Our hiring has come down but we will still hire: Cognizant's Chatterjee

From that perspective, any growth that will happen now will definitely necessarily mean that there will be a net headcount addition, said Debashis Chatterjee

Debashis Chatterjee, president for global delivery at Cognizant, the US multinational professional services entity, speaks to Gireesh Babu & Bibhu Ranjan Mishra on his biz outlook, hiring plans & allied matters. Edited excerpts:

You met the upper end of the revenue expectation for the March quarter and have given a strong one for June. Were these not enough to revise upward the full-year forecast?

We had a solid start to 2018 and remain one of the fastest growing among services companies. If you talk about revenue guidance, we still expect  revenue growth of eight to 10 per cent and have just taken the lower end of the range a little further. But, overall, given the scale and opportunity we see today, and given the fact that we are also very focused in terms of what type of deals to go after, we think that’s a robust growth.

In the March quarter, though you met the upper end of the earlier forecast, the company got a revenue benefit of $21 million because of the adoption of new revenue standards. Your view?

There are multiple factors. If you look at the new revenue and tax guidance (expectation) of the last quarter of 2017, we are still trying to interpret some of those things. As we go from quarter to quarter, some of the clarifications are emerging. I don’t think I will give too much attention to those. Some of the fluctuations in terms of currency are also difficult to understand ahead of time. Overall, we still feel the growth is propelled by the digital transformation we are seeing in the market.

Your profit and profitability continue to be under pressure. This quarter, too, there is a decline in net profit.

That is mostly due to the accounting standards. If you look at our non-GAAP operating margin, we are at 20.3 per cent this quarter and have already said that in 2018, we will take the non-GAAP operating margin to 21 per cent; by 2019, our target is to take it to 22 per cent. We are well on track to meet those numbers, on the back of the many initiatives we took last year and continue to do this year. 

As you continue to drive localisation, will it not add to your costs?

The broad answer is No. We are talking about the digital business, around 29 per cent of our revenues right now and coming at a slightly higher margin than the overall company margin. From that perspective, this will not have any material impact on our margin. Certain parts of our business like consulting, strategy and design require more on-site presence and agile development work. We do not anticipate a material change of the overall onsite/offshore mix and we are hiring both onsite and offshore.

Do you expect to continue to hire in India, especially from campuses, at a similar pace as you earlier used to do?

Hiring will happen across the board but the nature of the business is such that you need more of a local workforce and we have been seeing that for some time. As part of shifting to digital, we will continue to hire in local markets but that doesn’t mean we won’t hire in India. The intake might have come down but we are still hiring. If you look at last year, the headcount (growth) was flat but we improved our (employee) utilisation quite significantly. I don’t think we can take the utilisation up any further. From that perspective, any growth that will happen now will definitely necessarily mean that there will be a net headcount addition. 

What is your fresher hiring plan for 2018, especially the campus plan?

Campus recruitment is a little too early to say right now but, overall, I can say our hiring plan encompasses all those aspects – a mix of campus and lateral –- both in India and in local geographies. We are not in a position to give the exact numbers right now.

Your growth from financial services was a bit softer (seen quarterly), while health care was almost flat. Any reason?

From a financial services standpoint, we are up 6.2 per cent year-over-year. Within that, in the insurance practice, we had double-digit growth. We have done quite a few strategic deals in this (insurance) segment.