Cognizant India is on target with its fourth quarter numbers with profits rising by 16 percent. Revenues were also up 2.5 percent.
But what caught the eyes of investors is the company's growth guidance, which has been pegged at 16.5 percent for this fiscal. Ramakrishnan Chandrasekaran, Executive VC, Cognizant India says there are a number of factors both internal and external driving this bullish growth guidance. "If I look at the external factors, this is actually a once in a decade sort of technology shift that creates lot of opportunities that we are experiencing," he says.
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Internally, he says the company has been making investments ahead of the curve. Going ahead, he does not see any significant change in demand and neither does he see any significant shift in pricing.
Below is the verbatim transcript of Ramakrishnan Chandrasekaran's interview with Kritika Saxena on CNBC-TV18.
Kritika: You have guided for a growth of 16.5 percent for the calendar year 2014. Where does this confidence come from? This is bullish at the start of the year but any pressure points that you are seeing specifically from Europe and the US?
A: There are number of factors both internal and external. If I look at the external factors this is actually once in a decade sort of technology shift that creates lot of opportunities that we are experiencing. When I say technology shift many of the customers are now trying to do better in their own businesses driving business transformation leveraging technology. For example the SMAC Stack that we have been talking about for the last over two years that is actually opening up a lot of opportunities for our services. What I hear is now technology has become CEO level agenda and even newer technologies that are being talked about like Internet of Things, 3D Printing, Machine Reading, Machine to Machine Communications, all these things are actually helping to create a digital business which is a complete transformation. That is a big agenda for every enterprise around the globe and that is driving lot of demand for our services. So, that is an external environment.
Internally, Cognizant we have been tracking this trend and making investments ahead of the curve. As we said SMAC Technologies we have been talking about little over two years now and that is actually leading lot of demand and that is why we saw a phenomenal performance in 2013 because we had the early mover advantage. That drove lot of discretionary spend towards us and that really resulted in a USD 250 million over performance in 2013. We expect that to continue in 2014 as well. So, that is what leads to an optimistic guidance for 2014.
Kritika: While financial services and healthcare have performed well for the quarter some kind of pressure is seen in retail and logistics. It is flattish for the quarter and bit of pressure seen in UK. Will that continue in Q1 of CY14 and also you are expecting a 2.9 percent growth which couple of analysts say could be slightly conservative. Would you expect to beat that as well?
A: I don't think we should base our judgement based on one quarter performance because retail tends to be slow during the last quarter because of the holiday season. So, there is a freeze. So, that typically is a seasonality that we see in retail. Otherwise retail as a segment has done extremely well for us throughout 2013. So, we expect that to continue in 2014 as well.
Similarly UK also you cannot categories one quarter performance as the trend. So, overall UK has done well for this year and we expect things will turnaround in 2014. We don't see any significant change in the demand part either in a particular industry segment or in a particular geography.
We expect the overall trend to continue in 2014 as well.
Kritika: How has the volume growth been for the quarter? In terms of pricing, as you said there is a transformational shift. We have seen newer services, emerging verticals, digital verticals coming in which are taking over, any kind of shift in your pricing strategy because couple of your peers have indicated that their pricing strategy may change now?
A: We don't see any significant shift in the overall pricing. It has been very stable and whatever growth that we have reported it is all by volume growth. So, we don't see any significant shift in the coming year as well. It will continue to be the same.
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