 "Rajeev Mehta")
What is your observation about the financial numbers in Sept quarter?
Honestly, we are very pleased with our overall performance this quarter and for the year. I think a lot of this has been possible because of our unique and integrated capabilities to address the market demand. We are winning in digital by innovating at scale. We are helping our clients to go through the digital transformation by optimising their legacy systems.
While you have done quite well in terms of revenue and guidance, your net profit as well as margins have not been able to keep pace with that. Why?
What we have said is that we are comfortable having our operating margin between 19-20 per cent. And the rest we would like to reinvest in the business which is important for us, and that?s why we are witnessing industry leading growth. Besides, there was an impact of wage hikes also which we announced in the third quarter.
What is happening in the UK where your growth was just 0.8% in Q3?
There is a significant cross currency movement in Europe and we had to absorb that impact during the quarter. Otherwise, we do see strong pipeline of deals across Europe including the UK. Apart from the traditional application development and maintenance, infrastructure services business, we are being invited for many opportunities in the digital side. Most of that is possible because of our strong consulting practices and deep domain expertise.
Don't you think an attrition rate of 20% as you saw in Sept quarter is quite high for a company like Cognizant?
Yes; 20 per cent is higher than our desired level. We are taking numerous initiatives to address this. But at the same time, it's not just happening with us but many of our competitors are also seeing high attrition. Cognizant provides great opportunities to its associates to participate in the industry leading growth. When we are growing, both sides benefit. We have done extremely well this year in both revenues and margins and this will get reflected in the bonus for which we have accrued this quarter. We are also re-skilling and retraining many of our associates to participate in next generation of demand opportunities. We are having many programmes in place to encourage and motivate employees.
Your net head count addition of 1,300 in Q3 is quite low. Why is it happening? Is it because of higher automation?
If you remember, during the end of 2014 and Q1 of 2015, we hired quite aggressively in the market. We hired a lot of the talents in anticipation of the demand. In the September quarter, as you can see, we have significantly improved on the utilization front. There are still some opportunities before us to improve the offshore utilisation.
Some of your competitors in India say that December quarter is expected to be softer than usual due to extended client furloughs etc? What do you see?
If you look at our Q4 (October-December) guidance, I won't say there is a softness. But yes, there is a seasonality in Q4. There are year-end furloughs that are happening. But in terms of the demand environment, it is very positive across all our geographies and all our service lines. We are very excited.
Even though it's little early now, what is the indication you are getting from clients about their next year's budget?
As I talk to you, I am in San Francisco for the Fortune Global Forum conference. Many of our clients are here and they are all talking about how digital disruptions are disrupting their business. They are looking at digital. There is a tremendous demand. Obviously, clients are looking to bring down the total cost in one part of the business to free the dollars in order to be able to invest in digital disruptions. So the budget for clients to yet to get finalised but overall there are opportunities in this market place. As we enter the next year, we have a great strategy and we are winning on both sides.
