Cognizant beats Indian peers in profit, revenue

Our Bureau Chennai | Updated on January 11, 2018 Published on May 05, 2017

Francisco D’Souza, Chief Executive Officer, Cognizant. (file photo)

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Reports 26% increase in net to $557 million; revenues up 11% to $3.55 billion in first quarter

Cognizant Technology Solutions reported a strong performance in March 2017 quarter, beating its Indian peers in both profit and revenue growths.

The US-based company reported 26 per cent increase in net profit to $557 million in the first quarter ended March 31, as against $441 million in the same period last year.

Revenue in March 2017 quarter was up 11 per cent to $3.55 billion, driven by strong performance in business consulting and increased demand for digital solutions.

In comparison, top Indian companies — Tata Consultancy Services, Infosys and Wipro — reported single-digit growth in both profit and revenue during the March quarter.

Out of Cognizant’s 2.61 lakh employees globally, over 75 per cent work in India.

Digital shift

“We are making good progress in accelerating Cognizant’s shift to digital services and solutions to create value for clients and shareholders, positioning us well to achieve both our revenue and margin targets for this year,” Francisco D’Souza, CEO, Cognizant, was quoted in a press release.

The company expects second-quarter 2017 revenue to be $3.63-$3.68 billion and 2017 revenue to be $14.56-$14.84 billion, the release said.

D’Souza told analysts that as globally, clients move to digital, the firm must build new customer experiences and automated processes on top of secure and scalable technology. This is the only way to effectively compete in a world that is increasingly being shaped by artificial intelligence, algorithms, bots and big data.

There is no slowdown in demand due to various issues related to US immigration laws, he said.

Karen McLoughlin, CFO, Cognizant, said the company is realigning its business to accelerate shift to high-value digital-transformation work, while continuing to reassess less profitable opportunities.

It plans to improve employee utilisation, optimise its ‘pyramid structure’ and talent supply-chain management to align resourcing with client demand, simplify business-unit overhead structure and leverage corporate-function spend more effectively.

The company has started a realignment programme to improve operating margin from the present 18.9 per cent to 22 per cent in calendar year 2019, while continuing to drive revenue growth.

For this, the company has sought help of external advisors.

The firm had incurred round $11 million in connection with the realignment, including advisory fees and severance costs, McLoughlin told analysts.

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Published on May 05, 2017
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