Why Cognizant earnings continue to surprise positively

The first quarter earnings for Cognizant (it follows a calendar year for its financial year too) are in and the numbers look pretty. The company delivered both on revenue and margins front.

On the revenue front while it was an upside, it held to its margins. The surprise was that it marginally increased its growth projections to 19.3 per cent instead of the 19 per cent it had forecast for the full year at the beginning of last quarter.

So compared to TCS, Infosys, Wipro and HCL Tech which reported anemic numbers, what has Cognizant been doing well? Four things have helped it.

Its dependence on the US market seen as weakness, has actually helped it to fare better as this market has grown faster than Europe.

Second, it is less exposed to oil & natural gas sectors apart from telecom, the two key verticals which have dragged down performance of the other players.

Third, has been its seamless execution in the marketplace, be it the integration of the TriZetto acquistion which it did for $2.7 billion in February or investing ahead of the curve in digital, automation and utility-based delivery models.

The BFSI and healthcare segments from which it generates maximum revenue have continued to grow, which has been the fourth reason for its continued success.  

Cognizant clearly has demonstrated its ability to anticipate market shifts and adapt to them quickly and thus is still ahead of the pack.