Feeds

Cognizant filing stokes Indian outsourcer growth fears

Keep Calm and Hold Your Shares: growth will still be around 16 per cent

Maximizing your infrastructure through virtualization

An SEC filing from IT services poster boy Cognizant has sent ripples of uncertainty through the entire Indian tech sector after some interpreted it as a sign the company is expecting slower growth in 2013.

The filing from NASDAQ-listed Cognizant, whose revenues beat those of IT giants Infosys and Wipro in the last quarter, indicated that the firm would pay its top execs 100 per cent of performance linked stock if the firm grows 16 per cent next year.

Although not a formal announcement of 2013 growth expectations, the filing has been interpreted by many commentators as an indicator Cognizant expects slower growth than the 33 per cent it achieved in 2011 and the 23 per cent predicted at the start of 2012, according to Economic Times.

Adding to the potential gloom is the fact that Cognizant has been one of the best performing Indian tech firms in recent history, outpacing the industry by at least 10 per cent over the past four years, according to Forbes.

The firm did little to reassure the markets, in a canned statement sent to ET:

Cognizant's goal is to maintain industry-leading revenue growth ... The revenue target at 100 per cent payout would represent industry-leading growth. Based on the current knowledge of the economic context and business demand, coupled with the discussions we have had with our clients, we think the targets are appropriate.

India’s IT trade body NASSCOM optimistically predicted double-digit growth for the industry in fiscal 2013, although would not elaborate.

While there are certainly jitters in the Indian outsourcing market as Europe’s continued economic slump impacts deals, the big picture is more reassuring.

Gartner analyst Arup Roy told The Reg that the reaction to Cognizant’s filing has been overly dramatic.

“Cognizant has historically been conservative in its outlook and about what it conveys to the market, but in reality they have always delivered far beyond what they say. So a 16 per cent growth in 2013 can safely be interpreted as a 20 per cent at least for Cognizant in 2013,” he added.

“And we must not forget that 16-20 per cent growth for company of that size is quite good given the muted economic situation and thereby the overall industry growth situation.” ®

Top three mobile application threats

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Nadella: Apps must run on ALL WINDOWS – PCs, slabs and mobes
Phone egg, meet desktop chicken - your mother
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
Microsoft: We're making ONE TRUE WINDOWS to rule us all
Enterprise, Windows still power firm's shaky money-maker
HP, Microsoft prove it again: Big Business doesn't create jobs
SMEs get lip service - what they need is dinner at the Club
ITC: Seagate and LSI can infringe Realtek patents because Realtek isn't in the US
Land of the (get off scot) free, when it's a foreign owner
Dude, you're getting a Dell – with BITCOIN: IT giant slurps cryptocash
1. Buy PC with Bitcoin. 2. Mine more coins. 3. Goto step 1
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Top 8 considerations to enable and simplify mobility
In this whitepaper learn how to successfully add mobile capabilities simply and cost effectively.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
The Essential Guide to IT Transformation
ServiceNow discusses three IT transformations that can help CIO's automate IT services to transform IT and the enterprise.