Cognizant reiterates need for skilled labour globally, to ramp up US hiring

To increase hiring in the US; hints to a stronger growth trajectory for Q1 CY2017

Nasdaq-listed IT services and solutions firm Cognizant Technology Solutions reiterated that to continue and maintain its current growth projections the company will require access to talent across the globe and in the US.

During the analyst call post its results on February 8, Rajeev Mehta, president, Cognizant said: “The skilled labour issue has been an ongoing discussion for many years. Cognizant’s growth requires trust and retain the best talent to meet our client need for technology solutions, business process and consulting solutions & services. The plans we have discussed today will require us to continue to build our team in the US and in other geographies around the world we operate in. Consistent with this need we will continue to take steps so that we have adequate talent in the US.”

The company said that in 2016 it hired 4,000 US citizens and residents. And to support this scale they also invested in creating 20 US-based delivery centrse and plans to further add capacity in 2017. 

“What happens on the Immigration issue is tough to speculate. We continue to hire the best and brightest across all our key geographies,” said Mehta to Business Standard. 

The company, which announced a shift of its business model to cater to the fast-growing digital services, also said that M&A which has been its focus will also help it to add local hires in the respective geographies including the US. 

Cognizant guided for an 8-10 per cent growth for CY2017, it reported a growth of 8.6 per cent for CY2016, the reported growth numbers met the lower end of its guidance (8.5-9 per cent). For the Q1 of CY2017 the company has guided for a revenue growth of 1.45 per cent to 2.6 per cent. The guidance is much better than last year Q1 numbers. 

Mehta agreed that the first quarter of the year did look much stronger than last year. “In the healthcare sector there are a few concerns and we are not sure what will happen in terms of regulation changes due to the new administration. So clients are cautious. We have seen significant traction on Trizetto platform. From a healthcare sector perspective, we are in a better situation in 2017. For banking and financial services, 2016 was a tough year due to Brexit. But we see a much healthy start as we go into 2017,” added Mehta. 

The company during the call also said that as it accelerated its move towards high-value digital transformation deals it will reassess some of the profitable opportunities that do not further the company’s position in the digital marketplace.   

“This is part of the focus on the digital side of business. Last year we changed our business verticals on digital offerings, but as we work with clients we realised that there will be more commoditized work or low margins work. We will selectively look at it and does it make sense to go after that or focus on high growth and high-value work,” added Mehta. However, he did not specify what percentage of such deals or work is under consideration. 

This shift towards high-value work is also because of the target set by the company to bring its operating margins to 22 per cent from the current historical band of 19-20 per cent.