Cognizant Technology Solutions Corporation (NASDAQ:CTSH) Q4 2022 Earnings Call Transcript

Jan Siegmund: Ravi will chime in after I give you a more technical thing. I think as we mostly developing these plans, so we’re clearly not at the end of the job, otherwise, we would give guidance today. But when you think large deals and calculate of volume, I think deal characteristics of large deals have impact us on to our margin profile. And when we think about that, we need to build kind of our culture to leverage the relative margin strength if you exclude our health care charge and our pricing discipline and our delivery discipline, so that it allows us to be competitive for these larger deals that may cause dilution initially and then ramp up their full margin potential.

James Faucette: So I think the biggest impact practically would be to figure out for us, assuming the success in our large deal focus of what that would mean for the overall P&L structure. I think that’s going to be the biggest one. There’s going to be other investments that Ravi is going is going to be proposing, but I think we’re going to be managing those a little bit more within the framework of an SG&A volume that we have already not to take that away from you, Ravi, but I think…

Ravi Kumar: Jan, I think you’ve covered it so nicely. The one thing I would probably add is, I think in the last one to two years, Cognizant has invested heavily on organizational infrastructure to take large deals on a continuum, all the way from managed services to transaction-based pricing to cost takeout initiatives to digital transformation on that continuum. Now is the time to leverage those investments and take those large deals and be competitive on those large deals. So in a way, I would say a large part of it is done. We have now strengthened it, and we have oriented to the market for the opportunity, which is going to be presented to us. So that’s broadly how I see it. As I keep saying, it isn’t going back to the drawing board, but I’m going to build on what we have. We’re going to refine it. As we refine it, we have to make some changes. We’re going to make those changes, but we’ll be agile enough in the market to seize the opportunities we have.

James Faucette: Appreciate that. And then just as a follow-up, Ravi, how are you thinking about and what’s your perception of the current economic environment? Obviously, as you go to listen and engage with customers, et cetera. It seems like a big part of the challenge for you will be to parse out feedback that is specific to Cognizant and has impact on how you should move the business going forward on a sustained basis versus maybe some things that are happening near-term. So just wanted to hear how you’re thinking about the current economic environment and the lens that you’re looking at, at some of these comments or listening to these €“ some of these comments through?