Tien-Tsin Huang: Hi. Thanks. Good afternoon. The margin outlook was encouraging. So I was hoping for little more detail on the gross margin versus operating margin dynamic. It sounds like utilization rates should improve. You talk about NextGen benefits, productivity, pricing, that kind of thing. So I just want to make sure I understand the callouts for the — for margins for the year across gross margin and operating margin, if that’s okay. That’s all I had. Thank you.
Jatin Dalal: Sure, Tien-Tsin. The — I think the opportunity exists on both lines, and the drivers would be clearly different. The driver for gross margin would be really the efficiency of operations kicking in. We have quite a bit of utilization upside that one can capture as the growth return. The second is really deploying the tools and processes related — around AI and automation to, to get some operational benefits out. So there’s the opportunity on gross margin apart from the traditional opportunity around pyramid and Gen Zs and related traditional measures. On operating margin, definitely, there will be an upside on SG&A front led by some of the cost take-outs related with the tail end of NextGen program that will complete in 2024. So I would be — I mean, we’ll work on both, and we’ll see where we go by the individual lines. But overall, we think we have sufficient actions around the overall expansion we have spoken about.
Tien-Tsin Huang: Okay. And within…
Ravi Kumar: Just to add to what Jatin said. We’re very pleased with our performance on the NextGen program. We do think we have an opportunity for a full year impact this year on the NextGen program. Equally, as Jatin also pointed out, in addition to the classical levers in gross margin, we do have — I mean, classical levers being, better operational efficiency, higher utilization, better pyramid, higher offshoring, I mean all of these are — we are very encouraged with the progress. But we also have this unique opportunity to share the productivity benefits with our clients, which is the technology arbitrage versus the labor arbitrage, driven by generative AI tooling. And I think we are ahead of the curve, which is the reason why we are winning a lot of these large deals and sharing those benefits of productivity, which will then start to contribute to growth and operating margin as we go forward.
Tien-Tsin Huang: Great. That’s what I was looking for. Thank you.
Operator: Our next question comes from the line of Moshe Katri with Wedbush Securities. Please proceed.
Moshe Katri: Hey, thanks for taking my question. And Jatin, welcome. It’ll be great to work with you again. So a couple of questions. If we’re looking at revenue growth, and we’re looking at the deal flow that you’ve been winning since you came on board, Ravi. When do you think we could see that inflection point in revenue growth, especially as you start seeing some of these deals ramping on top of what you won last year and obviously, factoring the fact that it takes some time for these deals to ramp. That’s my first question.
Ravi Kumar: Thank you, Moshe. Good to hear from you again. The wins in 2023 started to ramp in 2023, of course, they have a partial benefit in the first year and the start to get to more benefits in the second and the third year. Equally, the momentum as we got into the, into the back end of last year, we actually had more new business, more new logos in the percentage mix of our large deals, which means it’ll have higher impact in the future years. So what this really does to us, it makes our business sticky, it increases our backlog for the future, and therefore you’re entering the year with tail velocity. The only unknown in the mix is the $0 million to $5 million deals, which are discretionary in nature. And, they kind of neutralize if the fall-off, they kind of neutralize what you win on the large deals.
I think part of that happened in 2023 because discretionary was pretty soft in 2023. 2024, we do not know what’s going to happen to discretionary. Otherwise, I would say the flow of those deals, the large deals is continuing and it will strengthen in ’24 and ’25 when it will actually be fully realized. What it does though is — I mean the unknown in the mix is, how much does that get neutralized by soft discretionary. If the discretionary is not soft, it comes back, we want to be prepared, it then starts to show the momentum. So it’s interesting part because it’s not about the large deals, it’s also about the small deals, because if the small deals start to neutralize even if the plateau, then the large deals will start to show revenue momentum.
That’s how I see it. So we are executing to these deals pretty well. And this, Moshe, that in the first year, they always start with a transition, they start with a slower trajectory. And then once they take off, they get to a steady state of revenue. So that I’m not as worried about. I continue to believe that we are in good shape on that. What certainly I do not know is discretionary.
Moshe Katri: Okay. That makes sense. And then the second one is more related to strategy. I’ve always been intrigued in terms of what Cognizant does with TriZetto. And that used to be a pretty big part of your healthcare practice, and I think you’ve indicated during our first introduction when you came on Board that you will be taking a second look at TriZetto and trying to kind of maybe revive the business. Are there any actions that you’re doing there to, for us to see more of that reflected in the numbers and the healthcare vertical. Thanks a lot.
