We're on the path to becoming fastest growing IT firm again: Cognizant CEO

The macro demand is uncertain, but we did better than our April performance, he says

Cognizant was in the midst of a transformation under the new Chief Executive Officer Brian Humphries when the Covid-19 pandemic struck. In conversation with Bibhu Ranjan Mishra and Sai Ishwar, he talks about how the company approached each of these challenges, and is expecting to beat competition. Edited excerpts:

What has changed since the pandemic? What are the changes you expect to see in the coming days?

The macro-environment conditions are better than what we had anticipated in April. Revenue rose and our bookings accelerated during the quarter. It was somewhat of a V-shaped recovery for Cognizant. We are fortunate to have a strong digital mix. Our client segmentation is not overtly exposed to the verticals affected by the pandemic. Our graphic mix has also positioned us favourably. Our order booking in the first six months of the year has grown 14 per cent year-on-year (YoY) and our pipeline has increased in double digits. These are strong signs.

You are expecting your top line to decline this year whereas your peers in India seem to be more positive about growth. Are you expecting any specific challenge?

There is already an impact (on revenue) due to our decision to exit a business. A year ago, Cognizant was behind competition in terms of growth rates. Since the last quarter, we are growing and catching up with Wipro, Tata Consultancy Services, and HCL Technologies. We are on course to become the fastest-growing IT firm, again. The macro demand is uncertain, but we did better than our April performance. We are committed to delivering on our commitment in terms of revenue and margin. 

Do you see any more impact from ransomware on revenue in the future? 

We have an exceptional performance managing ransomware and Covid-19. It was an extremely challenging set of conditions. But for us, factors, such as gaining market share versus competition and building strong indicators for the future like bookings and win rates, tell you how well we executed. The revenue and margin impact from ransomware is behind us, but we have expenses in profit and loss as we want to build a world-class security organisation. 

According to the data furnished by the firm, around 9,000-10,000 employees have been laid off as part of a transformation initiative, compared to the initial estimation of 5,000-7,000. 
 

The number of employees impacted is 13,000-15,000. But we are reskilling and training around 4,000. The net impact will be smaller. That’s because the world has changed since we spoke about hiring a year ago. Covid-19 was not even there in the picture. Workforce management is business as usual for us and we want to invest in growth. We are welcoming 15,000-20,000 hires in the coming quarters, and we are implementing promotions and salary hikes as of October. While we continue to optimise our cost structure, we are protecting digital skills and investing in our employee base. 

Can you shed some light on the deal wins?

It is a broad-based momentum. North America is growing 25 per cent YoY in the first half, in terms of bookings. The global growth markets, which is our second region, is growing in the mid-teens. In the business segment, we are seeing strong momentum in health care, life sciences, and insurance. The real story is also our digital momentum. Digital revenue grew 14 per cent YoY and now 42 per cent of our mix. And digital bookings are up 50 per cent year-to-date. It becomes a virtuous cycle once we become bigger in digital. 

Any update on the plans to hire an India managing director (MD)?

We have decided that (we will have) an Indian MD who will also be an executive director, and will report to me. The person will be part of the executive committee. It is a big role and can have a huge impact on the company’s progress. The role will be based in India. 

There is a feeling in the market that there are a very few senior leaders left at the top at Cognizant after the exits of founders. 

I have promoted our head of North America last year — Dharmendra Sinha, who is of Indian origin. Our new head of health care (Surya Gummadi) is born and bred in India. So is the case for our new head of life sciences. A lot of internal promotions have been people who have been with Cognizant for 20-plus years. Our chief marketing officer and our digital operations head brought from outside are also of Indian origin. Our leadership team is a set of world-class professionals. Some of them are of Indian origin, some aren’t. My simple goal is to make Cognizant the IT services bellwether. It is not about India versus America, but a Fortune 200 company that is global in nature.

What is your target and plans for campus hiring in India?

We are committed to hiring from India’s campuses. We will hire another 15,000-20,000 in the coming quarters. The more our momentum continues, the more the hiring numbers will grow.