Cognizant Technology Solutions Corp. expects its full year 2022 revenue to grow 8.5-11.5% in constant currency to $20.0-20.5 billion, its highest ever annual revenue outlook. The Teaneck, New Jersey-based firm posted a 14.5% rise in revenue in constant currency from the year-ago period to $4.8 billion for the fourth quarter ended December, its highest-ever quarterly revenue. The company follows the calendar year. In an interview, Rajesh Nambiar, chairman and managing director of Cognizant India, and president, digital business and technology, spoke about the reason for the upbeat guidance, hiring plans, and acquisitions strategy. Edited excerpts:
What gives Cognizant the confidence to project its highest-ever annual revenue outlook?
Our bookings for the full year 2021 stood at $23.1 billion, which is about 22% year-on-year growth in Q4 alone. Our book-to-bill is at 1.2x which is an indicator of what we can do in the future. So that's a huge positive. The demand environment is quite robust. We do see a significant uptake for our services business in general as well as in our ability to grow. So, it’s positive from the demand side of the equation. Supply side is obviously more constrained than the demand side. But attrition has actually gone down by about 2%. So, when we look at the potential for us to really capitalize on this market momentum, it's just phenomenal.
Have clients finalized their IT budgets? What areas will they be spending on?
We have a significant momentum in the marketplace. When we look at the digital agenda, we see that our clients are willing to spend a lot more on digital transformation. The acceleration in spend on digital transformation which started in 2021 will continue in 2022. The industry demand remains robust and resilient. The demand for IT services in 2022 will go much beyond that. This has also been validated by industry analysts’ outlook. Talent shortage and attrition will remain a concern from the supply side. But on the other side, hyperscale companies are making huge commercial investments to accelerate their cloud migrations, which are very positive indicators.
How is the pricing environment? Is there an upward bias for digital deals?
Pricing is a complex issue. When you look at the digital side of the equation, clients are willing to spend more on very strategic digital type of deals, but at the same time, they will also optimize on the non-strategic or non-digital deals. So, there is always a balance in all of that. The cost of our employee base is obviously going go up and we need to eventually get that charged through pricing or other means. It is one of the big levers for us to achieve sustained growth and margin. Clients are willing to pay more for the right capabilities and right sort of strategic interventions.
What are your hiring plans for 2022?
Last year, we hired 33,000 college graduates in India. This year, we plan to hire 50,000 people from the campuses. We don't give out the lateral hiring numbers but our broad strategy will be a mix of campus, lateral hires, talent through acquisitions, as well as through training and promoting our people internally. In the last one year alone, we have internally promoted about 14,000 people.
What’s your acquisitions strategy and which areas or geographies will you be targeting?
We will continue to acquire companies in what we call our digital backgrounds – digital engineering, artificial intelligence (AI) and analytics, cloud, and internet of things (IoT). These are the four areas in which we have been acquiring companies. For example, we acquired Linium in the cloud space; Servian in the data space; Magenic, Hunter Technical Resources, and Devbridge in the digital engineering space; and ESG Mobility and TQS Integration in the IoT space. I think we have been able to add the right set of assets and companies into our digital battlegrounds. That has given us enormous strength and it is going to be one of our strategies that we will continue with.
How are you strengthening your consulting capabilities?
I believe we have one of the very strong consulting organizations within Cognizant. Most recently, I think we have been able to bring together many of our consulting capabilities which existed in pockets into one single organization. So, we have strengthened that portfolio. We are bringing together capabilities such as digital business and technology to leverage our power as Cognizant in terms of going out and competing in the marketplace. Our capabilities which came through acquisitions have also added to our abilities to win in the marketplace. I believe today we are much stronger as a consulting organization than ever before and that is the reason we are winning in the digital space.