Cognizant Technology Solutions on Wednesday delivered industry leading numbers for the quarter ended September. R Chandrasekaran, president and MD of the firm?s global delivery, speaks to FE?s Goutam Das on whether the firm can continue its turbo-paced growth momentum in the coming years.
You have recorded the highest volume growth among peers this quarter. Are you happy with the way the year has tracked?
We have revised our full year guidance and we are pretty happy with the way 2011 has turned out. What is even more satisfying is that the growth is balanced across all segments. Many people though that the financial services segment would take a hit, but it grew by slightly over 7%, which is a healthy growth given the size of the segment. Given our leadership position in the healthcare area, we continue to track very well and we saw 11% sequential growth. Segments such as retail, manufacturing and logistics also posted healthy growth. What customers are asking is whether we can add value in the way we engage. The traction that we saw in 2011 for new service offerings is an indication of how strong our relationship is with our clients. The growth that we saw in business process and infrastructure outsourcing is quite gratifying. Also, the investment that we have made in the consulting capability has helped in capturing the mindshare of the customer. We feel pretty good as we look into the future.
The investment banks are under pressure now. Since your exposure to financial services is so high, how do you see the vertical panning out over the next one year?
Given the large size, we expect financial services to grow slightly below the company average. But we will continue to have a healthy growth. The confidence comes because of the deep client relationships we enjoy. All customer discussions have been positive though it is too early to comment on how the budgets will turn out for 2012.
What is your reading of the macroeconomic environment, especially in Europe?
It is a fact that we would continue to face macroeconomic challenges. But on the other hand, it also provides us with opportunities. In 2008-09 everything came to a standstill and it really hurt a lot of customers. Now, in order to confront any new macroeconomic situation, they are looking at technology, towards building some newer solutions that can enhance their business prospects and leveraging offshore more and more. As we have these discussions with our customers, we expect IT budgets in 2012 to remain either flat or have a slightly upward bias. But customers will spend more offshore so that they can continue to invest in capabilities they need to remain agile.
In this environment, do you expect any up tick in pricing?
I don?t think any customer will be willing to give you better rates. But there is continued pressure on the cost for customers. So the discussions are not about rates, but how we can reduce the total cost of ownership for clients. They want you to take on a lot more responsibility and deliver a unique value at a lower cost. That is what we are focusing on.
Your employee strength is 1,30,000. What are your thoughts on non-linear growth since this scale of addition may not be sustainable?
How do you reduce total cost of ownership for the customer? The only answer is non-linear mode. We talk about managed services, outcome based service delivery. If we get more of such contracts, it will help us to streamline our delivery operations better; we can introduce best in class delivery processes where we can focus on outcome. That is one way of growing our non-linear business. We are seeing good traction in terms of converting many time and material contracts to an outcome-based contract. Second, we are also investing in creating lot of platforms so that we can reuse the platforms across many client situations. That would also reduce the headcount needed to deliver service.
