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Bangalore, Dec. 8 Cognizant Technology Solutions said though clients have clearly delayed their budget cycles, the first industry to get serious about their technology budgets is the financial services because they know what is happening in their industry. The other sectors are still looking for more visibility.

“Clients in the financial services sector now have enough understanding of where their budgets are headed to start having discussion about how can you (Cognizant) help us,” said Mr Gordon Coburn, Chief Financial Officer and Chief Operating officer, Cognizant, while speaking to Credit Suisse.

Mr Coburn said the company has seen more clarity in the financial services sector, which will probably be down 10 to 20 per cent for IT spends. But that does not mean that financial services spend on offshore is down. The weak budget would be a catalyst for more work going offshore, especially in the application management space.

But this would be offset by development work getting cancelled or deferred or never happening. “How the two things balance off, particularly in the short term is where the lack of visibility comes in,” Mr Coburn said. While the development work can be delayed, it can take some time for the catalyst of application management to set in, he added.

Mr Coburn also said more clients are asking for ‘apple-to-apple’ reduction in pricing, but the company has not considered a price cut. Instead, it is open to discounts on incremental volumes and reducing price points for clients by bringing more work offshore.

He said Cognizant would certainly not start a price war by going in for ‘apple-to-apple’ price cuts. ‘Apple-to-apple’ reduction refers to a straightforward cut in pricing, without the other variables changing.

However, if the other big companies reduce their prices Cognizant would also need to do so, Mr Coburn said. All the companies have so far been fairly disciplined because everybody understands that nobody will gain any significant market-share doing by that, he added.

Mr Coburn said the company is happy to pass on to the clients the efficiency savings it has from larger relationships and it is seeing more of those large deals now. “You are seeing vendor consolidation and you are seeing some clients offshoring a broader range of services than they had in the past, which means the potential size of deals can get materially larger,” he said.

He also said the company can lower the price points for the clients by working with a higher offshore ratio that will lower costs for the same amount of services. “In the third quarter, the offshore ratio increased, and we expect the offshore ratio to continue to increase in this environment. The customers are more open to that,” Mr Coburn added.

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