Cognizant sees slower growth in 2013; clouds over Indian IT

BANGALORE: In what may be a dampener for the Indian information technology services exporters, Cognizant Technology Solutions, which is likely to grow faster than any other Indian technology outsourcers in 2012 has hinted at slower growth in 2013.

In an filing to the US market regulator Securities and Exchange Commission, the company said that it will pay its senior executives 100% of performance linked stock units if Cognizant sales expand by 16% in the year to December 2013.

In a reaction note sent to clients, brokerage CLSA said that Cognizant's growth expectations imply an 8-14% growth at best for Indian IT services exporters.

In 2012, Cognizant expects to grow its revenue by at least 20% to $7.34 billion, a target that was revised downwards from earlier in the year, when the company had hoped to grow at 23% in the current year.

However, the company also said, it will pay its senior executives 200% of the performance linked stock units, if they managed to grow Cognizant sales by 25% to $9.18 billion.

In the year to March 2013, industry body Nasscom expects Indian IT services exports to growth by at least 11%, a notch down from earlier expectation of 11-14% growth during the financial year. Some of the larger companies including Wipro and Infosys are expected to grow much slower during the same period. However, Tata Consultancy services and HCL Technologies are expected to be sector growth leaders during the year.