Greetings, and welcome to the Cognizant Q3 2020 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Katie Royce, Global Head of Investor Relations. Please go ahead, Katie.

Thank you, operator, and good afternoon, everyone. By now, you should have received a copy of the earnings release and investor supplement for the company's third quarter 2020 results. If you have not, copies are available on our website, cognizant.com. The speakers we have on today's call are Brian Humphries, Chief Executive Officer; and Jan Siegmund, Chief Financial Officer. Before we begin, I would like to remind you that some of the comments made on today's call and some of the responses to your questions may contain forward-looking statements. These statements are subject to the risks and uncertainties as described in the company's earnings release and other filings with the SEC. Additionally, during our call today, we will reference certain non-GAAP financial measures that we believe provide useful information to our investors. Reconciliations of non-GAAP financial measures, where appropriate, to the corresponding GAAP measures can be found in the company's earnings release and other filings with the SEC. With that, I'd now like to turn the call over to Brian Humphries. Please go ahead, Brian.

Thank you, Katie. Good afternoon, everybody, and a warm welcome to Jan, who many of you know, in what is his first Cognizant earnings call. Today, I'd like to address 4 topics with you, namely, a brief summary of the third quarter; an update on our employee engagement; observations on the demand environment and clients' evolving needs; and our strategic focus areas as we aim to revitalize revenue growth. Let's start with the third quarter. Third quarter revenue was $4.2 billion, a decline of 70 basis points year-over-year in constant currency. Excluding the negative 130 basis points impact from the exit of certain nonstrategic content services business, revenue grew 60 basis points year-over-year. We executed well in what remains a challenging environment. Highlights of the quarter include: continued commercial momentum with bookings growth in excess of 25% year-over-year; ongoing momentum in digital with revenue growth up 13% year-over-year and continued strength in digital bookings and qualified pipeline; gross margin and cash flow strength, enabling us to continually invest in the business; and significantly increased and sustained financial flexibility on India earnings and cash. Jan will provide more insights on the quarter in his prepared remarks. Moving to our second topic, I would like to briefly address our talented associates. I'm grateful to each of them for their professionalism and perseverance in serving our clients during this protracted pandemic, which has put a tremendous strain on families and compressed their lives to screens and homes. We could not have executed against our commitments in 2020 without their client centricity, work ethic and engagement. Given our financial performance and in recognition of the contributions of our associates, we are creating 2020 bonuses at higher levels than 2019. We are also implementing targeted merit increases and promotions in the fourth quarter. Both will hurt our cost structure in 2020 versus the prior year, but are an essential and normalized part of the cost structure in the services business. In stressful times like these, we are especially attentive to employee engagement, a measure of how committed and connected people are to our company. Our recent Cognizant people engagement survey showed scores consistently above industry benchmarks. And our overall engagement score meaningfully increased versus prior surveys. In an external endorsement of sorts, Forbes Magazine just ranked Cognizant #19 out of 750 companies across 45 countries in its World's Best Employers list. These high levels of employee engagement, coupled with current economic environment, contributed to our fifth consecutive quarter of reductions in voluntary attrition. We anticipate some sequential increases in voluntary attrition in the coming quarters after the forthcoming merit-based promotions and salary increase cycle. We continue to prioritize the health and safety of all our associates, and remain in a work from home and restricted travel posture with only limited exceptions. Now I'd like to turn to clients, and in particular, the trends we are seeing. These trends fall into 2 categories, 1 cyclical and 1 secular. First, on the cyclical side and set against a protracted pandemic, clients are increasingly decisive on their technology priorities. They are focused on cost savings, CapEx reductions, resiliency and agility. This is slowing large project deployments with extended paybacks, but creating other opportunities. We are seeing accelerated vendor consolidation trends, which we stand to benefit from given our deep strategic relationships and client references in buildup rate, and our enhanced portfolio and growing reputation in digital, where more and more clients want to see us challenge digital incumbents. Client focus on innovation and cost savings is also creating opportunities for incumbent vendor displacement as larger deals. We plan to be disciplined and selective in our pursuit of larger deals, including captives, as these transactions, if not well conceived, can bring diluted compound annual growth rates, margin pressure and unfavorable terms. I want to focus my comments on the more consequential secular trend, digital transformation. This is our top priority. It goes to the heart of client business model innovation, transformation and experiences. COVID-19 has widened the digital divide between the digital natives and legacy economy companies, which have struggled to shift to a fully digital operating model. These industrial era companies have focused on upgrading their tech stack at the infrastructure, data and application layers. They have migrated their apps and data to the cloud, and improved the agility of their underlying technology. These improvements, however important, all short of delivering the full power of digital transformation as they optimize the technology foundation rather than the business process or operating model. I believe the industry is at an inflection point in digital adoption. We see growing client interest in realizing more immediate customer and business value by identifying use cases to shift to agile digital workflows. That means transforming processes to become agile, data-driven and automated. So workflows can be industry-specific such as claims and policy management or pharmacovigilance, or horizontal such as close to cash or digital marketing. In such cases, how we engineered an agile digital workflow for a leading app pro company that needed a return to work and to store strategy. We offered our safe workforce solution, built on the Salesforce work -- platform. This comprehensive employee safety solution provides management with information about public health conditions, office capacity employee health and shift schedules. We can stagger arrival times to minimize contract, encourage hygiene through automated reminders and when connected with IoT centers, help enforce social distancing and occupancy limits. As more clients implement agile digital workflows, the digital services market is evolving into a third phase. In Phase 1 of digital, clients sought to understand what digital really meant to their industries. In Phase 2, the implemented digital experiments and projects at the edge of their enterprises. In Phase 3, clients realize they must be software-driven enterprises and digital to their core. So what does this shift to agile digital workflows mean for services companies, and who will be the winners? The first and perhaps most obvious thing to say is that there will be more than one winner. That being said, everything we are doing as a company, from our strategy, solution portfolio, partnerships, mergers and acquisitions, branding and marketing and talent is focused on being one of the biggest beneficiaries of this new phase in digital. To become modern businesses and create business value, companies need to embrace a digital technology stack that consists of: personalized and engaging customer and employee experiences, enabled by software engineering, powered by customer and operational intelligence, driven by data and run on a modern cloud business platform. We haven't always done a great job marketing this, but we are one of the few firms in the world with solutions and partnerships across every layer of this stack. Inorganic investments have strengthened our SaaS partnerships with both Salesforce and Workday, complementing long-standing relationships with SAP, Oracle and ServiceNow to offer clients the full suite of enterprise application services they require to modernize their core processes and enable agile digital workflows. In the last 6 months, we have further strengthened our partnership commitment to all 3 leading hyperscale providers, announcing the formation of dedicated business groups for both Microsoft and AWS, and investing to enhance our Google Cloud credentials. Whatever approach a client wants to take to become a modern business, our portfolio adds multiple overlaps. Let's say a client wants to start at the bottom of the digital technology stack by accelerating cloud migration. We can do this for them, driving efficiencies that can subsequently be invested in innovation. And that's exactly what we're doing for a global automotive manufacturer that came to us for help to bring agility, innovation and efficiency to their business processes. We started by executing an agile delivery model for core modernization. We then deployed our one DevOps model across the clients, dealers, supply chain, accessories, parts and incentives, improving speed, flexibility and user experience. In another example, we're engaged in partnership with Snowflake in a digital transformation project for a leading financial services firm. We're building a cloud-based intelligent data platform that facilitates multiple analytical and machine-based use cases. This platform unlocks innovation opportunities and value-added use cases, including real-time intelligence for fraud detection, a better user experience for opening and reactivating accounts, a reduction in loan dispute processing time and improved field agent selling effectiveness. More and more clients are, however, starting at the top of the digital technology stack, by focusing on the customer and employee experience. Such experiences can be continuously improved through the magic of human-centric insights, software product engineering, automation and applied AI. And hyper personalization, all of which ultimately requires clients to embark on a core and data modernization journey. That's what we did for a large global insurance company -- Cognizant to design, implement and run a new direct-to-consumer business that will provide a compelling AI-enabled interactive experience to consumers and agents. Recognizing this needed to be integrated with existing core systems and data architectures, we then worked with AWS to host this in a scalable modern digital platform. In these examples, you will see the opportunity to create a flywheel effect, a virtuous cycle, which Cognizant and our clients stand well positioned to benefit from. In a world of vendor consolidation, Cognizant is one of the few firms that can capture this opportunity. I'd now like to turn to the company's future, and our goal to increase our relative commercial momentum and revitalized revenue growth. In the knowledge-based business, investing for growth starts with attracting, developing and retaining talent. In the last 6 months, we have overhauled our talent management and annual performance evaluation processes, which allow us to develop a diverse, inclusive and high-performance team, where talent is identified and nurtured for promotions. Meanwhile, we have invested in growth by strengthening our country leadership with senior hires in Germany, the Nordics, Australia and Asia Pacific Japan. Earlier this week, we also announced the completion of our Executive Committee with the announcement of our new President for Global Growth Markets, and the newly created role of Executive Vice President and Chairman for Cognizant India. We've also rallied the organization behind what we call the Cognizant Agenda, which articulates our purpose, vision and values. Our vision is to become the preeminent technology services partner to the Global 2000 C-suite. To achieve this, we are aligned behind a series of both moves that require investments. First, we will meaningfully increase investments in branding and marketing including launching a breakthrough global brand campaign in the coming months. This campaign will reposition the Cognizant brand, and will reach beyond our familiar technology audience to the entire C-suite as well as the next generation of talent. Second, we will continue to accelerate digital. Our priority areas of digital engineering, AI and analytics, cloud and IoT are more relevant than ever to clients. We aim to lead in the third phase of digital, which will require continued investment in M&A, our commercial and delivery capabilities, offer management, talent and branding. Third, we will continue to globalize Cognizant by investing for growth in targeted countries, strengthening our regional capabilities, scaling our brand internationally and executing a global delivery network that will ensure greater resiliency in our delivery capabilities. And fourth, we will continue to make investments that increase our relevance to clients by strengthening our industry expertise and technology consulting capabilities, investing in our talent and extending our solution integrator and designer competency. As we invest for growth, we will also continue to leverage our balance sheet to accelerate our strategy. Our M&A strategy continues to be focused on advancing our digital priorities across the globe. Last month, we closed the acquisition of Tin Roof Software, a custom software and digital product development services company that expands our software product engineering footprint in the United States. And earlier this month, we closed the acquisition of 10th Magnitude, one of Microsoft's longest-standing Azure-centric partners. This deal expands the Microsoft Azure expertise within our new Microsoft business group and adds development on managed services hubs throughout the United States. And last week, we agreed to acquire Bright Wolf, a technology services provider that specializes in custom industrial IoT solutions for Fortune 1000 companies, which will expand our smart products and Industry 4.08 expertise. In short, we are committed to growth, and we'll continue to make meaningful investments to ensure we increase our relevance to clients and enhance our competitiveness. While the macro and political backdrop remain uncertain, come what may, our goal is to ensure we outgrow the market, just like we did in the third quarter, whilst remaining commercially disciplined. In closing, I would remind you that 18 months ago, when we set Cognizant's transformation in motion aimed at returning the company to be the IT services industry bellwether, we knew this would be a multiyear endeavor, and our view has not changed. While we continue to have a lot of work ahead of us, we are encouraged by our progress. Our employees are energized united by our shared purpose and vision. We're excited about our strengthening competitive position, the opportunity to expand internationally and the opportunity presented by the third phase of digital. There will be several big winners in this attractive market, and we aim to be one of them. With that, I'll turn the call over to Jan, who will take you through the details of the third quarter and our fiscal year outlook before we take your questions. Jan, over to you.

Thank you, Brian, and good afternoon, everyone. I'm very happy to be part of the Cognizant team and look forward to connecting with all of you going forward. From the onset, I was intrigued by Cognizant's meaningful growth opportunity, and my first weeks in the job have more than confirmed my initial assessment. I will work hard to fill Karen's shoes and wanted to say a big thank you to her for making my onboard so smooth and seamless. Moving on to Q3 results. Third quarter revenue of $4.2 billion was flat year-over-year or a decline of 70 basis points at constant currency. Compared to the prior year period, this includes a positive 250 basis points contribution from inorganic growth and a negative 130 basis points impact from the exit of certain content-related services. Sequentially, we saw a broad-based improvement in the business, particularly in areas such as cloud and enterprise application services, IoT and software engineering. Moving to the industry verticals where all of the growth rates provided will be year-over-year in constant currency. Financial services declined 2.2% with similar performance in both banking and insurance. Retail banking improved in the quarter, driven by regional banks, while capital markets returned to growth after several quarters of softness. However, we continue to see weakness across global banking accounts and with clients in the payment sector. We continue to expect below company average performance in the Financial Services segment for the next several quarters. Healthcare grew 4.2% led by double-digit growth in life sciences, driven by strong growth in the biopharma clients, and included the contribution of the Zenith acquisition which we lapped mid quarter. Growth was partially offset by continued weakness in the medical device clients. Within our health care vertical, revenue saw modest growth. After 6 quarters of decline, we are pleased with early signs of improvements in the health care business, we see improvement in the payer segment across key accounts which is offsetting the decline in the provider market that continues to be negatively impacted by COVID. Products and Resources declined 4.6%, with double-digit growth in manufacturing, logistics, energy and utilities, offset by double-digit declines in travel and hospitality and high single-digit declines in retail and consumer goods. While we saw strength in bookings in retail and consumer goods, we expect continued pressure in 2021 as a result of the ongoing pandemic. Communications, Media and Technology was flat, including the approximately negative $57 million year-over-year impact to technology from our decision to exit certain portions of our content services business. Excluding this negative 920 basis point impact, growth in Communications, Media and Technology was approximately 9%. Communications and media grew mid-single digits as growth in communications and education clients offset continued weakness in media and entertainment. We expect pressure in media and entertainment into 2021. While overall, we saw improved momentum across the business, the demand environment remains uncertain. But we believe we are gaining traction across industries as reflected in the strong bookings and pipeline numbers Brian referenced earlier. Moving on to margins. In Q3, our GAAP operating margins and diluted EPS were 14.2% and $0.64, respectively. GAAP EPS reflects $140 million or $0.20 -- $0.26 per share income tax expense related to the reversal of our indefinite reinvestment assertion on accumulated India earnings. I'll comment more on that decision later in my prepared remarks. Adjusted operating margin, which excludes restructuring and COVID-related charges, was 15.9%, and our adjusted diluted EPS was $0.97. Adjusted operating margin was down 140 basis points year-over-year primarily driven by higher incentive-based compensation and the dilutive impact of our recently completed acquisitions, which more than offset savings from our Fit for Growth program, lower T&E expense and the favorable movement in the rupee. Additionally, during the quarter, we incurred $43 million of charges related to the Fit for Growth Plan. The actions drove continued cost discipline, which allowed us to further invest into our growth initiatives. The majority of the actions under Fit for Growth are complete, and we have achieved our savings targets. We expect charges to be approximately $200 million in annualized gross run rate savings of $520 million to $550 million in 2021. While we don't anticipate charges under Fit for Growth to continue in 2021, we will continue to invest savings achieved to help accelerated growth aligned behind the 4 strategic areas Brian outlined: repositioning the Cognizant brand, accelerating digital, globalizing the company, increasing our relevance with clients. Now turning to the balance sheet. Our cash and short-term investments balance as of September 30, stood at $4.6 billion or a net cash of $2.1 billion. Our outstanding net debt balances include the approximate $1.7 billion drawn on our revolving credit facilities in the first quarter 2020. We had a strong cash flow quarter generating $821 million of free cash flow, largely driven by improved collections of our receivables. DSO improved 5 days year-over-year to 72 days. Before turning to guidance, I will provide additional details on our decision to reverse our indefinite reinvestment assertion on accumulated India earnings totaling $5.2 billion. The decision was made based on our strategic priorities to accelerate growth in international markets, and to expand our global delivery footprint, changes to the India budget enacted in April, and changes to the U.S. tax regulations that became effective in September. This reversal resulted in a onetime GAAP-only tax cost of approximately $140 million, and makes those earnings available globally. In October, we distributed $2.1 billion from our subsidiary in India, which resulted in a net $2 billion cash transfer from India after payment of India withholding tax. Importantly, on a go-forward basis, we can now more efficiently utilize 100% of free cash flow globally, which gives us greater flexibility in our ongoing capital allocation program. While we are reviewing our capital allocation plan, we initiated our share repurchase program, and intend to repay our credit facilities by the end of this month. The share repurchase activity will offset a portion of the EPS impact from the lost interest income historically generated from cash balances held in India. While interest rates in India have steadily declined in the last several quarters, year-to-date, that cash had earned roughly 5%. This generated approximately $95 million of interest income or $0.13 per share. Since September, we have deployed over $700 million on share buybacks, repurchasing approximately 10 million shares. Now turning to guidance. The macroeconomic environment remains uncertain and the pace of recovery complicated by the evolving nature of the coronavirus pandemic. While we are pleased with the solid bookings and pipeline of the business year-to-date, how that pipeline converts to revenue will likely be impacted by the pace of economic recovery and thus, clients' confidence and spend. We are reaffirming revenue guidance at the high end of our previously guided range. Specifically, for the full year 2020, we expect revenue to decline approximately 0.4% year-over-year in constant currency. Based on current exchange rate, this translates to a decline of 0.5% up to approximately $16.7 billion on a reported basis. Our revenue guidance includes our estimate of the negative impact of approximately 110 basis points to the full year revenue from our decision to exit certain work within our content services business that will be reflected in our CMT segment and a positive contribution of approximately 200 basis points from closed acquisitions. This guidance continues to reflect the muted outlook for Financial Services, and the retail and consumer goods and travel and hospitality portions of our Products and Resources segment. For the full year 2020, we expect adjusted operating margin to be approximately 15%, which assumes incremental costs associated with the remediation of the ransomware attack, wage increases and promotions for certain of our associates effective October 1, and incentive compensation above 2019 levels. Our current guidance also assumes that Q4 revenue will be negatively impacted by lower bill days versus Q3 and the typical cycle of furloughs. We expect to deliver adjusted diluted EPS in the range of $3.63 to $3.67. Please see the non-GAAP reconciliations in the 8-K we filed today for a full definition. This guidance anticipates a full year share count of approximately 541 million shares and GAAP tax rate of approximately 32%, which implies a Q4 tax rate of approximately 27%. Our guidance does not account for any potential impact from events like changes to the immigration and tax policies. With that, operator, we can open the call for questions.

[Operator Instructions] Our first question today is coming from Jason Kupferberg from Bank of America.

Congratulations on the quarter. Maybe I'll just ask 2 quick ones upfront in the interest of time. First off, in light of what's happened recently with SAP, we've been getting a lot of questions just around the size of the practice that you guys may still have in that area. So any sizing you can give us there would be helpful. And then can you just comment on -- with the digital bookings growth being strong as it has been, I think you're up 40% year-to-date. When does that start translating to faster digital revenue growth? I know we've been hovering in kind of the almost the mid-teens range here the last couple of quarters. And then that kind of dovetails with a related question of do you think revenue growth could actually turn positive in Q1? I know previously, you said that we may still see negative growth through the first quarter of next year, but obviously, you're on a better trajectory now.

Jason, it's Brian. So let me take a shot at this. These may be for Jan. By all means feel free to jump in if you see incremental details to add. So SAP as a practice, it's multiple hundred millions of dollars for us. It's sub-$1 billion. It is actually a very healthy business for us, and I have been in touch with the SAP leadership team in recent periods to see what we can do to accelerate our momentum there. It's pretty intuitive, what they're doing. But in the same way, it's also interesting for us given our ambition to scale much more internationally and given the installed base of SAP. So it's a partner that really is strategic to us, and we will continue to work closely with. Digital bookings. Look, more broadly, if I stand back from this. Bookings are strong overall, and it's broad-based by geography, by industry, by new and expansion versus renewals, and digital bookings are continuing to be strong as well. So what's been very pleasing to me is in the course of the last year, we have consistently shown strong bookings growth year-over-year. That has enabled us to actually build a stronger backlog through the year. And now we're in a very healthy position, healthier than we've been before. And of course, the pipeline, as Jan suggested earlier, is strong as well. Not just strong overall, but also strong in visual, in particular, and strong in the strategic accounts that we focused on as part of our customer segmentation exercise in the -- model. So I feel really good about our momentum there. The timing of all of this to revenue can vary by quarter, of course, and in the face of economic environment, which is unsettled to say the very least, including announcements made tonight across Europe. But we're pleased with what we've done. And if this continues, it all goes very well for our future. We're not going to make commentary around Q1 or indeed, fiscal year '21 at this moment in time. The only thing I'll say is we will continue to try to outgrow the industry. That's what we did this quarter. We think we're more competitive than we've been before. And we're absolutely committed to growth and to make -- investments to grow. If that means compromising some margins in the short term to achieve, we will absolutely do that. But I'm expecting performance to improve in 2021, but we'll share more details of that, of course, Q4 earnings. But the big caveat around this is what we're going through this some on time, which is a very uncertain macroeconomic environment.

Our next question is coming from Lisa Ellis from MoffettNathanson.

Congratulations. All right. So with the election, inevitably causes and triggers some discussions and questions related to H1B visas and L1 visas. Can you just remind us what fraction of Cognizant's U.S. labor force is currently on visas? What sort of your level of dependence and focuses on that program, and maybe kind of a little bit of the movie of how your labor force structure has evolved over the last few years and how that's evolving going forward. Maybe I'll just dovetail that into my other kind of observation was just that you actually had head count increase sequentially quarter-to-quarter and that utilization is way up. Attrition is way down. Are you kind of at where you want to be with your labor force at this point going forward?

Lisa, Brian here. So let's start first with the headcount situation. I think our utilization levels are now quite high. We tightened our belt earlier in the year as I think every company in the world did, but we've seen somewhat of a V-shaped recovery, particularly in the digital side of our business. And as such, we're at the stage now that our bench is light, and we're committed as a leadership team to build that out. And we've already started that over the last month or so. But it takes time, of course, to get that built out. Obviously, we want to continue to drive more operational rigor around forecasting, which triggers enterprise resource management and all of that to make sure we have the right resources in the right place at the right time. So you will see us continue to build out our capabilities with evergreen skills or hot skills, as we would call them, and build upon our capabilities such that we can reduce utilization, which is a little bit higher at this moment in time. I am pleased with the employee engagement. I am pleased that voluntary attrition is down for the fifth quarter in a row. Notwithstanding that we're really pushing meritocracy and a performance culture these days. So you have seen a big bifurcation between voluntary versus involuntary attrition. And we do expect voluntary attrition to pick up a little bit in the coming quarters as we go through the merit-based promotion and salary cycle we're going through. And I underscore the word merit-based. With regards to H1B visas, look, it's quite topical, but perhaps I could stand hand back here a little bit and talk because the administrative rule changes with regards to skilled integration leases that have been quite topical in recent weeks. Some of those have been enjoyed through litigation already. And for other elements, there are challenges pending at this moment in time. So whether the rules, survive or not remains to be seen. All that being said, I actually think all roads are leading this direction anyway. So we will always intend to comply with the letter of the law to use these applications and any extensions we intend to pursue. We are a H1B visa, I would say, dependent organization. You used the word evolution, and I think that's the right word. Over the years, we have reduced our dependency in visas, and we've also acquired companies that enable us to be more global in nature. But in the same vein, some of the strategic decisions we took, which were in the right decisions, including exiting a portion of content moderation, has put us back a little bit. That being said, the rule is solely triggered by new applications and extensions. And H1B visas are currently under a 3-year visa. So this will roll in gradually. And I would say, I don't want to reassure everybody, our intention is to globalize Cognizant. And so you'll see us build out much more of a global-based workforce to meet client expectations, whilst, of course, stay focused on quality of delivery. And that will include a whole host of things that we will do, including U.S. college campus recruiting, upskilling and just a broader effort around a local employee base in the U.S. and indeed globally.

Our next question today is coming from Ashwin Shirvaikar from Citi.

My question is on the health care vertical, and it's good to see the improvement. Question is with regards to the sustainability of that and the investments that you're making in various health care capabilities, including, but not limited to TriZetto? And on the topic of TriZetto with the Atos settlement, was that included in the cash forecast that you have? What does it mean from an operational perspective in terms of your client relationships, if you could address those questions.

So Jan, I'll touch on the health care business. If you want to touch upon then the cash flow and the cash balance and the Syntel settlement, which we were pleased to see yesterday. So Ashwin, first of all, health care is really important to us. It's almost 30% of the total company, and it consists of 2 major portions. One is life sciences. We're doing really well there. We have been for a long time. It's highly strategic to us. You are seeing the lapping of Zenith technology, which happened in Q3 of 2020. So that will impact growth rates a little bit. But I'm very optimistic around the opportunities in life sciences at the intersection point of biopharma medical devices. Right through to industry 4.0 health care, retail and indeed health tech. And I spent a number of hours on that with the team over the weekend. So we're really pumped around what we can do there, and you will see us continue to invest in it. The majority of the businesses, however, the U.S. health care business, which is split between payer and providers. The payer business accelerated meaningfully this quarter, which strengthened services and indeed in products. We have a new leader who took over the Healthcare business earlier this year, an internal promotion, who has done a fantastic job, and this entire team are doing great for us. Bookings are very strong. Product growth is strong. We're getting new logos. Margins are improving. And we're just generally feeling very good, a better payer business. The provider business, which is much smaller than our payer business, saw significant erosion year-over-year in the third quarter as did the industry. As you know, the provider business is suffering from transaction volumes that are decreasing because the pandemic is obviously reducing elective procedures. And I would say that's an area that we would expect to come back but more holistically, the momentum we're seeing in payers, which is 3/4 of the business, and life sciences will give us confidence that we can continue to pull strong health care results going forward. We're improving. Jan, over to you.

Yes. Let me add a few comments to the Syntel lawsuit. You may have seen this morning that we won a jury verdict of $854 million. This lawsuit has a long history for Cognizant. And at the core is our claim that Syntel misappropriated TriZetto's intellectual property related to some software products during that time and -- while Syntel was a TriZetto subcontractor. And the jury verdict, which found no liability for TriZetto or Cognizant, basically speaks for itself. We're gratified with the results. But at Atos, the owner of Syntel, has already indicated that they're planning to appeal the verdict. So it will be quite a bit out, I think, until we have the final results of this trial coming, too. So way too early to take that cash into account for any actions. Nevertheless, I think it was satisfying to see the jury decide with Cognizant's position. Relative to the cash repatriation, it might be worthwhile just spending an extra minute on it, too. So we had about a cash balance in India of $2.1 billion. And we -- at the end of September, reversed our indefinite reinvestment assertion and decided to repatriate that cash from India. And as part of that decision, we could make that decision for 2 reasons. The most important one is strategically driven actually because we are executing well on our strategy to globalize the enterprise, and we'll continue to invest into international markets. And for that, capital will be needed. But number two, also, the '21 -- fiscal year '21 India budget enacted in April and some changes in U.S. tax regulations allowed us to remediate this cash on a cost-effective basis, and we did so actually in October. The cash balances in India historically have earned some interest on the cash balances -- on the cash that we have there. And approximately, I think, as I said in the script, about 5%. And the -- we offsetting -- we used some of the cash that we returned from India and cash at hand to repurchase shares during the month of September and October. And the accretion created to the share buybacks is actually approximately offsetting the contribution that our interest income would have generated in India. So the outlook is quite balanced as a starting point. And obviously, we're excited about the go-forward benefit of this transaction because we, going forward, have now full flexibility and full access to our free cash flow on a global basis.

Our next question is coming from Bryan Bergin from Cowen & Company.

Just thinking about your largest verticals here. So you've turned the corner on health care. I wanted to ask on Financial Services. I hear the commentary on lower-than-average growth for the next few quarters. I'm curious what you're seeing in the areas of the clients. And whether it's still limited to only a handful of the former large banking accounts. Really, how close are you to the end of the tunnel on stabilizing those? And what do you think you need to do in those areas to really turn the corner in Financial Services, too?

Bryan, so I would say, yes, it remains challenged. Look, first of all, just like health care, financial services, so the greatest impact from ransomware. But the Financial Services results, I'd almost cut them into 2 portions of discussion. First of all, insurance -- and as you know, the insurance industry has really been pressured, to say the very late in the last year, both at a pandemic level, insurance rebates and automobiles, SMB businesses, interrupted failures. That's impacting the property as of the insurance entry. And of course, mortality rates of life carriers. And then on top of that to make matters worse, catastrophic events and low interest rates. So that sector is under pressure. Our business is, let's say, 80% of our insurance business is in North America, so a little bit more than the average company. It's one of our strongest franchises, but it will decline in this year, in 2020. So we need to turn it around. We need to improve the pipeline. To be very honest, booking have been strong, but the pipeline isn't strong enough. Our leader has retired in the last month or so, so we have some new energy in there. And hopefully, we can get that back on track. Banking. Look, if I paint the macro picture first. As we've implied in the prepared remarks, capital markets, retail and commercial banking grew year-over-year. Cards or payments were down. With regards to some of the larger global banking clients that you referenced, it's more of a handful. Some of that, to be very honest, relates to ransomware we were turning some around. Some is self-inflicted wounds related to a lack of appropriate senior origin in the client partners we had. And some of it relates to secular pressure towards in-sourcing that we're seeing at those banks. Now what do we do to turn all around this entire situation. I'm confident we'll get insurance back on track. I think we'll also continue to make progress in the North America regional banks. And we've even brought some accounts into platinum account status this quarter, i.e., they surpassed $100 million. But in the same vein, we have a lot of work to do in our current accounts, and that includes scaling more into digital in those banks. The good news is our digital bookings in those banks are up in excess of 50%. So we are starting to get our foot in the door. We continue to upgrade our client partners, and we're continuing to try to do a much more sophisticated job in terms of account planning. In the same vein, right up to the executive committee, me included, we are trying to break into some of the other large banks. And I think we're making progress actually on 2 in particular. So hopefully, we'll have some good news on that in the foreseeable future. Europe and banking just remains weak. We lost an account there in the last year, and we have some transformation project issues and 1 large account over there. It is fixable, but I just don't see the momentum turning around there as quickly in banking overall, as I have seen in health care.

Our next question today is coming from Rod Bourgeois from DeepDive Equity Research.

Okay. Great. Nice progress by Cognizant in these results. I want to ask a high-level question. Recognizing that the COVID pandemic is continuing here. Do you see Cognizant as still somewhat in a crisis response and basic blocking-and-tackling mode? Or have you transitioned now into a more forward-moving strategic attack mode? I guess the main part of the question here is, assuming you are in a transition, what are the next set of metrics you're most focused on to gauge Cognizant's progress moving forward here.

Thanks, Rod. Brian here. So look there's a short answer and there's a long answer, so I'm going to give you something in between. First of all, I really feel good about the progress we've made in the last 18 months. We've actually done a lot, probably more than people realize. Clarified our strategy. We executed the nonstrategic portion of the business. We executed a restructuring program. We used some of the proceeds from that to reinvest back in the business. We meaningfully improved our digital portfolio competencies and partnerships. We've built a strong professional, mature, client-centric leadership team. We've begun a pretty significant commercial transformation that is showing positive leading indicators and pipeline win rates, bookings. And we put, I would say, a better business management system in place to ensure optimal financial and operational rigor. And we did all of that, to be very honest, in a period that I was not expecting. We managed through global pandemics that impacted both demand as well as fulfillment. We navigated a ransomware attack well, and I want to say that humbly. But we did as best as we could, and we've actually received good client feedback on that. We've improved employee engagement to levels not seen for a few years, and that reduced voluntary attrition at 5 quarters in a row. And we've managed to put ourselves in a position that we built a multiyear plan that incorporates sustained investments. So I'd characterize all of that as pleased, but not satisfied, to be very honest. We're not in finish product yet. We're in the middle of a multiyear project. And we must continue to, of course, as we've said, reposition the brand, execute our strategy, globalize the company, take advantage of the opportunity overseas, globalize our delivery, build on our growing momentum in health care, and fix financial services and, of course, accelerate our position in digital, which just simply exposes us to higher categories of growth and makes us more relevant to clients. If we do all of this, our bookings momentum will continue, and ultimately, this will translate to revenue growth. And so Rod, everything else at some stage becomes a leading indicator: pipeline, win rates, the leadership team, the bookings. Our goal here is to invest in the business to get back to growth. If we do that, growth accelerates and we will show margin expansion but in a very calculated manner that allows us to sustainably reinvest back into the business. I say all of this with a great deal of caveats given the uncertain macroeconomic situation we're in at this moment in time. That being said, I'll just wrap up by saying, I'm really proud of our team and of our associates around the world. I'm confident of the unity of our leadership team, the absolute support of our Board of Directors who've been tremendously supportive of what we're doing, and our growing execution rigor. And honestly, I think we're on track. We're increasingly competitive, and you've seen that, hopefully, in this quarter's results.

Our next question today is coming from Keith Bachman from BMO.

Brian, I wanted to actually try to get to and I'll ask them concurrently. The first is I wanted to return to bookings. And your bookings growth has been really strong. It sound like it's 15% year-to-date, and it sounded like it was 25% for the quarter, so accelerating bookings growth. And I'm trying to understand the translation of revenue, broadly speaking, for Cognizant. While bookings has been strong, is there something else that we should be thinking about on the other side on attrition, specifically of revenues outside of Facebook. And so normally, you would expect that to start to show up next year, but just want to make sure we understand the other side. Has there been a greater level of attrition, again, outside of Facebook, that would cause revenue growth to perhaps not show up as quickly as we might think over the course of the next year or so? And then the second question, Brian, is I wonder to see if you could just touch on philosophical margins. And what you mean by that, you outlined your 4 investment areas, and also the benefit associated with how the savings plan is going to manifest itself during '21. But just philosophically, is there any words that you can give, without providing specific guidance, on how investors should be thinking about margins given those puts and takes associated with '21.

So look, let me start on the revenue question and the bookings question. There's no big story here, to be honest, outside of the exit of the nonstrategic portion of the content moderation business, which is in our operations business. Frankly, I think we're executing well, both in our -- most of our verticals, we've got more work to do in Financial Services, but even Products and Resources. We're doing well in the areas that are not consumer goods, and travel and hospitality. And so I just feel we have growing momentum, Keith, but I'm very cautious to commit anything because of the macro environment. The bookings is real, when I look at bookings by renewal versus expansion versus new. I just feel as though we had in the last 1.5, 2 years maybe lost a buildup of backlog and we had eroded that. And now we started replenishing what I would call them late. And now we're in a position where I'm feeling better about the future. So there's no major story there. And the more we can keep up this bookings momentum, the better because it's inevitable, then it will show up in the revenue. So we just need to keep executing. With regards to margins and, in some ways, revenue versus margin trade-offs, I guess, comes into mind. Look, I think about this always in 2 ways. First of all, it's important to differentiate between a cost and an investment. And secondly, growth investments will be prioritized versus short-term margin optimization. And our goal is ultimately to increase our wealth and commercial momentum and to revitalize revenue growth. And we will make some short-term margin trade-offs to achieve this. We're investing meaningfully in the business, probably even more than I anticipated a year ago. Because the more I'm here, the more I see opportunities. In talent overall, in our management -- talent management system, we're accruing bonuses at higher levels. We're getting back to merit-based promotions and raises. In digital, we're attracting talent, which is a constrained asset and, therefore, an expense asset. We're upgrading our client partners to be better able to represent Cognizant beyond the traditional CIO, CTO organization. The targeted M&A that we're doing, which I'm very pleased with, comes with integration costs. And while gross margins are reasonable, we do have some margin dilution on the operating income level because of the SG&A nature -- intensive nature of those businesses that we're scaling. And then, of course, we're continuing to build our commercial hiring. We're building our bench, which will hit our delivery costs. Investing in automation, branding, marketing. We got overall our internal systems and tools. Remediate and modernize our IT and security, and globalize our delivery network. So I've got plenty on my mind to find a way to continue to show margin expansion and as I said, 2020 was, in my perspective, a very challenging year from a margin perspective because of ransomware, because of COVID. I'd like to think that as we go through our restructuring program as we got more operational rigor, as we continue to work on pricing and renewals, up selling and cross-selling in our existing accounts, optimizing our pyramid, our near and offshore mix versus on our automation agenda, I'd like to think we can do what's needed in investments and yet continue to show margin expansion at a pace that is appropriate for us to continue to invest in the business. And for investors who are interested in that story, I think there's very 2 more compelling investments in Cognizant at this moment in time.

In the interest of time, we have time for 1 more question from the line of James Friedman from Susquehanna.

I was wondering, Brian, do you have any view at this point on '21 budgets? And if that's too hard, just more generally how important do you think your client budgets are in terms of impacting Cognizant's fortunes?

Well, it's an interesting question, James. There's many moving parts, I would say, a macro demand and on client buying behavior. So on one hand, I really feel good about our momentum today. Bookings momentum, up 15% year-to-date. I'm behind every one of those bookings, either a renewal or expansion or a new logo as a client win. So the first thing I'll say is macro demand is better maybe than the most pessimistic analyst suggested back in April, which is good for the entire industry. But of course, in a world of vendor consolidation, some like Cognizant will do better than others. Second thing is maybe against this protracted pandemic clients become increasingly decisive with their technology priorities and indeed their spend decisions, which is also good because uncertainty is the real enemy. Third, we are less exposed to some troubled verticals or customer segments than others. Travel and hospitality, retail and consumer goods is less than 15% of our mix. We really focus on the global 2000 customer segmentation, so SMB issues are less of a concern for us. And fourth, we have momentum in digital. We strengthened our portfolio, and it can be a winner and will determine the next phase of digital. And I think that inflection point is real, by the way. On the other hand, this week's growing COVID-19 numbers and the latest restrictions, including lockdowns that were announced across Europe today, are a major cause for concern for us. And it's unclear whether this will really impact the decision-making and indeed budgets, so what has looked more promising at least in months may turn against us. So that leaves us in a situation that is challenging going into the months ahead because we have to figure out how to optimize our bench and how to reduce utilization a little and make sure we continue to get the right skills into Cognizant, but at the same time, watch demand signals and customer buying behavior like a hawk. With regards to customer buying behavior, look, I would say they're more decisive, as I said. They are speaking -- seeking more strategic or trusted partners to help them through the pandemic. There's some very short term or cyclical priorities. They would include all the things you would expect: remote working enablement, e-commerce, AI and analytics with a view to doing hyper-personalization activity. There's a whole set of initiatives clients are looking at to provide cost relief, CapEx reductions. And I see more and more clients look towards enhanced resiliency, security, agility and scalability. So the whole notion of cloud acceleration will continue. The implications of this, for sure, there's some freed-up opportunities in the short term around e-commerce and working remotely. Certainly, some larger, I would call, longer payback projects like ERP are slower, but there are some larger opportunities that have been freed up, including captives that we will look at carefully because unlike the book of business we've been acquiring through M&A, captives can be revenue catered dilutive. There are lots of vendor consolidation opportunities, which is good for us in legacy. And by the way, I would say increasingly good for us in digital because I am seeing some key -- certain suppliers or so-called digital incumbents who are perhaps less malleable or flexible than Cognizant on Ts and Cs and pricing. And look, there's other things happening in parallel. The pandemic is truly forcing companies to look at virtual agile and perhaps a greater consideration as to when they partner versus what they're working at. So those things are real, and I think that's impacting budgets for the coming year. As long as the situation doesn't get materially worse, the most important thing is clients are making decisions faster and they're more decisive leading into a budget cycle. If things get worse, then I think we may end up as an industry, not just in services, but beyond back in the world of pain again. The real trend that I'm 100% focused on, and we will put all our resources and effort behind this, relates to digital. That's a secular trend. It's strong. Our bookings are strong. Our pipeline is strong. We've got an improving brand. We see strength in digital engineering, where we're showing up very well these days. Software as a Service, AI and analytics, interactive. And like I said, clients, I think, are now hitting a point where they've almost reached the epiphany that they've upgraded their tech stack, but at the same time they're wondering if they're getting adequate returns from this based on everything they've spent. And so if you think about Phase 3 of digital, and think of COVID as a very, very low tide that exposes everything before the enormous tsunami wave comes in and follows, we're seeing clients realize that our platforms, our e-commerce capabilities are concrete or inadequate. Their marketing is actually more analog than digital. They kind of hyperpersonalize because of poor data hierarchies for engineering. Their processes are so people-intended that they're unscalable. And so in essence, even though we've gone through multiple phases of digital, what we've really been doing around the edge has been upgrading the tech stack and the infrastructure data and application layer for nondigital-native companies. And that fundamentally doesn't solve all of their problems. And clients, I think, going to this budget cycle and beyond in the years ahead, we'll become much more savvy with the fact that they need to become much more software and data-driven, they must embrace user experiences, and they ultimately must shift use cases to agile digital workflows. That's what we're focused on. That's where we're pointing our guns. And we'll participate elsewhere, but we will definitely focus on digital, and we're committed to that.

Thank you. We reached the end of our question-and-answer session. I'd like to turn the floor back over for any further or closing comments.

This is Katie. Thank you all for joining and for your questions, and we'll speak to you again later in the next quarter. Thank you.

Thank you. That does conclude today's teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.