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HindustanTimes Sun,20 Apr 2014

Cognizant is eyeing small buys: Francisco D'Souza

Vivek Sinha, Hindustan Times  New Delhi, May 09, 2013
First Published: 22:38 IST(9/5/2013) | Last Updated: 22:41 IST(9/5/2013)

IT services major Cognizant posted a 17% rise in first-quarter profit for 2013 riding high on robust growth in European businesses.

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Francisco D'Souza, CEO, Cognizant, tells HT that despite talks of slowdown the company continues to see demand for IT services. Excerpts:

How do you see demand for IT services across the US and Europe? Are there any indications that your clients are delaying their IT spend?
In today's environment, client firms want to run their businesses more efficiently and expect their IT vendors to help them re-think about their business models.

At Cognizant we have done well to help our client firms run their businesses better and effectively. Hence, we continue to see demand for our IT services and no significant hold back of IT spend by client firms.

What do you intend to do with the cash pile of $2.7 billion (Rs 14,653 crore)? Is a big-ticket acquisition on the cards?
The strategy of acquiring for "capability" and not capacity is central to Cognizant's acquisition philosophy. The approach is to look at small "tuck-under" acquisitions that add capability in specific areas.

Given the size of Cognizant today, the company's sweet spot really is in the $20 million (Rs 108 crore) to $80 million (Rs 434 crore) range, maybe going up to $200 million (Rs 1,085 crore).

What would be the impact on your business model if the H-1B Bill gets passed?
It is important to remember that we are at a very preliminary stage of the legislative process and the Bill is not expected to become law as written.

Once we have more clarity, we will be able to discuss the likely impact. Also it's important to remember that this bill does not affect only Cognizant.

It affects large companies in the US. What would be harmed if the bill became law as written is America's ability to innovate, test new drugs, develop sound energy solutions, create new products, and be globally competitive.

The bottom-line is the bill would ultimately change the way America does business. We don't believe that will happen.

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