We will look for small acquisitions in $20-100 m range, says R Chandrasekaran

Updated: Feb 7 2014, 18:36pm hrs
The stock market may have reacted negatively to Cognizants Q4 performance and the 2014 revenue growth guidance of 16.5%, but the US-headquartered $8.84-billion IT firm is optimistic that the current calendar year will continue to generate good demand. Cognizant executive vice-chairman R Chandrasekaran says the rising demand for emerging technology services in areas such as social, mobile and analytics will drive growth in 2014 in an interview with PP Thimmaya. Edited excerpts:

How do you view Cognizants performance given the 2.2% revenue growth in the December quarter

We feel pretty good about the results. If one looks at the full-year performance of 20.4% growth for 2013, once can see that we have added $250 million over our initial guidance. One cannot look at one quarters performance in isolation as during the previous quarters we had phenomenal growth. 2.2% growth is a good number. The December quarter has historically been soft for Cognizant due to many reasons. But given the outperformance in the previous quarters, I would say overall it was a good year.

How do you see 2014 playing out

Pretty good. We are very optimistic as we saw a good demand environment in 2013 and we expect that to continue in 2014. Most of the customers are looking to leverage newer technology stack, transform the business to create a digital enterprise. Technology is going to drive a lot of demand and we are also expanding into newer geographies such as Latin America and newer business verticals like public sector to emerge better.

Has the depressed market conditions witnessed in 2012 and early 2013 receding as far as Cognizant is concerned

We had good years in 2012 and 2013. If one sees historically, we have seen economic cycles going up and down but Cognizant has always come out stronger when there is an economic downturn, whether it was 2001 or 2008. The growth might have slowdown but we grew faster than the peers of the industry. Given the demand outlook, macro economic fundamentals, we have a very optimistic outlook in 2014.

What has been the demand for emerging technologies

The SMAC (social, mobile, analytics and cloud) stack is creating a lot of opportunities that is helping customers challenge the status quo and improve business performance. Every customer wants to be the first to introduce this service leveraging these technologies. We expect the demand for SMAC services to be very robust. The adoption of these technologies has been across the board. We have been preparing ourselves and have clearly laid a strategy in terms of Horizon 1, Horizon 2 and Horizon 3 levels of services. This would encompass the entire spectrum like helping our customers run better, bringing down the cost of ownership, maintain industry leading growth, moving up value chain, going into newer geographies and verticals. It is a complete integrated services to customers.

What is the companys strategy in building its expertise in emerging technologies

We have always looked at opportunities to build capability organically as well as look for acquisitions to jump-start emerging technology areas faster. We will look for small acquisitions in the $20-100 million range, which would bring us capability in terms of presence in newer verticals, geography and also addition of strategic customers.

R Chandrasekaran