Cognizant Technology Solutions Corp. chief executive officer Francisco D’Souza explains in an interview what helped the company post strong growth in the January-March quarter when many of its peers struggled. Cognizant also raised its growth outlook for the year. Edited excerpts:
What’s the reason for your rosy outlook? Your peers have been more subdued.
I think we had a solid start to the year. The growth would have been higher had it not been for the currency headwind. We are pleased with the quarter’s results. It’s a manifestation of things we have been doing for some time. We are winning in digital. We are winning with our clients and that explains (why) we are doing well. Because we are helping them build in the digital space. We have this very unique approach, called Digital Work, a company-wide approach to transform their digital business. You should remember that no digital business is complete without integration with their traditional or legacy business. So we are benefiting from demand from both digital and traditional business.
So how different is your digital from, say, some of your clients?
We have a very strong technology foundation. Having technology capabilities is only one piece. You need additional new kind of skills which traditional system integration companies have not had. Like having data scientists. You need designers. You should be able to bring all this together.
You have marginally raised your revenue outlook. So is the demand more broad-based or are there certain sectors, like digital, which will lead the growth?
The investments we have made in digital and automation and consulting are clearly paying off. You see, we are in the midst of a once-in-a-decade shift in the technology landscape which is creating significant opportunities for firms like us. You cannot delink the demand from digital as in the traditional business space.
A shift to digital by clients is, in turn, driving demand for our traditional services. And that is helping us with a more broad-based growth. It’s been a good quarter. And it is gratifying to see we win more deals in the digital space as we have been making investments in digital and automation and they are clearly paying off. If you see our results, you will clearly see it has been more broad-based growth and we hope to continue with it.
Where is Cognizant traditionally strong—is it in the client mining or client farming business?
A significant portion of our revenues comes from generating more business from existing clients. So to give you a perspective, I can say about 90% of our business comes from existing clients or generating more business from our existing clients while the new clients we add every year take some time before we can make them our strategic clients.
There is talk of hiring by big IT firms slowing down in the coming years. Your thoughts?
I believe that the traditional model of headcount-based approach will continue.
And in parallel, another model, which is more IP-led ((intellectual property-led), a strong platform-led approach will also coexist. So we continue to hire but you should also remember, from our acquisition of Trizetto, how focus on IP-led platforms also helps generate more revenues.