The Street: Cognizant President and CFO Explain Why the Company’s Outlook Shouldn’t Alarm Investors

“It [Q1-2012] has been an interesting quarter,” says Gordon Coburn, President. “Despite reducing our fiscal 2012 guidance from at least 23% to at least 20%, we are still going to grow far above the peer group and industry average. In Q2, we expect to have healthy growth by any normal metric; a sequential growth of 4.6% is well above what the others have forecasted. The issue for us is that the rate of acceleration in growth going into Q2 is not as much as we expected it to be. Growth is indeed accelerating, but not as fast as we had hoped. In the banking and life sciences sectors, clients are not increasing their discretionary spending as fast as we had anticipated. This is owing to regulatory reasons, cost pressures and caution.”

He adds, “We are continuing to take market share. We are growing faster than any other major player in the market. By definition, it should mean we are taking market share. Both banking and pharma sub-sectors are indeed growing and growing in double digits, but still not as fast as we had anticipated.”

Talking about opportunities in the business process outsourcing (BPO) space, Karen McLoughlin, CFO, says, “We see a lot of traction across all our industry segments. In the life sciences space, for example, we are doing a lot of clinical data management and commercial operations. In financial services, we are seeing a lot of trend toward business process outsourcing, particularly in the insurance space. Customers are interested in outsourcing a lot of their different back office functions, things they wouldn’t have explored two or three years ago.”