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It is more of caution than fear or worry right now, says Cognizant's R. Chandrasekaran

India's second largest IT exporter Cognizant thinks it could be a short-term blip and demand might pick up later during the year.

twitter-logo Goutam Das        Last Updated: February 10, 2016  | 19:16 IST
Ramakrishnan Chandrasekaran, Executive Vice Chairman, Cognizant India
Ramakrishnan Chandrasekaran, Executive Vice Chairman, Cognizant India

The Indian IT industry is facing multiple headwinds. India's second largest IT exporter Cognizant thinks it could be a short-term blip and demand might pick up later during the year. Ramakrishnan Chandrasekaran, Executive Vice Chairman, Cognizant India, spoke to Business Today's Goutam Das on the sidelines of the Nasscom India Leadership Forum.

BT: Why is there a divergence between what TCS is communicating around banking and financial services (BFSI) and Cognizant's outlook? TCS thinks BFSI is doing fine but Cognizant says there is a push back on discretionary spending…

Chandrasekaran: From our pout of view, we see demand environment to be pretty healthy. That is why we have guided to 10-14 per cent on such a large base. We believe that we will be the leader when it comes to growth in the industry. Having said that, we did observe some softness in the first quarter, specifically to do with these two sectors - healthcare and BFSI. We don't believe that it would be a continued phenomenon for the rest of the year because of the underlying shifts that are happening in the industries. In healthcare, there are M&A situations. We are on both sides of the M&A situations in some cases. When those things settle down, new initiatives will come through and we will play a big role in consolidation of their systems. So we expect demand to pick up in the later part of this year. So barring the first quarter where we see some softness, rest of the year is going to be good. In BFSI again, it is a short-term phenomenon. Everybody is very cautious if you look at the global macroeconomic cues. Again, the digital transformation is so compelling, nobody can afford to delay it. I don't think there is a negativity. As macroeconomic things become clear, people will have to embark on technology spend to transform their business. We have the right skills, right expertise, right service lines. We are well positioned to seize those opportunities. 

BT: What exactly are customers worried about? Is it the slowdown in China, which might mean bad assets on their books?

Chandrasekaran: Multiple things. China, the commodities market, slower growth in various developed countries. People want to be a lot more cautious. It is more of caution than fear or worry right now. So, things will become a lot clearer after a couple of months.

BT: There is a lot of talk on automation. What role will that play in revenue cannibalisation for the industry, going ahead?

Chandrasekaran: We don't expect it to cannibalise our revenues. It will bring a different level of efficiency and we are pushing very hard. Customers are also turning around. We are moving to outcome-based contracts with clients. If we have more automation and artificial intelligence, not only will we be able to deliver better services, it will help us in outcome-based contracts. How I deliver is upto me. If I am able to deploy better technologies, better tools, and become more effective, I may be delivering a better outcome at the same price - the customer wins, we win because we are a lot more efficient in the way we deliver services.

BT: There is a chorus of protectionism around the world. There are visa issues. Are you worried?

Chandrasekaran: As a professional who has been part of this industry for over 30 years, I do worry whenever such things come up because it affects trade, affects the way we think about our business and make a lot of adjustments. Having said that, this is not something new. It has always come, in different forms and shapes. As an industry, we need to focus on the value we are delivering. If it is just shipping people, then our business model is not correct. We need to be worried. But as an industry, we have come a long way.  It is not always driven by cost. People will come to you because we have a compelling value proposition.

 

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