Despite posting largely in-line second quarter numbers, IT services major Cognizant on Thursday further revised its revenue growth downwards for the whole year as the Teaneck-based company continues to pursue cost optimisation measures.
For the whole year, the company guided for a revenue growth in the range of 3.9-4.9 per cent in constant currency terms, which was lower than its previous guidance of 3.6-5.1 per cent issued in May.
For the second quarter ended June 30, Cognizant posted growth of 11.6 per cent in its net profit at $509 million as compared to the corresponding period in the previous year. The revenue at $4.14 billion grew 3.4 per cent on year-on-year (YoY) basis while in constant currency terms, the growth rate was 4.7 per cent.
In comparison, larger peer Tata Consultancy Services' revenues grew 10.6 per cent YoY on constant currency term, while Infosys reported 12.4 per cent growth during this period. “We are taking the necessary steps to position Cognizant for improved commercial and financial performance,” said Chief Executive Officer Brian Humphries. “While there is lots of work ahead, I am encouraged by what I have seen to date and am optimistic on our future.”
The company said that it was planning to hire over 500 customer-facing and sales support professionals who will help expand existing accounts and generate new ones in coming quarters.
“We are implementing actions in the second half of the year that we expect will lower our existing cost structure and allow for greater investment in growth, talent, and digital solutions,” said Karen McLoughlin, chief financial officer at the company.
Among verticals, the growth in financial services segment was relatively flat at 0.3 per cent YoY, while the segment accounted for 35.6 per cent of total revenues.
“Segment revenue growth was driven by modest improvement in banking, though it was partially offset by continued softness with a few of largest banking and insurance clients,” the company said.
In July 2019, the firm offered retention awards to certain key employees, which would result in additional realignment charges of $48 million during the remainder of the year. In February, the Nasdaq-listed company which has huge delivery presence in India, appointed Brian Humphries, a former top Vodafone executive, its new CEO, replacing Francisco D'Souza, who is now the vice-chairman of the company.