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Cognizant’s Executive Leadership Talks About the Company’s 2014 Performance and Growth Outlook for 2015

Following Cognizant’s announcement of its fourth quarter and full year 2014 results, the company’s executive leadership team spoke with the media about the company’s performance and growth outlook for 2015.

Francisco D’Souza

Francisco D’Souza, CEO, Cognizant, told The Economic Times. “We’ve been talking for a long time about a 'dual mandate'. Clients have been struggling with this, saying: How do I free up the dollars to invest in the new digital technologies to capitalize on the new opportunities? It manifests in more integrated deals on efficiency side and investment on the digital side. The three horizon model has been a very strong and positive organizing construct for Cognizant. It has allowed us to keep our focus simultaneously on the present and on the future. Three years ago, we were talking about SMAC and now that is everywhere… SMAC is now part of digital and digital permeates every part of the company. The new opportunities lie around artificial intelligence, adaptive manufacturing, 3D printing and advanced automation.”

“The digital opportunity is not just a tech opportunity, but an opportunity to reinvent client business models. Hence, it’s a business strategy-led change”, D’Souza told Business Standard. “We were among the early movers in this space. We coined the term SMAC several years ago. SMAC comprises technologies that underpin the digital opportunity.” When asked about the key drivers of Cognizant’s growth in 2015, D’Souza said, “Digital is an important part of our growth. The second is traditional services that continue to grow and we see clients pushing hard on traditional services as these help drive efficiency and also allow them to invest in new technology. The third is the TriZetto acquisition and the opportunities it is creating.”

On Cognizant’s strategy about investing in start-ups to gain a foothold in new technologies, D’Souza said, “We constantly talk to start-ups, engage with them, and bring them to clients. Our approach has thus far been not to make financial investment in start-ups. My goal is not to be a passive financial investor in the start-up ecosystem, but to have an operational relationship with the most promising start-ups that are relevant to our clients.”

Gordon Coburn

“We see a lot of opportunities around digital, helping companies figure out how they can transform their business with digital technologies,” Gordon Coburn, President, Cognizant, told The Times of India. “If you look at the IT and operations budget, there will be shift towards digital and innovation. It’s not just automating the transaction, but it’s fundamentally looking at what should the business process be in the given environment.” He added, “Clients want to run their businesses more efficiently. At the same time, they want to invest in digital and innovation. We are well-positioned to achieve this dual mandate.”

Commenting on the European markets, Coburn told Bloomberg, “Cognizant is investing ‘aggressively’ in Europe. The tightening of corporate spending can actually be good for the company’s business. Economic pressure serves as a catalyst for figuring out how companies can run their businesses better. We can improve service levels by reducing costs, which frees up dollars for investment. Clearly the economic environment [in Europe] is not as strong right now as the U.S., but it is stable. When you have stability, customers can make decisions.”

Speaking to TheStreet.com, Coburn said, “We had a great quarter. We saw healthy growth across all our business segments. In addition, we closed the acquisition of TriZetto, the largest acquisition in our history. That’s off to a great start. Not only did we finish 2014 on a high note, we are really quite optimistic today about 2015.” He added, “North America was quite strong. Europe was solid on a constant currency basis. When we think of Europe overall, we feel good about it. We are seeing a weaker economy there is causing clients to look at how they can reduce cost of operations so they can free up money to invest in innovation and we become a part of that solution.”

Cognizant, said Coburn, was seeing a shift in client spending, “a shift towards innovation”. He said, “We help clients run their businesses better by reducing costs and improving service levels on their traditional operations, while also helping them to innovate and helping them with digital technologies to fundamentally change how they run their business and their customer experiences. Customers want to do both of those at once, and there is only a small number of companies in the world that can meet that dual mandate.”

Rajeev Mehta

Rajeev Mehta, Chief Executive Officer, IT Services, Cognizant, told Mint: “Digital is a very broad theme across our business in all geographies and industries. It is a C-suite theme. We are being invited into offices of CEOs to help architect their digital transformation. Digital work is becoming more and more embedded into everything we do for clients across industries and service lines. We believe we are well positioned to continue our growth momentum into 2015 on the strength of our integrated consulting, technology, digital and business services capabilities, helping clients address the dual mandate of simultaneously achieving efficiency and innovation, and reimagining their businesses for the digital era.”

Speaking to The Hindu, Mehta said: “The overall demand environment remains strong, and we have a very healthy order pipeline entering 2015. We are seeing solid demand across our key industries and service lines. In particular, we are seeing robust demand in newer technologies, which help clients on the path to transforming their businesses into digital enterprises.”

He noted that the current digital era was different in two very fundamental ways. “First, technology has moved from automating transactions to ‘instrumenting’ all aspects of our lives,” he said. “The second difference is that the pace of change is like nothing we have seen before. Today, innovation cycles have compressed so dramatically that business leaders around the world have to think of innovation and improvement simultaneously. Clients need a partner who has the ability to integrate and execute end-to-end transformations, driving both efficiency and innovation. We are confident that Cognizant is that partner for our clients in 2015 and beyond.”

Karen McLoughlin

Mehta pointed out that Cognizant’s SMAC business had folded into the larger digital opportunity. “SMAC refers to the tools and digital to the larger business solutions,” he said. “We have a comprehensive, integrated approach to help clients evolve to become digital enterprises. The approach centers around four key areas: the creation of a strategy to help clients capture the commercial digital opportunity, leverage design capabilities that help re-imagine and architect the business of the future in a digital world, transform existing business processes into digital version through our extensive knowledge of process and systems, and foundational technologies that focus on infrastructure, connectivity, devices, and security that are required to support digital solutions.”

Karen McLoughlin, Chief Financial Officer, Cognizant, told Reuters, “We think there are significant opportunities in the healthcare space in the next several years particularly in the United States with the continued implementation of the Affordable Care Act.”

Malcolm Frank

“We wanted to be a leader in the healthcare market and that’s starting to manifest itself; clients recognize it and they can turn to us to help them,” Malcolm Frank, Executive Vice President, Strategy and Marketing, Cognizant, told CRN.com. “Cognizant’s healthcare growth was propelled by the advance in healthcare digital technology, consumerization and the ‘dual mandate’ to drive new levels of efficiencies and innovation. That’s a strategy that’s unmatched by any other solution provider in the market. We think this has positioned us quite well.”

Frank added, “Other than healthcare, Cognizant saw strong demand with terrific growth for financial services. We expect Cognizant to see growth, in particular, for infrastructure services, business process services, and management consulting. On top of that, digital technologies will grow across all of those services businesses. We see lots of opportunities up and down our services stack, and will continue to invest there.”

R. Chandrasekaran

R. Chandrasekaran, Executive Vice Chairman, Cognizant India, told The Financial Express: “We won several large deals last year. The investments that we are making in terms of helping customers with their business transformation are actually creating demand for our services. Overall, we remain optimistic on growth opportunities. That’s why we have given a healthy guidance for 2015. Customers are looking at business transformation by leveraging digital technologies. We have been making a lot of investments in offering services around SMAC technologies for the last several years. We have taken a lead in the marketplace. These types of capabilities, built over a period of time, are helping us get mindshare as well as marketshare. We remain committed to the business in terms of getting newer capabilities, which are going to differentiate us. Our goal is to be a high-growth company and we remain focused on that.”

In an interview with Financial Chronicle, Chandrasekaran said, “We finished 2014 on a strong note. As we enter 2015, we are encouraged by the strength of the demand environment and by how well positioned we are to capture the market opportunity. For the full year 2015, we expect to deliver at least $12.21 billion of revenue, which represents full year growth of at least 19%, including a 2% currency headwind. This guidance reflects strong revenue growth in our underlying business.” When asked about hiring, he said, “Hiring has been strong the past two quarters with net headcount addition of approximately 24,000. As we expand our capabilities and develop capabilities in newer technologies such as digital, we also have to expand the scope of talent and skill sets that we hire.”

Chandrasekaran told CNBC TV18: “We have a healthy pipeline and we see that the dual mandate challenges that the customers have create lot of opportunities for our services portfolio. The digital business that we have been focusing on for the last few years is yielding good results in terms of helping our customers transform their businesses. Many of the large multi-billion-dollar, multi-year deals that we announced last year will start ramping up during the course of this year and that will generate additional revenue. Overall we are very bullish and happy to enter 2015 with a great deal of momentum.”

Speaking with ET Now, Chandrasekaran said: “We continue to be very optimistic about the outlook for 2015. It will be a balanced growth across all service lines. We see a once-in-a-decade opportunity for our services. Customers around the globe are faced with the dual mandate to improve the operational efficiency and drive business transformation leveraging emerging technologies that will lead to innovation. We see good opportunity both for consulting as well as outsourcing services for us going into 2015. We expect clients to spend on transformation of business processes leveraging digital technologies. They will also increase spending on outsourcing to bring down the total cost of ownership of current applications, so they can release dollars to be innovative and differentiate themselves in their markets.”

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