The company said that the Covid-19 related disruption reduced revenue in March, reflecting delays in project fulfilment while the company shifted to work-from home capabilities.
The highest growth in revenue during the quarter came from Communications, Media and Technology, which grew 5.2 per cent to $626 million. Financial services and healthcare, which contribute around 34.3 per cent and 28.3 per cent of its revenues, grew by 1 per cent and 2.5 per cent, respectively. Products and resources grew 4.4 per cent to $954 million.
Growth in banking was driven by the contribution of the previously announced partnership with three Finnish financial institutions to transform and operate a shared core banking platform and regional banks in North America.
"This was partially offset by continued softness with a few of our largest banking and insurance clients. We executed well in what was a challenging quarter, and posted our strongest quarterly signings since 2017," said Brian Humphries, chief executive officer.
In the second quarter, the pandemic and resulting economic slowdown are dampening demand across industries, especially in the travel, hospitality, retail, automotive, energy, and media and entertainment.
However, the pivot to digital is accelerating as companies
look to quickly modernise and increase their competitiveness, migrate more of their workloads to the cloud, and rethink their core business processes. Digital revenue as a percentage of total revenue was around 41 per cent for the first quarter and grew by around 19 per cent year-over-year.
"While we expect a challenging demand environment throughout 2020, we believe the pandemic is accelerating the secular trends of core modernisation and cloud migration as companies
shift to digital business models. These and other related IT trends play directly to Cognizant's strategy," said Humphries. The company had earlier announced that it would not provide guidance as the pandemic has impacted its ability to forecast performance.
Since more than 60 per cent of its business is in Financial Services and Healthcare, Cognizant
is less exposed to some of the hardest hit industries. International markets, which tend to rebound more slowly, represent around 25 per cent of its business and is exposed to Global 2000 clients which are more resilient than smaller companies.
The company expects a majority of the revenue and margin impact from the ransomeware attack it went through in April, will be reflected in the second quarter results.
Karen McLoughlin, chief financial officer said that the company will continue with its 2020 Fit For Growth Plan to streamline the Company's operating model and reduce costs to fund growth investments that align to "our long-term growth strategy".
It will invest in the business by protecting and developing Digital skills, continuing to build out its commercial team, and continuing to correct the employee pyramid by onboarding around 20,000 entry-level hires, in 2020. Number of employees as of March 31, 2020 was around 291,700 as against 285,800 employees in the same period last year. However, the number of employees during the quarter ended December 31, 2019 was 292,500.