Editor’s note: Cognizant is increasingly encroaching on IBM and Accenture’s territory by building out its consulting scale and digital and cloud expertise, writes Technology Business research Analyst Jennifer Hamel.

HAMPTON, N.H. – Cognizant’s year-to-year revenue growth again outpaced top-tier India-centric peers and global competitors but decelerated from the 20%-plus rates sustained from 1Q15 through 3Q15 to 17.9% in 4Q15, with only a half-quarter inorganic boost from the November 2014 TriZetto acquisition.

Ongoing reinvestment of profits in the consulting-led Digital Works unit and cloud-delivered platform solutions put Cognizant on the same playing field as IBM, Accenture and Deloitte for digital transformation engagements.

Bundling transformational offerings with cost-efficient legacy IT system management capabilities remains the company’s key differentiator against these global peers.

However, Cognizant reported discretionary spending pressures in its top two verticals, Banking and Financial Services and Healthcare and Life Sciences — together comprising nearly 70% of its total revenue — which will challenge the company’s ability to sustain growth momentum in 1Q16.

Cognizant builds out its cloud integration capabilities and onshore consulting scale by acquiring KBACE

According to TBR’s 2Q15 Cloud Brokerage & Integration Benchmark, “IT services vendors have the advantage of existing strength in SI and consulting services, making the venture into the cloud integration market a natural outgrowth of their current businesses.”

This is true for Cognizant, which TBR estimates has grown its cloud business above the overall company average rate by cross-selling cloud solutions to outsourcing clients. Cognizant offers cloud integration and brokerage IPs, including its Cloud Steps Transformation Framework and Cognizant Cloud Integration Brokerage (CCIB) BusinessCloud solution, and cloud consulting through its Digital Works practice.

The February acquisition of New Hampshire-based KBACE Technologies Inc. enhanced Cognizant’s cloud consulting, integration and managed services capabilities around Oracle applications. Though Cognizant has been an Oracle partner for 15 years, the KBACE acquisition brings 400 U.S.-based consultants that specialize in Oracle Cloud solutions, adding onshore consulting scale in Cognizant’s core U.S. market.

The acquisition follows similar moves by Accenture (Cloud Sherpas) and IBM (Meteorix) to acquire cloud integration vendors with expertise in cloud solutions from specific vendors such as Salesforce, ServiceNow, Workday and Google. We expect Cognizant will use KBACE’s expertise to bolster its cloud integration frameworks.

Cognizant Business Consulting and Digital Works enable the company to handle digital transformations from strategy through execution

TBR’s 1H15 Management Consulting Benchmark observed that India-centric vendors “will become more troublesome in 2016,” competing head-to-head for talent and clients with strategy-led firms such as McKinsey, Big Four firms such as EY, and solutions-led peers such as Accenture and IBM. Of all the Tier 1 India-centric players, Cognizant poses the greatest threat to the management consulting establishment.

The Cognizant Business Consulting (CBC) practice more than quadrupled from 2008 to 2015, now boasting 5,500 consultants worldwide, through a combination of business school hiring and poaching senior talent from competitors. Beyond headcount expansion, Cognizant developed thought leadership and IP-based frameworks such as Digital Works Accelerator to communicate its consulting expertise.

Efforts to shed its low-cost outsourcing image and grow its brand as a strategic transformation partner are working, with Cognizant Executive Vice President Mark Livingston reporting CBC has opened 50 new accounts each year on average for the past few years. Though much smaller in scale than IBM and Accenture, Cognizant will continue to aggressively challenge its global peers for consulting-led digital transformation deals.