Plans to re-align business for digital transformation
IT services major Cognizant on Friday posted a 26% increase in net profit at $557 million for the quarter ended March 31, 2017, compared with $441 million in the same period last quarter of 2016.
Cognizant, a US-based firm which has most of its employees based in India, stated that its revenue grew 10.7% to $3.55 billion in the reported quarter from $3.2 billion in the year-ago period, meeting its guidance range of $3.51 billion to $3.55 billion.
Commenting on the results, Cognizant CEO Francisco D’Souza said the company has delivered solid results in the first quarter. “We will continue to build our digital solutions portfolio, expand our skills, and enhance our engagement with clients,” said D’Souza.
He added that the company is making good progress in accelerating its shift to digital services and solutions, positioning it well to achieve both revenue and margin targets for this year.
On the revenue front, the company has maintained its revenue forecast for the fiscal 2017 to be between $14.56 billion and $14.84 billion. For the April-June 2017 quarter, it expects its revenues to be between $3.63 billion and $3.68 billion. Cognizant expects to grow between 8% and 10% in this year.
Although the IT major’s sequential growth in the January-March period was lower than the 2.7% sequential dollar revenue growth reported by Wipro, it was better than the 1.5% and 0.7% growth put up by TCS and Infosys, respectively.
The Nasdaq-listed firm also said it is going ahead with “realigning” its business to accelerate shift to high-value digital transformation work, while continuing to reassess less profitable opportunities.
As part of the process, the company plans to improve utilisation and optimise workforce to better align with client demand. Cognizant expects to incur a majority of the total costs related to this realignment programme in 2017.
“This realignment is part of our plan to improve our non-GAAP operating margin to 22% in the calendar year 2019, while continuing to drive revenue growth,” it said
Cognizant to ramp up hiring in US
Cognizant expects to "significantly" ramp up headcount in the US in a bid to woo the Trump administration that has been critical of outsourcing firms for unfairly taking jobs away from American workers.
The US-based firm has over 2.61 lakh employees, with a large number of them based in India.
While the company is hiring more locals, it is also consciously reducing its dependence on H-1B visas. Cognizant expects its visa requirements to go down further going forward.