The bulk of Cognizant Technology Solution?s growth in the March quarter came from manufacturing, retail and logistics segment that grew 58.7% over the year-ago quarter. R Chandrasekaran, president and MD of global delivery in the firm tells FE?s Goutam Das that discretionary spending is back across all segments and how happy he is with the company?s Q1 performance.
Cognizant is expected to overtake Wipro next quarter in revenues. How do you see the demand environment panning out?
Overall, we are very happy with the results in Q1. We see the robust demand environment continuing. Given the economic recovery, particularly in the US market, customers are looking for several things. One, they are looking at business transformation so that they can generate newer revenue streams. That requires certain consulting help. We have been beefing up our consulting capability ? we have over 2,500 associates who are charting out a roadmap for our client?s business transformation. That opens up newer opportunities for us. Customers are also looking at what else they can do offshore. So, we are parallelly investing in developing our capability in remote infrastructure management, BPO, business analytics ? these are huge areas of opportunity. Demand for newer offerings and the demand for consulting type of services really helps us to see a good demand for Cognizant?s business as we look into Q2 and the rest of the year.
Can you give us a sense of the uptick in retail and manufacturing verticals?
As the economic recovery continues, the demand for goods are also increasing. If you look at the peak holiday season towards the end of last year, that would indicate the increased demand for retail manufacturing segment. We expect the economic recovery to continue this year as well. Many of these retail manufacturing organisations are looking at ways and means of re-engineering some of their legacy platforms to state of the art technology. Retail organisations are looking at alternate channels ? particularly online channels to market their goods. These are opening up newer opportunities for Cognizant.
Is discretionary spending back across all verticals or are there any pockets of weakness?
If you look at our revenue split, 50% is from application management which is the annuity recurring business. The remaining 50% is on application development, which reflects the discretionary spend. It grew almost 59% year over year compared to 30% growth in application management spend. This is a clear indication that discretionary spending continues to rake in newer opportunities for Cognizant.
We have seen a couple of top tier IT firms restructuring ? almost similar in pattern ? to get themselves vertically organized. Lot of it has to do with taking Cognizant on. Is there any re-look at your strategies on how you want to plan the year ahead?
We have a great platform for success not only for today but also for the future. We don?t see the need for a major rejig within Cognizant. We have kept our business model very simple so that we can be very responsive to our client?s needs. We are always focused on delivering industry-specific business solutions to our client engagements. That?s why we are verticalised as an organisation. We have a robust organisation model that can sustain Cognizant?s growth for several years to come.
You lost your BFSI head last quarter. Has it resulted in any material impact for the company?
No. We have leadership talent at all levels. We have sufficient leadership bandwidth. Losing one individual is not really going to impact us. While we don?t want to loose anybody, we are adequately covered in our succession planning and building space capacity at every level within the organisation.