Cognizant CEO to bet on biz from social, mobile, analytics and cloud

Francisco D’Souza, CEO of Cognizant Technology, said the IT outsourcing company would focus on businesses from technology shift due to the emergence of social, mobile, analytics and cloud, or SMAC.

In 2013, Cognizant generated SMAC revenues of more than $500 million. In the fourth quarter of 2013, Cognizant revenues were $2.36 billion, a sequential increase of 2.2 percent and an increase of 20.9 percent year-over-year.

Cognizant CEO says SMAC technologies are enabling its clients to become digital businesses.

“In addition, development in areas like center technologies, the Internet of Things, machine learning and 3D printing, promise to further disrupt the status quo in many industries. These technologies are enabling our clients to reimagine and redesign part or all of their businesses — part or all of their business models,” said D’Souza during an analyst call last week.

Francisco D'Souza, CEO of Cognizant Technology

Thanks to support from its clients, Cognizant will better its revenue in 2014 compared with full year revenue of $8.84 billion in 2013.

The implications of SMAC are far-reaching. “In terms of the specific areas of opportunity, our clients are rethinking how they interact with their customers by driving better customer engagement, allowing anytime, anywhere customer interaction and creating new tailored products and services,” said D’Souza.

In considering the impact of SMAC technologies on employees, Cognizant clients are looking to create better experiences by empowering field workers, allowing teams to bring their own devices to the workplace and creating more interactive and engaging collaboration spaces.

Where is the future

Cognizant says its BPS practice continues to show solid growth driven by cross-selling its vertically aligned business process solutions.

IT Infrastructure Services had a robust quarter with new wins across multiple industries, including financial services, healthcare, retail and communications. This quarter, Cognizant also saw solid wins in remote infrastructure management and service desk solutions, a trend that gets accentuated with every passing quarter.

Within ITIS, Cognizant is seeing solid growth in Europe, driven by Germany, the Nordics and Benelux.

Cognizant says its public sector and Latin America businesses began to gain traction and it deployed 18 SaaS and BPaaS platforms under the Cognizant BusinessCloud solutions umbrella at more than 150 clients.

Its financial services segment grew 4.5 percent sequentially and 22.3 percent year-on-year, with strong growth in both banking and insurance. The key focus areas for its clients were cost rationalization, regulatory- and compliance-driven initiatives and a growing demand for SMAC-related services, particularly analytics and mobility.

Healthcare, pharmaceutical and medical device clients, rose 2.2 percent sequentially and 22.6 percent year-on-year. Growth in this segment for the quarter was primarily fueled by ongoing work related to Affordable Care initiatives, including extended support for member enrollment and the implementation of direct-to-consumer programs through mobile platforms.

Communication, information, media and entertainment and high tech, declined slightly on a sequential.

Cognizant says revenue from North America grew 1.9 percent sequentially and 18.3 percent year-over-year.

Europe grew 3.5 percent sequentially, performing better than company average.

While sequential growth in the U.K. was flat this quarter, Continental Europe saw a solid 8.8 percent sequential growth.

Overall, Europe grew 31.5 percent year-over-year. This growth includes our revenue from the acquisitions of C1 Group and Equinox Consulting.

Consulting and technology services and outsourcing services each represented 50 percent of revenue for the quarter and for the full year.

In Q4, consulting and technology services grew 20 percent year-over-year and 1 percent sequentially.

Outsourcing services grew 22 percent year-over-year and 4 percent sequentially. For the full year, consulting and technology services grew 18 percent and outsourcing services grew 23 percent.

During the fourth quarter, 35 percent of Cognizant revenue came from fixed price contracts and grew 4 percent sequentially and 25 percent year-over-year. For the full year 2013, 34 percent of revenues came from fixed price contracts, up from 33 percent in 2012.

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