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The 17 per cent annual revenue guidance (forecast) is lower and if you remove the $90-million acquisition revenue, the growth is 15.8 per cent. Will this be the new normal for you?
There are a couple of reasons. First, it is about the law of large numbers coming into play. Our revenue base has increased at a good pace. Our guidance is also cautious due to the continued pressure in both Europe and the US. Europe had a good quarter. However, it is clear to us that long-term structural challenges remain in the business environment. We believe these will serve as a catalyst for existing and new clients to look to Cognizant to help them transform their operations and for technology to run better and run differently.
This quarter, the finance services sector did well. Do you see growth continuing in the banking and finance sector?
Growth in the banking and finance vertical is being propelled by three elements. First, banks are loosening their purse strings. This is especially true for large banks in the US and Europe. Second, the large technology shift we are seeing in the segment is also driving tech spends. We have seen some good consulting spend from banks. Finally, since banks are done with their application layer, they are now focusing on services like infrastructure management, BPM (business process management), etc. More, we finished the year with 16 clients each contributing more than $100 million in annual revenue.
But pharma continues to be slow for you?
From a technology stand.point, we are very optimistic about pharma. Especially if its about adoption of technology like Big Data. It is applied in a significant way in the sector. We are also seeing a lot of mobility work in pharma. On the other hand, the sector is under significant pressure. A lot of our customers are going though a patent cliff, which will have a downward pressure.
Compared to your peers, Cognizant’s exposure to other regions is very small. What is the strategy to expand in other geographies?
Our view is that each of these markets — the US and Europe — are still in an early phase for offshore/outsourcing services. Especially Europe. Even if we add our revenue along with peers like Infosys, HCL, TCS, Wipro in Europe, it will be one to two per cent of the market share.
Our approach has always been to get a critical mass in a particular market and then grow into others. We are continuing to invest in APAC (Asia-Pacific). In markets like Australia, New Zealand, Japan, India and the Middle East, we are still in an early phase. I would categorise our presence in these markets to be the same as we were in Europe four to five years ago.
The reshoring debate has created quite a stir. Are clients insisting on getting some part of work onshore?
I think it’s naive and a bad example to say that just because its happening in the manufacturing sector, it will happen in the services sector, too. They are very different industries.
We don’t see this is as a significant trend. We have seen a significant amount of growth in India and that will continue. But we have also seen significant growth in building facilities in Europe, North America (Dakota, Arkansas, etc).
