The Street: Cognizant’s Chief Financial Officer Talks About the Company’s Growth Outlook

“2013 was a terrific year for Cognizant,” says Karen McLoughlin. “We ended up reporting revenue growth of just over 20% in 2013. Back at the beginning of the year, we had actually guided to a revenue growth of about 17%, which did include about $90 million of inorganic growth or acquisition revenue. So our organic revenue guidance at the beginning of 2013 was actually 16%. For 2014, we have provided a guidance of 16.5% revenue growth—it is very consistent with where we were a year ago.”

McLoughlin adds, “In terms of what we expect in 2014, we are seeing very good demand in the business and feel the economy has continued to strengthen—certainly stabilize—and our expectation is that 2014 will play out very similar to 2013. The big question mark is always about discretionary spending and we will get more clarity when we get closer to end of Q1 and Q2 period.”

Commenting on the performance of specific industry sectors, McLoughlin says, “2013 was very strong for Financial Services, particularly banking. Another area of strength for us last year was the Healthcare business. In healthcare, the payer side of the business was very strong in the middle of the year, as a lot of our clients needed to ramp up to do a lot of things for the Affordable Care Act (ACA) implementation. A lot of that work is now ongoing because a lot of states have not implemented their exchange programs yet. As more and more of those exchange programs need to come online over the next two years, we would continue to see a lot of strength in healthcare.”