D'Souza now serve on Cognizant's board as VC

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As the calendar turned to 2007, a smooth and silent transition took place at Cognizant Technology Solutions. On Monday, Francisco D’Souza took over as the IT major’s CEO from Lakshmi Narayanan, who will now serve on Cognizant’s board as vice-chairman. The move was announced four months back to ensure a smooth changeover. The 38-year-old D’Souza is the youngest CEO of a billion-dollar IT company. Cognizant hit the billion-dollar mark in December ’05, and has given a revenue guidance of $1.4 billion for 2006. In fact, in the three years under Mr Narayanan, the company saw at least a three-fold increase in market capitalisation, revenues, net profit and employee strength. When Mr Narayanan took over in December 2003 from Kumar Mahadeva, there were doubts whether Mr Mahadeva should step down at all. Then, Cognizant was at a crucial growth phase and Mr Mahadeva had led Cognizant right from its inception. Mr Mahadeva had developed an enviable network of people during his stints in other companies across industries. However, Mr Narayanan had always been with the software sector. He joined TCS in 1975 after his studies at IISc. From TCS, he moved to Cognizant in 1994, when it was still a part of Dun and Bradstreet. When Mr Narayanan assumed charge in December 2003, the company’s revenues were $368 million. Now the net profit of the company is expected to cross $220 million from $59.4 million three years back. Its employee strength has grown to over 38,000 people from 9,241 in 2003. Cognizant’s market cap is set to grow from $3.1 billion to $11.1 billion in December 2006. Cognizant’s forward price-to-earning ratio is ahead of even Google now. Interestingly, this came on the back of a change in the company’s solution mix. Services such as ERP, CRM, testing, data warehousing, BPO and IT Infrastructure services, which contributed to below 10% of revenues in December 2003, today contributes to over 35% of revenues. If Mr Mahadeva turned a 50-person in-house development shop to a 9,000-person global IT leader in 10 years, Mr Narayanan made it a billion-dollar company. Industry players and observers will be keenly watching how Mr D’Souza takes Cognizant forward.