Cognizant, the Nasdaq-listed IT services company with a large employee presence in India, reported one of its slowest quarterly growths for the first quarter of 2016 and also lowered the upper end of its revenue guidance for the year. However, it has guided to a strong revenue growth in the second quarter given the traction in the deal pipeline. Debashis Chatterjee, president, Technology Solutions, Cognizant said the company is now placed on a solid trajectory and expect a broad-based positive growth for the remainder of the year in an interview with FE’s P P Thimmaya. Excerpts:

How do you see the overall demand environment?

In the earlier part of the year, we saw some headwinds on some macro-economic conditions in banking space. There was consolidation activity in healthcare space. Overall, if one looks at the remaining part of the year, we feel confident both on the financial services and healthcare space. Our sequential growth will be positive for the remaining part of the year. The demand situation is quite robust and overall the pipeline of deals is pretty broad-based across service lines, geographies, industry verticals.

Why has Cognizant marginally reduced the upper end of the revenue guidance for 2016?

We are getting into the second quarter in a very positive frame of mind. Our revenue guidance for the second quarter put us in nice solid trajectory for 2016. The growth is fairly broad-based across multiple geographies. The first quarter has been soft which we knew. We have a better visibility for the rest of the year that is why we have tightened the guidance range for the entire year. We expect a ramp up in several deals. Many of the deals we are chasing are fairly large though they will take little more time to materialise.

Why has financial services and healthcare sectors seen a dip in sequential growth?

This is something which we had anticipated. With many of large global banks, who are our clients, we get involved in understanding their operating plans. We could see the softness but the second quarter will be stronger. Within the financial services, tier two and regional banks are quite strong. We are seeing good momentum in the insurance practice. In the healthcare sector, we do have some cyclical things going on like the software licensing sales of Trizetto which typically are the highest in fourth quarter and then there is a dip. This seasonal impact also contributed to the sequential decline in healthcare segment. However, there is a good pipeline of deals.

Continental Europe recorded positive sequential growth in second quarter unlike North America or Europe. Comment?

Our horizontal services which includes infrastructure, consulting and BPO has reached almost $3 billion run rate and a good portion of it is coming from continental Europe. We have remained invested in continental Europe from a long term perspective and signed some good accounts. We are also witnessing integrated deals from this region, which includes all our service lines. The lower growth in North America and UK has largely been due to the softness in healthcare and financial services.

How is the traction for Cognizant in the digital business?

In every industry, we are witnessing a lot of digital transformation. Many of the clients understand that they have to become digital. They need to defend their business through becoming digital. For example in the banking space, fintech companies are posing a big challenge to the established players. In order to cater to these digital disruptions we have capabilities built in areas such as strategy, design thinking, industry knowledge, data science etc. These I would say are interdisciplinary skills and we need to handle this disruption. We feel that clients are looking at somebody who can provide end-to-end services in terms of digital transformation. We want to stay ahead of the curve by having that capability.