Ravi Kumar: So let me start and ask Jatin chip in. I would say, the discretion or the spend, if you take industry view is the motion banking, financial services and insurance. That’s a sector which is burdened with high interest rates. And because of the high interest rate, there is a wait-and-watch and kind of a pause on discretionary work. Remember, these are financial services is one of the sectors which also has a strong technology retained organization. So what they outsource is dependent on how much is the discretionary. Let’s see how the industry shape up in the year. And normally what I have seen based on the experience is, if there are one or two repeatable cycles of interest rate adjustments downwards, we will start to see the spend to come back.
Discretionary is also tied to transformational work, that means transformational work, normally it takes off when there is a period of certainty. I’ve said this before in my remarks that we see this as a period of uncertainty and a period of change. I mean the change is — the change ahead of us is, is such a positive catalyst. So if the uncertainty starts to go away. I think that change will trigger discretionary to come back. It’s also a deal where, at the back end of the year, we — in many parts of the world there are elections, so I don’t know what impact does to discretionary. But, the AI cycle can trigger the discretionary back the industry rates drop can trigger the discretionary back, financial services is the biggest one. So we are hoping that the stability in that sector based on interest rate cuts can drive that discretionary back.
So it’s a little bit of — I’m waiting for how the interest rate shape up for the — in this year to really say whether it is going to come back or not.
Jatin Dalal: Yes. So Surinder my — this is Jatin. I will just add to say that, there is this — if you see the history of IT services industries and shocks and shock recoveries is always some event led. And as we all know, the current situation is not a shock, it’s not an event, it is an overall high interest cost across the spectrum of the yield curve, which is weighing down on minds of decision-maker. It is difficult to call when the discretionary comes back, it’s very sector-specific. And it is a little novel from what the world has seen in last 20 years, where there was one big event and then you actually saw interest rates go down very, very sharply, very quickly, and there was a bounce back of the demand. This time, it is a new slowdown that we are — and I’m sure all our customers are coping to deal with that in terms of how they react to it.
Ravi Kumar: Also one other, one other, I would say, one other event in the mix is, during the COVID era there was a heavy discretionary in many sectors. And that’s going to — that went through — that’s kind of gone through a course correction, if I may, including the fact that there was uncertainty. So it’s going to be an interesting year to watch on discretionary and that’s probably as we go through the year, we’ll probably get more visibility on it.
Surinder Thind: That’s very helpful. Thank you.
Operator: Our next question comes from the line of James Faucette with Morgan Stanley. Please proceed.
James Faucette: Great. Thank you very much and really appreciate all the color and detail you are giving today. I’m wondering, just in terms of the larger deals that you’ve talked about, can you talk about the scenario of win rates for Cognizant? Sounds like you’re pretty confident, etc., but just wanted to get a sense for how you’re perceiving your competitiveness right now in the market.
Ravi Kumar: Yes. So you would have noticed that these large deals we are doing, we’re doing based on a differentiated value proposition, and we are holding our pricing. I mean that’s one of the reasons why our margins were good enough, good in 2023. And we gave 20 basis points to 40 basis points improvement this year. Our strength on our large deals is the following. We are able to unify the company together with the velocity, which is in line with what our clients are looking for. I mean, the velocity of these deals is very high, because these are cost takeout, vendor consolidation kind of deals. So you need that velocity, you need the unification of — to come together, it’s in our DNA, so I have kind of energized the DNA if I may in 2023, and that has helped us significantly.
The second I would say is, there are sectors where we have strong capabilities. And in those sectors, we are a formidable force. We can be provocative in those sectors. We don’t need to wait for a request for a consolidation or a request for productivity. We can actually work with our clients. We are very sticky. I mean we are also a company over the 30 years of Cognizant’s heritage. We are very sticky to our client. So we could be provocative with bold ideas. I see that as a trade and an integral part of the DNA. And as a CEO of the company, I’ve been able to lead those provocative conversations with our clients. That has helped us significantly. We have an extraordinary front-end team, if I may. The third, I would say, is our execution muscle, which we built in the last one year, I’m very proud about it.
And that has helped us to not just deliver these deals well, but also hold our margins as we execute these deals. The last one, I would say, in the mix is we also have, I would say, uniquely a differentiated value proposition related to productivity led by automation and AI, which can actually help to that provocative board thinking to support construction of these deals and share the benefits about the extraordinary opportunity AI provides to us. So I would say these are the three or four things which have helped us to win deals. And I would like to continue on that momentum in 2024.
