Wall Street is beginning to see renewed vigour in Cognizant: CEO Humphries

Topics Cognizant | Wall Street

Cognizant CEO Brian Humphries
After showing signs of a revival in growth in its last quarterly earnings, IT services company Cognizant sees 2020 as a year of execution to get its bellwether tag back. In Chennai recently to attend the company’s board meet, the firm’s CEO Brian Humphries spoke to about the company’s plans and how India remains critical. Edited excerpts:

Is Q4 performance indication of a turnaround for Cognizant? When can the company match its industry peers in revenue growth?

We have beaten Wall Street estimates for three quarters in a row now. In fact, after our most recent earnings announcement on February 5, the stock went up 10 per cent the next day. I think our owners in Wall Street are beginning to see a renewed vigour in Cognizant. They are seeing a clear strategy and seeing us executing it well. But of course, to realign a company and get back to industry bellwether growth (level), it takes a lot of work. It takes a lot of motivation, highly engaged employees, and requires finding savings that we can reinvest in growth. And that is what we are doing in 2020. I think growth should pick up this year and accelerate into 2021. So, we are entering 2020 (on) an optimistic (note). This will be a year of execution. We have really aligned ourselves now to go and attack 2020, 2021 and beyond that, and reaccelerate our growth.

Will India remain a key delivery centre for Cognizant?

India will play a huge role — it always has and always will. India is the heart and soul of Cognizant. We have around 200,000 employees here, which is two-thirds of our total employee base. The headcount growth in the country will continue. This year, we are hiring 23,000 freshers in India and our (offer) acceptance rate is extraordinarily high. Cognizant brand remains very strong in India. We will continue to invest here, and that is why I am here every six to eight weeks. That is why, we held our Board of Directors’ meeting in India this week.

What is the strategy behind growth revival? Will you diversify your portfolio or increase company’s presence in newer geographies?

We have been diversifying our portfolio. I do think that the future of Cognizant is ultimately three-fold. One, you will see us as a much more global company. Today just 24 per cent of Cognizant revenue comes outside of North America. Our strategic ambition is to accelerate and make that a bigger portion of our (revenue) mix. Three of the five acquisitions the company has made ever since I came onboard were European companies. My ambition is to see a CAGR (compound annual growth rate) of 20 per cent in international markets. Our strategy also has two parts — we want to protect and optimise our traditional business, and within that, we have to optimise our delivery. We have to accelerate internationally, and have to grow the technology consulting business. The second portion of the strategy is based on the four key digital battlegrounds — cloud, data analytics, digital engineering and Inter of Things.

Could you elaborate on Cognizant’s hiring plan? Also, what is the status of employee optimisation initiatives announced earlier?

We plan to hire or reskill around 25,000 people this year with digital skills. Some of them would be freshly hired, while some would be reskilled. This year, 23,000 fresh graduates will join us, which is 30 per cent more than last year. You see acceleration in our hiring and it is a very strong indicator of the future. We have increased our entry level salaries by about 18 per cent, from Rs 3.38 lakh on an annual basis to around Rs 4 lakh now.

Given the difficulties in getting visa, what will be the mix of offshore versus onshore for the new hires?

We are ultimately a global company and 76 per cent of our business is in North America. We continue to embrace India and the skills we get here. The visa situation is such that we also need to create much more near-shore and off-shore jobs. We have built rich capabilities in Eastern Europe as well as onshore capabilities. I think, India will be a part of the promise of the future in a distributed agile world. 

A political leader has recently filed a petition against Cognizant in the Madras High Court, alleging it of paying bribes to develop facilities in India. What is your response?

I don’t want to comment on any individual litigation or news in India. The most fundamental question is, am I confident that we have a world-class ethics and compliance team? The answer is ‘yes’. Am I confident that we have zero tolerance for anything that goes against the principles of our ethics and compliance team? And the answer for that also is always ‘yes’.

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