To combat pricing pains with higher productivity: Cognizant

But the truly positive surprise came when the management withheld from cutting their guidance down from the current 20%. At a time when economic pressure is squeezing other IT services firms, Cognizant believes it still can deliver the growth it targeted to achieve at the start of the year.

In an interview to CNBC-TV18, president Gordan Coburn says that the tough environment in the US and Europe is forcing to companies to cut on their cost and innovation spends. To combat this, he says that they are working on their productivity.

“It really comes down to how each company approaches the client’s need to reduce their spend. We have been doing it through productivity improvements, through value added activities and not through rate cut reductions,” he explained.

He further adds that clients are shifting towards larger, transformational deals, which is beneficial for them.

Below is an edited transcript of his interview with Shereen Bhan.
 
Q: You continue to hold to that guidance of 20%, even when the street was expecting a cut down to about 18-19%. What makes you so bullish and optimistic? Where do you see growth coming in from?

A: We had a great quarter; things played out as expected. We saw strength in financial services, our pharmaceutical industry has started to grow again, and we beat our guidance both on the top line and EPS. But what we are most pleased about is that despite the tough economic environment we maintained a full year guidance of at least 20%.

Maintaining that guidance included absorbing significant currency movements that happened since early May. So we absorbed over USD 20 million of negative currency movements and still maintained our guidance, and that’s been driven by our clients looking to do two things at once, which is reduce their cost and spend on innovation and to growth their top-line. We are well positioned to meet that dual mandate and customers are coming to us and we continue to take market share.