Nasdaq listed IT firm Cognizant, which has revised upwards the lower end of its revenue guidance for 2017, has witnessed its digital revenues growing higher than the company’s average. Debashis Chatterjee, president, Global Delivery, Cognizant, says the company’s early investments in the digital segment have started paying rich dividends, in an interview with FE’s PP Thimmaya.
Cognizant has delivered a strong performance for two-quarters in a row. Comment.
We have continued the strong momentum from Q1. This is the quarter where we have raised the lower end of our revenue guidance and guided to 9-10%. We have also raised the margin guidance. The execution has been very good and the improvement in the margin gives us room to accelerate our investments for growth. The second important factor for us is that we have been driving digital at scale. The long-term investments that we have been doing is paying off now. We have always been maintaining that in the digital market we need to look at the complete span of business, operating and technology model of the clients. It has to be digital end to end.
How is Cognizant addressing the digital segment?
We have realigned our global delivery into three practices – digital business, operations, technologies. We are also deeply engaged with reskilling activity besides investing in areas such as automation, artificial intelligence, machine learning. All these things are paying off. We have 40,000 people in the digital business practice. In this quarter also we have demonstrated the consistency in the execution. Our digital revenue is growing well beyond the company’s average.
How different is Cognizant’s execution strategy now?
One of the big difference is that we have been talking about transformation in clients environment. The bulk of that transformation is being driven by digital which is end to end. Also we need to ensure that we retrain our workforce in digital skills. Some of the new practices we have formed with a view that we can address the digital transformation of the clients. By the end of 2017, we expect to have 100,000 of our associates trained in digital technologies. We are also making sure that the workforce gets ready for the digital wave. When a company wants to make the digital transformation it does not happen in one part of the organisation. One needs capability at the front, middle and back end. Clients also need somebody who can understand the shift towards the digital. We have really accelerated the shift to digital, which is the future. We have made sure that we address that marketplace much faster than anybody else. Much of our past investments have started paying rich dividends.
Why did Cognizant’s employee headcount decline this quarter?
Though we saw a dip in this quarter, at a broad level we still hired 10,800 people on a gross basis. There were a couple of reasons for this dip which included higher utilisation, launch voluntary separation package and regular performance review programme. However, we do not anticipate any dip in the next quarter.
Is the healthcare sector bouncing back for Cognizant?
There is some of the M&A activity that are going on in the sector. What we see right now is that there is a lot of pent up demand, which had gone into a holding pattern. The demand is coming back and we are also investing a lot in healthcare platforms. We are also focusing on how to take them on our various platforms.
How does Cognizant see the demand momentum?
Overall the momentum has been pretty good. Bulk of the industries have done very well, though in some segments, we have not seen a similar kind of demand. The banking and retail industries have been a little soft. The discussions we are having with clients is fairly broadbased. The need for digital transformation is absolute paramount in the mind of the client.