Cognizant’s Executive Leadership Discusses the Company’s Q1 2015 Results and Growth Outlook
Following the announcement of Cognizant’s first quarter 2015 results on May 4, 2015, the company’s executive leadership spoke with the media about the company’s performance and growth outlook for the rest of the year.
“Social, mobile, cloud, analytics, sensors, and IoT are profound technologies that would change our lives, change societies, change businesses, and change governments,” Francisco D’Souza, Chief Executive Officer, Cognizant, told Fox Business. “We are in the middle of a big technology revolution that’s being driven by these new technologies, and Cognizant is at the forefront of helping businesses transform by using these technologies.”
He added, “We are starting to see a whole new wave of technology like sensors and wearable devices that are allowing us to better measure healthcare and allowing us to provide better outcomes for patients. We have a great position in healthcare. We are helping all the players across the healthcare value chain from providers all the way through payers, digitizing their healthcare value chains. That, we think, is going to be a great growth driver for the company.”
Barron’s quoted D’Souza as saying, “The investments we have made in digital, automation, utility-based delivery models, consulting and industry-specific expertise are clearly paying off.”
“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,” D’Souza told Mint. “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.”
He added, “The investments we have made in digital and automation and consulting are clearly paying off. 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.”
“We have been making investments in the business for a long time,” D’Souza told The Times of India. “Our results are a reflection of the fact that we are helping clients build digital businesses. When you have big shifts in the marketplace, it requires sustained investments in building new capabilities. We identified what we call the SMAC (social, mobile, analytics and cloud) technologies several years ago. We invested in building practices around SMAC, the underlying technologies that power digital businesses. The fact that we had long standing investments in digital technologies is really positioning us well.”
D’Souza said that the company’s fundamental tenet was “the tenet of customer-centricity, the fact that we’re organized in a way that lends itself to a deep level of empowerment of our teams on the frontlines to do things that are in the best interest of the customer.” He noted: “Those have been traditional core strengths of Cognizant. In today’s world where volatility is the new normal, the particular behavior that organizations need is agility. Our organizational structure, our client-focused work culture, and the approach we have towards entrepreneurship and empowerment allow us to drive agility. In the digital world, deep vertical expertise is critical. You have to be able to understand what’s going on in a client’s business and in a client’s industry, if you’re going to have them drive digital.”
In an interview with CNBC-TV18, D’Souza said, “We are seeing a very strong demand from our clients for technology-enabled digital transformation.” Speaking about the company’s acquisition strategy and geographic expansion plans, he said: “We will continue to look at small tuck-in acquisitions to bolster our capabilities particularly in the digital technology area, but also looking at areas like new geographies that we are looking to expand into and deepening capabilities in certain areas. We will continue to do that and we have got a very strong acquisition pipeline at the moment.”
“Digital is becoming embedded in a lot of what we do and what our clients do,” Gordon Coburn, President, Cognizant, told The Economic Times. “What we’re seeing is that clients have a dual mandate—they want to simultaneously “run better” and “run different”. Cognizant can do both. You need to have consulting capabilities and digital capabilities to help clients “change the business”. Because we’re so strong on the operations side and also on the innovation side, we’re doing in the sweet spot of where the spend is moving.”
He added, “Digital projects are not standalone projects in isolation. They impact the entire business stream. Lots of projects have a digital component. Around 60% of our consulting projects have a digital component today.”
“Cognizant is capitalizing on investments made in digital technologies,” Coburn told TheStreet. “The reason Cognizant is doing so well is that we are able to serve the clients on both sides of that dual mandate—we can help them run their businesses better through operational improvement and we have tremendous consulting capability, tremendous capabilities in digital that enable us to help them figure out how they should run their businesses differently and then to assist them in actually executing on those plans.”
Coburn told Bloomberg Business, “There is a shift going on where across industries, businesses are trying to squeeze the spend on ‘run the business’ so that they can invest in ‘change the business. We’ve been able to navigate that shift.”
“We are seeing opportunities across all our practices and geographies,” Rajeev Mehta, Chief Executive Officer, IT Services, Cognizant, told Business Standard. “We are seeing much larger deals because we are now playing in what we call ‘multi-service lines’. That has the combination of IT, operations, BPO services, infrastructure and consulting capabilities. We are bringing all those together with integrated solutions and offering to our clients bundled with digital. The deals are also becoming larger for us with that. We are also starting to see a phase when some of the platforms we have are becoming an integral part of the conversation as well. Opportunities are coming our way because we have the scale and capability to win.”
“Our results for the first quarter and our increased guidance for the full year are a clear reflection that we are well positioned to serve the needs of our clients,” said R. Chandrasekaran, Executive Vice Chairman, Cognizant India, in an interview with Financial Chronicle. “One of our key opportunities is emanating from the shift towards digital, which is a priority for our clients, because it is a priority for their end customers. Having worked with clients on hundreds of digital projects, it is very clear to us that winning in the new digital era requires a new engagement model. Clients need a partner who can bring new capabilities in design and digital technology in addition to a deep understanding of their business, operating model and technology landscape,” he added.
“We are in the midst of a once-in-a-decade shift in the technology landscape, which is creating significant opportunities for services firms such as Cognizant that have the right portfolio,” Chandrasekaran told The Financial Express. “Our results demonstrate that our strategy, investments, and solutions are strongly aligned with the evolving market demand.”
“The integration of TriZetto is on track and our combined offerings are clearly resonating with clients,” he said. “We have added 500 consultants—who are either already deployed or trained and ready-to-deploy—to help drive revenue synergies. In addition, we have added 300 people at our global delivery centers to accelerate product development on TriZetto platforms. These are already paying off. In the first quarter alone, we were selected for synergy deals with a total contract value of $200 million and a number of additional deals in our pipeline.”
Elaborating upon Cognizant’s digital strategy, he said, “Our differentiated approach, which we call Digital Works, has seen great traction and our recent digital acquisitions like Cadient, Odecee and itaas have helped us round out our digital services and geographic footprint. Having worked with clients on hundreds of digital projects, it’s clear that winning in the new digital era requires a new engagement model.”
In conversation with ET Now, Chandrasekaran said, “The pipeline is healthy. Digital transformation is key for driving new opportunities towards Cognizant. In the traditional outsourcing services, we reported several large deals last year and many of them will start ramping up in the second half of this year. Overall, we feel pretty good for our services lines across the board. That‘s why we’re optimistic for Q2.”
Referring to the TriZetto acquisition and its impact upon the company’s performance, Chandrasekaran said, “TriZetto has been a very strategic acquisition for Cognizant. It really puts us significantly ahead in the healthcare space. We also want to leverage TriZetto to build an industry-leading platform and offer it as a service. We are optimistic about TriZetto acquisition and the future prospects and are winning significant market share in the health care area.”
In an interview with Bloomberg TV, Chandrasekaran said, “We have been investing in building industry utilities for certain key business processes. For example, claims processing in health care or clinical data management for our life sciences customers. These are industry utility platforms that we have built. Customers are now embracing these and moving to a different, outcome or output-based engagement model. This is positioning us uniquely in the market place.”
Karen McLoughlin, Chief Financial Officer, Cognizant, told Reuters that that the adoption of digital services was notably strong in the financial services business, mainly banking. “The company was also seeing strong demand for its digital offerings from retail and manufacturing clients,” she said.
Speaking to TheStreet.com, Karen said, “The company will give greater attention to increasing its business in the energy and utilities sectors, as well as in government practices.” She added that the company’s intention is to focus on obtaining new federal business in areas related to the Affordable Care Act, Medicare and government-backed housing loans.
“Healthcare certainly did see a lot of growth,” Malcolm Frank, Executive Vice President, Strategy and Marketing, Cognizant, told CRN.com. “Within health care, a lot of the drivers are digital. Late last year, we made the acquisition of TriZetto in health care. That is proceeding to play out ahead of schedule.”
He added, “Everyone in the market has received the memo on digital. They are trying to see where that applies in their business model and how they should proceed. Helping IT organizations get ready for this explosion in data, the new security needs, how do they manage all these millions and millions of devices that are out there, and how do they tune their IT platform to be ready for these digital opportunities—it’s clear that this is a long-term scale driver.”