed monthly cost model, which provides spend predictability and transparency to enterprise clients without the overhead of big-box consulting.

The Bottom Line: Cognizant has bought the benefits of a product-centric mindset. Now it must work to scale that benefit within.

The acquisition of AustinCSI aligns with Cognizant’s intent to strengthen its capabilities in AI, cloud, analytics, and digital transformation. Maintaining AustinCSI’s product-centric mindset and encouraging its spread across Cognizant colleagues hold the key to scaling the benefits the acquisition brings to Cognizant’s broader client base.