Cognizant Technology Solutions Corp. has raised its 2021 revenue growth forecast to 5.6-7.6% in constant currency from the 4-7% it had estimated earlier, amid a strong business environment and deal momentum. Revenue for the June quarter is expected to grow 8-9% in constant-currency terms. The Teaneck, New Jersey-based firm said revenue rose 2.4% in constant currency from a year earlier to $4.4 billion for the quarter ended March. In an interview, Rajesh Nambiar, the newly appointed chairman and managing director of Cognizant India, talks about his achievements, revenue outlook, and hiring plans, among others. 
As you complete the first full quarter in your role as managing director of the India unit, what are your achievements and priorities?
We are one of the very few organizations that have actually been able to help our clients go through this digital transformation. One of the reasons I joined Cognizant is to make sure we are able to build that in a very balanced way and be able to grow and bring back the IT bellwether tag. My role is multifaceted and if we take branding as one area, we have done very well in India. We have done a lot of work in the area of campuses, improving our position significantly from where it used to be. We built back the brand of Cognizant being a magnet for skilled talent and a great place to build a career. We have been able to see a meaningful increase in our brand perception and our campus acceptance rate among all the top engineering colleges has risen to more than 80% this year, which is 10 percentage points more than what we had in 2019 and more than five percentage points more than 2020. I believe we have turned the corner in terms of our revenue growth and where the organization is headed. Our bookings and pipeline are looking very solid.
What gave Cognizant the confidence to raise its revenue growth guidance for 2021?
We raised our 2021 revenue growth guidance to 7-9% in reported terms and 5.6-7.6% in constant currency. The revenue for the second quarter is also expected to grow 10.5-11.5% in reported terms and 8-9% in constant currency. I believe we got the confidence because our bookings were more than 1.1 times what we were saying. We are now able to come back and say that we will actually execute better than we thought earlier. That is coming from the momentum we saw on the back of strong bookings in 2020. We saw continued momentum in Q1 (March quarter). Despite tough competition our pipeline is very strong. Digital revenues grew 15% year-on-year and contributed 44% to the total revenue, up from 39% in the prior-year period.
Cognizant spent $700 million on acquisitions, share repurchases, dividends in the March quarter. What is the strategy and roadmap for capital allocation?
Mergers and acquisitions (M&As) are a key part of our capital allocation strategy. M&A is one of the core elements that we will continue to actively pursue for revenue acceleration in alignment with our digital strategy. This is also part of our globalization goal. We are careful of the competitive market dynamics and high valuation multiples. We have walked away from deals because of their valuations. We will be very focused on ensuring that we have the right set of M&As. If you look at our capital deployment plan, 50% is towards M&As in areas aligned to our strategic priorities, another 50% will be allocated to dividends and share purchases. We are targeting a very consistent dividend payout ratio of approximately 25% and, of course, repurchases to offset some of the dilutions. Last quarter, the board approved an increase of $2 billion to the amount authorized under the existing stock repurchase programme.
Last year Cognizant said it intended to hire 25,000 freshers in 2021. Given the demand environment, how would you revise the target?
We have already made 28,000 campus offers. This does not include the lateral hiring as we don’t give out the lateral numbers, but it has been one of the highest in Q1. We continue to hire. We have also strengthened our hiring teams with a lot of recruiters to ensure we have a very strong team that can turn the engine in terms of the number of people we need to bring on board. With 296,500 employees, Cognizant is one of the largest employers. We have added 7,000 people sequentially from the last quarter. On a year-on-year basis, it’s more than 5,000. The momentum we see is because the engine is actually working. We have the highest brand within the day-zero slots in campuses, bringing in the right level of talent. We have also increased our internship programmes. Last year, we had only 5,000 people interning, but this year the number has gone up to 10,000-13,000. We are also putting them through a programme that will make them ready to do real jobs quickly.
