Despite Cognizant cutting its guidance, Genpact has raised its revenue guidance for the fiscal led by an uptick in North America and its acquisition of Pharmalink earlier this year.
In a CNBC-TV18 exclusive, the US-based firm’s CEO NV Tiger Tyagarajan says that the BPO major is on the prowl for more acquisition targets in the healthcare and insurance space.
Below is the transcript of Tiger Tyagarajan's interview with Kritika Saxena on CNBC-TV18.
Q: You have hiked your full year revenue growth guidance forecast from $2.22-$2.26 Bn earlier to $2.4-$2.28 Bn this quarter. What gave you the confidence to hike guidance at a time when there are evident challenges in the industry?
A: We expect global client growth to actually be better next year than this year and that is really about us investing and driving the pipeline and signing some of these big deals.
The contribution of revenues that we are going to get for the second half of the year from that acquisition was really what led us to increase our expectation for the year. So, it was less about our view about the year changing it was more about an addition to the portfolio.
Q: Some of your peers have cut their guidance for the full year citing challenges in individual contracts, citing challenges in UK specifically, do you agree with that? Is Europe still struggling and what are your clients telling you right now?
A: For us Europe has been a growth geography probably now for the fourth consecutive year. I expect this year to be similar to many of the earlier three years where Europe continues to do very well for us.
For us, Europe starts off with a smaller base than the US and therefore it is easier to drive growth on a smaller base. Plus in many of the types of work that we do Europe has been behind the US in terms of taking some of the actions that are needed for the kind of work that we do.
We have seen over the last 3 or 4 years some of those actions accelerating in Europe so that has been good for us.
Q: Are your clients seeing issues when it comes to consolidation, when it comes to discretionary spending. The sense has been that clients are now changing the way they spend within IT? How much of an impact has this change had on your clients and how much of a hit do you foresee through this?
A: Our business is a little different from a number of IT competitors in the industry. One, we are less dependent on discretionary spend because of the nature of our business. Two, when going gets tough is when actually some of our business rises. When companies think about changing the way they operate, restructuring, separating into two different enterprises, consolidating into shared services that is when we see an uptake in our demand.
We are actually going through a phase where we think a numbers of companies across the world in a number of industries that we serve are going through a major rethink on how they are going run themselves going into the future given the way the world is growing which is still slow, given the fact that a number of them have to invest in new technology in digital technology in marketing and the fact that they have to continue to expand into emerging market and become global. As a result they have to extract value from a large part of their portfolio and restructure that and we come into play when that transformation happens.
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Q: Since you spoke about digital, how much of a change or where are you changing your processes, your approach to clients when it comes to adapting to the newer technologies be it digital, be it big data, be it system integration, be it analytics these are areas that we are seeing form a significant traction if not in the immediate future but definitely in the medium-term. How are you changing your processes to fit this need of a client?
A: The way we articulated our strategy for the next five to seven years and did that at this beginning of the year. We had worked on it last year, we call it blue print. Basically there are four pillars of this strategy – (1) as we said we will pick a few industry verticals, a few service lines and a few geographic markets and really concentrate our focus, attention, investments, acquisition, capability building, sales force and domain expertise everything in those areas (2) we will hire even bigger domain experts in each of those areas whether it is an industry vertical like life sciences or it is service line like finance and accounting (3) we will bring together process analytics and technology in order to be able to solve big problems that our clients and industries are facing and (4) we will take all of this to the market with very senior people who are at the frontend and we said we will up that investment there. So the way we are approaching this is really creating a solutions that bring those things together.
Q: You have completed your Pharmalink's acquisition going forward what are the areas that could be open to acquisition? What are your targets, what are your geographies, what are your vertical targets as well?
A: I have already talked about our geographic focus in terms of markets, obviously some of the acquisitions that we would do would have delivery from some of our delivery locations that we have always considered to be great delivery locations, India, Philippines, China, Eastern Europe, Latin America as well as US and European onshore and Japan onshore. So, that is the delivery and market side.
When it comes to industry verticals, we have a set of industry verticals that we are very focused on. I would pick insurance as an example where if we find the right capabilities in certain specific services in insurance that we like that would be a great opportunity and we continue to look for them.
Healthcare is another vertical for us.
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