Cognizant Technology Solutions' Management Presents at the 2013 Barclays Information and IT Services Conference (Transcript)

Dec.12.13 | About: Cognizant Technology (CTSH)

Start Time: 12:20

End Time: 12:50

Cognizant Technology Solutions Corporation (NASDAQ:CTSH)

Company Conference Presentation

December 12, 2013, 12:20 PM ET

Executives

Karen McLoughlin - CFO

Analysts

Darrin Peller - Barclays Capital

Darrin Peller - Barclays Capital

All right, let's kick in. Good afternoon, everybody. Again, I'm Darrin Peller, the computer services and IT consulting analyst here at Barclays. So I want to thank you all again for being with us and why don't we just jump in. We're obviously happy to have Karen with us from Cognizant, CFO of the company as well as Dave Nelson from IR sitting over there. So thank you both for being with us today.

Karen, we're just going to go through some questions as we usually do and I think from there, we'll open it up and see if anyone in the audience has some questions as well. But I think just given the recent headlines we've seen around some the management changes going on in the business, there were some questions we go what it means and I'd love to hear from you. I mean, can you give us a little color on what actually is happening inside the organization? Who's moving where and why that change is happening?

Karen McLoughlin

Sure. So thanks Darrin and thanks for having us. So one of the things at Cognizant that we've been focused on for many years now is really how do we continue to build out our leadership team. As we grow obviously that becomes more and more important and we're building out the next layer of management and that we continue to provide a lot of opportunities for folks to grow in the organization to be successful with us.

So last week, as Darrin mentioned, we did announce a number of changes. If I sort of start at the top of the organization, we announced that Raj Mehta will now be running all of our global IT services business. Raj, as many of you know, has been with us really since the company was almost started and has played many different roles for us along the way. But it was a natural extension for him to take over the IT services part of the business. And then with that obviously we needed to make sure we build out the team underneath him so that he could manage the business effectively.

So we made a number of announcements, one of which is that Sumithra who has been heading up our quality engineering and assurance or our testing practice now for many years will actually manage many of our industry vertical businesses along with Raj. She will report to Raj. And then DC or Debashis Chatterjee who has also been with the company for many years will run many of our horizontal service offerings. And DC's background has primarily been in our financial services practice as well as our infrastructure services practice most recently.

But if you think about what we did there, what we actually did is we took somebody who came from a very strong horizontal background and somebody who came from a very strong industry vertical background and swapped them. And part of what we do is really look at how do we give people new challenges and new opportunities to grow in the organization. So that was a lot of what we did there.

At the same time we announced some other new promotions of the executive vice president level which included promoting DK Sinha who heads up global sales for us and large deals and so forth to executive vice president. And then two of our vertical heads, so Prasad Chintamaneni who heads up our financial services practice, some of you may know him, and Prasad now runs our global banking practice. And then Krish Venkat who heads up our global health care and life sciences practice. So again, it was really just how do we continue to build out that next layer and provide opportunities for those.

Darrin Peller - Barclays Capital

Okay. Just to be clear for the folks that we're used to interfacing with, whether it's Gordon or yourself or Frank, I guess, I mean is there any change on that front in terms of their roles?

Karen McLoughlin

No. Frank is continuing his role has CEO and will continue to personally lead our Horizon 3 businesses. And then Gordon obviously will continue in his role as President. So really the two of them will ultimately manage the entire company P&L moving forward.

Darrin Peller - Barclays Capital

Okay, right. Let's just move ahead now. I wanted to take it a step back. You became CFO about a year and a half, almost two years ago actually now. And before that you were working with the enterprise transformation group which obviously kind of looks to Cognizant's future and sees what should be done to make sure that business is in the right path.

Can you talk a little bit about how your thinkings evolved around the business mix in the sense of we have Horizon 1 which is obviously growing still but not quite at the same pace as it was or really quite at the same pace as your other offerings in Horizon 2 and 3 obviously. Horizon 2 with BPO work and infrastructure services work or consulting obviously outpacing here considerably.

And then Horizon 3, it's really how you map out your company in terms of the cloud offering, the SMAC stack. So can you just touch on a little bit what the strategy is? What do you see that mix becoming over time? Where is the dollars being spent primarily in terms of investment for the next few years?

Karen McLoughlin

Sure. So if you think about, as you mentioned our Horizon 1 business is really our core IT services business, right, and that includes both app maintenance and app development. As Darrin mentioned in terms of percentage growth, it is growing slower than Horizon 2 but it is still the largest dollar grower in the business, right. So the volume of dollars still continues to be in the Horizon 1 business.

Obviously as we look to how we need to grow the business and continue to support our clients, we've obviously added on a number of service offerings over the year and much of that became what we call our Horizon 2 services, which is our BPO, our infrastructure and our consulting practices. Altogether those are about 20% of revenue today. They are growing significantly faster than company average and should continue to do so certainly for years to come.

Those are capabilities that we started to put in place really over the last six to eight years but really in the last three or four years is where the real growth for those businesses has come from. And we believe that it's a very important part of our ability to build out an integrated solution offering for our customers. What we're seeing in today's marketplace is we talk about a notion of dual mandates that our clients are facing where they need to both drive – what we call run better, so drive cost and efficiency and effectiveness into their business but also run different which is free up those savings from the cost side of the business to really reinvest and transform and innovate in their business.

And in order to do that, customers are really looking for an integrated solution, so somebody who can bring me the consulting – bring me the IT services, bring me the BPO and the infrastructure altogether. And then increasingly over the last year or two is what we started to build out is what we call our Horizon 3. And Horizon 3 is really a number of things that one component of that is what we call our SMAC stack with social, mobile, analytics and cloud which are really the technologies of the future, sort of in here and now but will become much more predominant in the coming years as well as continuing to build out our geographic footprint and some of our industry footprint, so things like energy and utilities and government work and so forth.

Darrin Peller - Barclays Capital

Has there been disclosure on the size? If you added up your Horizon 3, what exactly does that contribute today?

Karen McLoughlin

So we haven't talked about Horizon 3 in total but the SMAC stack which is the very big component of that we said would be about $500 million of revenue in 2013 and is certainly growing quite – frankly is faster than we thought it would, so it's really been taking off nicely.

Darrin Peller - Barclays Capital

I mean certainly industry verticals clearly have more exposure to them than others. Financials obviously probably have a lot of mobility aspects to it…?

Karen McLoughlin

So it's been interesting. One of the things we've seen is we break the four pieces apart; social, mobile, analytics and cloud. Obviously we come from a very strong analytics background, right. We were originally Dun & Bradstreet subsidiary, so that is our heritage. So we've always been a strong analytics platform. Cloud obviously has been emerging over the last couple of years but mobile has really been the new star in a way that it's taken off in the last year or two.

I think what I see that's interesting in that sector is that clients are looking to leverage best practices from other industries. So clearly whether it be retail clients, financial services clients, even our health care clients are looking for mobile solutions but also looking at how do they integrate social, how do they integrate analytics, particularly how do they interface with their customers. And so you'll see maybe financial services clients saying, well, tell us what the retail industry is doing because they're very good at integrating and interacting with their customers, so how can we leverage that into our space.

Darrin Peller - Barclays Capital

Makes sense. Moving beyond just Horizon 3 and your core business here, emerging markets is an area that we're seeing more investment in also. I mean, can you talk a little bit about your opportunities or your strategy around that front?

Karen McLoughlin

Sure. So I mean I think in terms of the near term, we think the biggest opportunity is in Continental Europe. The UK is obviously a very successful market for most firms, including ourselves and continues to grow very nicely. But we've talked now for some time that we think Continental Europe actually has the opportunity to be as large as North America. And what we've seen over the last year or so is a big transition in customers thinking in Europe.

Historically, a lot of our business had been more development work, work that resulted in less impact on the workforce but over the last year or so, we've seen clients really look to how do they change their business model, how they adopt more of a global delivery through outsourcing models and we think there is a very big opportunity in the short term in Continental Europe and we're certainly starting to see traction there.

We also think Latin America is a big opportunity. We have delivery centers there. We do some work in Latin America but I think certainly over the next several years that's a continued area of investment for us, as are certain parts of what we call rest of world which includes Asia-Pac and the Middle East, the Middle East has really started to take off and you're also seeing good traction in a lot of countries like Australia and Singapore and so forth. But I think lots of room for global expansion.

Darrin Peller - Barclays Capital

Speaking of Europe, I mean you obviously did a couple of recent deals over the past year, so with C1 and Equinox both in Europe, is that – I mean should we expect that to continue in terms of the inorganic growth strategy around specifically Europe but also maybe in Latin America to be more inorganic?

Karen McLoughlin

We've always talked about wanting to do niche and tuck-in acquisitions and Frank really has been looking for acquisitions in Europe for quite some time. We're very pleased with the few that we did do this year, so the C1 Group that we bought back in March was primarily a German company. The Equinox Consulting Group that we purchased in earlier this quarter is a consulting firm primarily in financial services based in France.

They have terrific relationships with many of the large banking customers in France. We're very excited about that. I think you should expect us to continue to do niche and tuck-in acquisitions. Obviously geographic expansion is big for us and so where there are appropriate acquisitions you will see us do that. You'll also see us I think continue to build out some of our service offerings both though building and as well as buying.

Darrin Peller - Barclays Capital

So in terms of Europe wrapping it up on Europe for a moment, I mean are you seeing growth rates and trends now better than they were in the beginning of the year?

Karen McLoughlin

Yes.

Darrin Peller - Barclays Capital

Is there any reason that that should continue, I mean based on the macro environment as well as the underlying secular themes?

Karen McLoughlin

No, I definitely think that you'll see continued growth in Continental Europe over the next couple of years. It may be a little lumpy, it's often small numbers. So we do tend to see that it's not a straight line. So from quarter-to-quarter, one large deal can impact the growth rates but certainly we're seeing that general trend pick up.

Darrin Peller - Barclays Capital

Okay. Let's just shift gears for a minute. We just had a panel on immigration obviously and before we move over to the industry vertical discussion, that was a topic that was without a doubt by far the most topical one in terms of on people's minds in the middle of last year or the middle of this year I should say. It seems to have certainly calm down over the past few months to a point where it's almost not even discussed by many investors now although it still looks like something that can come up again in '14. So just give us your latest thoughts on what the company is thinking around that and potential for a lot of the tests or with or without certain elements that are obviously more concerning than others?

Karen McLoughlin

Sure. So I'm not a betting person so I wouldn't bet on what happens in '14 and whether the bill gets taken up in some form or another but certainly I think it's possible. I think what's been interesting over the last six or seven months since the Senate bill was put forward back in the early part of the summer is that I think there's actually been a lot of very good dialogue in Washington and elsewhere in the country around what does immigration mean to United States, how can we use immigration more effectively to attract the right talent and keep it here in the United States?

And I think that's actually been a fairly healthy conversation. I think when the original bill was passed, there were a number of components in the bill that could have been detrimental to the American economy and I think a lot of the dialogue has now turned to how do we use immigration to more effectively attract the best talent in the United States and retain the best talent here in the United States and thus continue to help drive the American economy.

How that ultimately plays out I think remains to be seen, but certainly some of the dialogue and some of the things that were in the original, both the Senate bill and some of the things the House has put forward around expansion and streamlining of the Green Card program, expansion of the H1B program I think are all well intended to attract the right talent.

Darrin Peller - Barclays Capital

Okay. I mean on that front there was an announcement made by I think Gordon recently about hiring another 10,000 U.S. based employees over the next few years. I mean that's been a strategy for Cognizant for a while anyway in terms of hiring more onsite or onshore employees. But to that point are there other or is that and are there other tools that you might be doing to try to work through some of the risks or the concerns by some Congressmen around immigration?

Karen McLoughlin

Sure. I mean our focus is really about making sure we have the right talent in the right place to support our clients and we do that through a number of means. So some of it is through using immigration, some of it's by continuing to help work with American schools both colleges, universities as well as more junior schools and helping build out STEM education here in the United States, helping encourage people to go into the STEM field.

So it's part of the conversation you talked about. We announced a relationship with Texas A&M to help drive a STEM education program there. So this is certainly something we've been working on for the last several years. Immigration's not a new topic, so we think it's prudent for us to always be looking for how do we optimize our workforce and how do we optimize our talent both here and elsewhere in the world and that's what we'll continue to focus on.

Darrin Peller - Barclays Capital

Okay. Why don't we shift gears in your verticals for a minute because obviously when you lay out the verticals and you look at your strengths, you've seen financial services which is over 40% of the company do very well. For a while we've seen retail manufacturing growing well as well.

And then it looks like health care picked up, right. I mean we had an early start to the year that was little slower, the end of last year was a little slower but second quarter picked up a notch and certainly third quarter we saw a material sequential pick up in year-over-year growth rates and just overall revenue. A lot of that was related to ObamaCare.

So maybe just touching on that vertical for a moment, we obviously – we did a big report on this also and a call and want to hear your thoughts on what does this mean? I mean what does ObamaCare really mean for Cognizant? What could this do for 2014 and beyond without mentioning numbers obviously, just conceptually? Is this going to be ongoing for a while?

Karen McLoughlin

Sure. So I think the Affordable Care Act is interesting. We've always had a very strong position in the health care payer side of the business, so certainly our clients started to get ready to implement what they needed to do for the Affordable Care Act. What you saw was a big pickup in spending as you mentioned sort of in the back half of Q2 and into Q3. And from our clients' perspective, a lot of that was around how do they interface into the various State exchanges or the Federal Exchange?

And so we did a lot of work with them on that. There was also this whole notion of how do you onboard all these new members? So as folks start joining the exchanges and become members of the various companies, how do they manage them from a membership perspective, how do you onboard them, what tools and processes and systems you need to support them moving forward? That work is almost in a way just beginning because a lot of clients don't know where all those people end up yet.

So there's a little bit of – almost a wait and see attitude there. But if you think about even just the State exchanges for a moment, there are only a handful of states who actually went live with their own exchanges back in October. So many of the states are just now starting to look at doing that work for themselves over the next two years it really is I think.

Darrin Peller - Barclays Capital

In two years are there expecting that we'd see that number go up?

Karen McLoughlin

It's through 2015 depending all the dates stay in place. So there will be a lot of work to continue to build out those State exchanges and for clients to interface into those exchanges.

Darrin Peller - Barclays Capital

What you're doing is really for the in-payers connecting into these?

Karen McLoughlin

We're doing both work for the payers as well as some work with the states and partnering with some other firms in some of the state work as well. Frankly there's only a handful of firms in the country who have that kind of experience. And so while we haven't had a big government practice historically, we clearly understand the health care space. So we're well positioned to do some of that work with them.

And then our hypothesis is that really after the next, I'd say two years and the program stabilizes and is up and running, then it really turns to how do you change health care delivery in the United States and how do you really start to bring down the cost of health care delivery which I think will be a very interesting roadmap and an interesting journey.

Darrin Peller - Barclays Capital

So the delays and the concerns on the Federal side that we've all heard much about, does that have any impact on Cognizant or is it not so impactful?

Karen McLoughlin

Not really. I mean we certainly – we were not involved in the Federal program. I mean certainly there's some impact on our clients just as they try to get these people on-boarded, but that's fairly minimal.

Darrin Peller - Barclays Capital

Right. And then there's also ICD-10 testing, right? I mean we had that come up for a while, it sort of slowed down as you finished what you had to do and I think the deadline for implementation on this coding is October of 2014. So is that another tailwind?

Karen McLoughlin

So there is potentially some work there. There is a lot of testing work that still remains to be done with clients. As you said we've sort of done the base work and so let's not bring it over the finish line. So I totally understand what the real deadlines are, so clearly there is some work to be done as well.

Darrin Peller - Barclays Capital

Yes. Now you work – I think you guys have published, you work with about 15 of the top 20 health care plans in the U.S. So your share there obviously must be pretty strong and as you said there's not many companies that can work on this. So, I guess overall I mean I don't know if you've ever seen anyone – has anyone ever sized the overall market opportunity for implementing changes around this or…?

Karen McLoughlin

No, I haven't seen the numbers…

Darrin Peller - Barclays Capital

Okay. But we've seen just your numbers go $50 million higher plus in the sequential change from second to third quarter right on ObamaCare alone. And your ICD-10 list coming up as well, that's just from the payer side which is what, 60% of your health care vertical and the rest is obviously life sciences.

So we see a pretty significant amount of acceleration or not even acceleration but continued strength in health care from the third quarter levels going through '14. Now the question becomes what about the pharma side, right, because that's been slower for a while and with a segment that's 27% or so of your revenues that's also important. What are your thoughts there?

Karen McLoughlin

Pharma has had some challenges over the last two years but it is still growing double digits, so the relative challenge in our terms. Pharma I think is early to tell. I mean you're certainly starting to hear some more positive news in the press and so forth about what happens with pharma over the next 12 to 18 months. We're certainly not anticipating anything in the very short term, but certainly if you get into later next year and 2015 I think it will be interesting to see if their pipeline starts to really pick up.

Darrin Peller - Barclays Capital

Yes. I mean in terms of the – do you have any disclosure on the number of pharma companies you work with in the U.S.?

Karen McLoughlin

So 6 of the top 10.

Darrin Peller - Barclays Capital

6 of the top 10, okay. So you obviously have a good position there as well, but that's something that you would expect or hope for in the second half?

Karen McLoughlin

Possibly.

Darrin Peller - Barclays Capital

You can go ahead.

Question-and-Answer Session

Unidentified Analyst

I got to ask a question. So (indiscernible) responsible for the Federal government exchange, group exchanges you're working against as you said on some state exchanges, but clearly you understand what's going on. Can you give us your view on how long this is going to take to really get this stabilized? Clearly security is a big issue, they don't even talk about yet, they're just trying to get people on the site and get the site working.

So clearly it's a disaster and we know UK tried to do this and there was a disaster, a lot of people lost a lot of money. So just gives us your and make the comparison to the UK, the Cerner's, the CSCs [ph], all these guys lost a ton of money and just maybe comment on over the next 18 months how this is going to roll out?

Karen McLoughlin

I'm not sure I'm the best person to give an opinion on the Federal exchanges. We've not been working on the Federal Exchange. There are many firms that have who are probably focused on what's working or not working in the system and sort of everything we hear is from the outside as well. So it's probably not a good idea for me to try to take a position on that. I don't have a sense to be honest.

I mean certainly it seems like it is getting better. Clearly the frontend of the application seems to be much more usable for folks to get in and login and actually get through the network. What I hear I think is the same thing that everyone hears is that some of the backend work still needs to happen. I don't have a good sense of the short-term thing, it's something more complicating.

Darrin Peller - Barclays Capital

So you go mostly with the state level, right?

Karen McLoughlin

Yes, most of our work is state level.

Darrin Peller - Barclays Capital

And that's been seemingly going pretty well actually more so than the Federal by far. So over time the anticipation is that at least a lot of these states are going to take it off for themselves, move away from using the Federal program anyway which is probably the biggest opportunity for you is more than the 17 that have already started come off as a platform and then you guys chip in.

Unidentified Analyst

Do you work with a company like eHealth or are you a competitor to their work and setting up exchanges?

Karen McLoughlin

So in some cases we're prime into the states doing work on our own and in some cases we're partnering with a number of firms to do work.

Darrin Peller - Barclays Capital

Okay. Just quickly on, in the amount of time we have, on financial services. Obviously it's been a strong driver for you guys for a while now. Going forward I mean should we expect that regulatory has got enough power behind it, that is can drive more growth or just continue to support that segment? Talk about the mobility changes and all the analytic changes and cost cutting in the banks, is this enough to drive for Cognizant another good year, another good two, three years given that you've already had very good years for the past couple?

Karen McLoughlin

I think if you separate banking and insurance for a moment, so certainly on the banking side of the business which has been quite robust this year, we've seen more growth on the regulatory side of the business as well as you're seeing a lot of work around mobile and analytics as you talked about. And you're also seeing a lot of banking clients really look at their operations and rethink what is core versus noncore? Can they do something different, what does the bank of the future look like?

And so I think a lot of that work will obviously continue for some time and that's really across both the multinationals, the big global banks as well as some of what we call our Tier 2, our regional banking clients, so seeing good traction I think in both of those and I would expect to see that. The big question on regulatory spend is always how much is incremental versus if you put something else on hold to fund the regulatory spend.

So I think that will remain to be seen how that plays out next year, but generally we saw a nice pick up there. I think on the insurance side it's a little bit less, obviously about the regulatory environment but clearly about the changing business there. And again really looking at their core operations one of the things we're starting to see some good traction on is now a little bit over a year into the ING transaction that we talked about in 2012, how you really leverage that now, how you leverage that experience in those assets, in those people into multiple clients and that's really starting to gain traction.

Darrin Peller - Barclays Capital

Okay. I'm just going to wrap it up with one last question. If there's anyone in the audience that want to ask anymore after, but just to touch on any recent trends in terms of we're now in the middle of December, so any discussions you're hearing from in terms of sort of sentiment or feelings about budgets or – I mean talk a little bit about the budget flush aspect, did we end up seeing anything in the quarter? Was there as much spending as in some years in the past?

Karen McLoughlin

Sure. So certainly going into Q4 we had not expected a big budget flush. Obviously we saw some very nice pick up earlier in the year. I think clients had more confidence early this year to stay with more of a normal cycle in terms of their spending. So I think that's been very consistent and I think frankly it's probably been several years since we talked about a true budget flush at this point…

Darrin Peller - Barclays Capital

Right, that's true.

Karen McLoughlin

…and clients kind of move away from that notion a little bit. But clients are right in the middle of their budget cycle now and I think very consistent with what we saw going into it is that budgets will be flat to slightly up. It will be very client specific. And I think the other interesting trend though that we've seen over the last year or two is a lot of projects we get engaged in today are not just in the CIO budgets. And so obviously when you're now talking to folks in business operations, chief marketing people, the finance people is many of these projects, particularly the Horizon 3 project expand outside of this core IT and so that would be important to understand what's happening there as well.

Darrin Peller - Barclays Capital

Got it. Has anybody have any questions they want to ask?

Unidentified Analyst

Just on the Horizon 1 services specifically, clearly a majority of your business. That piece has to be what's driving the growth, probably growing mid teens or so this year and yet competitors are growing a lot slower and it's within the context would you say of overall services environment or budget environment looks pretty flat to us slightly. So how sustainable is that kind of a mid-teens growth dynamic in your core…?

Karen McLoughlin

Sure. I think obviously over time there will be issues (indiscernible) large numbers, but certainly I think what's really important today is this notion of being able to bring these integrated solutions to clients. So being able to bring the consulting, the BPO as well as the IT and infrastructure is really what clients are looking for and it's almost rare today that you do just one service offering. It's really looking for an integrated solution.

The other thing to keep in mind is over time the way we've designed Horizon 1, Horizon 2 and Horizon 3 is Horizon 2 offerings ultimately will – as they mature would become Horizon 1. And then whether today Horizon 3 becomes Horizon 2 and then there's a new Horizon 3, so Horizon 3 is always intended to be your emerging business. So that will continue to evolve and shift over time. So the growth patterns will change a little bit as that moves forward.

Darrin Peller - Barclays Capital

Really quickly on wage inflation, anything new there, any changes, has it been pretty consistent?

Karen McLoughlin

No. I mean certainly this year played out fairly as we expected, low single digits onsite and how single digits offshore. I think at this point unless there's some significant change in the economy here or in India I think you'll see similar trends.

Darrin Peller - Barclays Capital

Okay. Any other last questions? Yes.

Unidentified Analyst

(indiscernible) the M&A environment in your space and you did two. Maybe approximately how many do you look at that you guys have or…?

Karen McLoughlin

So in any given year we look at a lot of acquisitions. Historically the types of acquisitions we've done have been primarily people based and so it really comes down to making sure that you have the right cultural fit and that you're going to be able to successfully integrate the acquisition.

So we spend a lot of time looking at that and really ensuring that it's a company that's going to add value to us, but that we also think we can integrate effectively and continue to make it successful moving forward. So you look at a lot to find a few to do that. In an ideal environment we would do more. We would like to do more niche, tuck-in acquisitions.

We're not looking for acquisitions with scale just for scale's sake but really where we think there's a company who can bring us the capability whether it be a geography or a service offering that we don't have or that we'd like to supplement today. So going forward we hope to do more but you do have to look at a lot of them to make a few happen.

Darrin Peller - Barclays Capital

Great. Anything else? There's one more. Last question.

Unidentified Analyst

What are some of the tailwinds you're seeing in your manufacturing and retail segment, especially as we're looking to 2014?

Karen McLoughlin

I'm sorry, could you repeat the first part of that?

Unidentified Analyst

What are some of the tailwinds, some of the potential drivers are you seeing?

Karen McLoughlin

Well, I think for us anyhow in our manufacturing and retail, customer goods and travel and hospitality business, there's a lot of opportunity for growth. In some ways one might argue we were a little bit late to that market but that was probably four or five years ago when we really starting investing in that market in a big way. We're seeing a lot of opportunity there for BPO services, IT services obviously, mobile, analytics are very important there.

Global expansion, so a lot of those companies are very global by nature and so they're looking for partners who can go with them across the globe. It's been a very fast growing segment for us the last few years and I think it continues to be underpenetrated, so I think there's some good opportunity there.

Darrin Peller - Barclays Capital

Great. We're going to leave it there. Karen, thank you very much for being with us again.

Karen McLoughlin

Thank you very much.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!