David Nelson - Vice President of Investor Relations and Treasurer Francisco D'Souza - Chief Executive Officer and Director Gordon J. Coburn - President Karen McLoughlin - Chief Financial Officer and Principal Accounting Officer

Darrin D. Peller - Barclays Capital, Research Division Peter Christiansen - UBS Investment Bank, Research Division Edward S. Caso - Wells Fargo Securities, LLC, Research Division Tien-Tsin T. Huang - JP Morgan Chase & Co, Research Division Keith F. Bachman - BMO Capital Markets U.S. Bryan Keane - Deutsche Bank AG, Research Division Joseph D. Foresi - Janney Montgomery Scott LLC, Research Division Arvind A. Ramnani - BNP Paribas, Research Division Rod Bourgeois - Sanford C. Bernstein & Co., LLC., Research Division Moshe Katri - Cowen and Company, LLC, Research Division Sara Gubins - BofA Merrill Lynch, Research Division Jason Kupferberg - Jefferies & Company, Inc., Research Division Julio C. Quinteros - Goldman Sachs Group Inc., Research Division

Ladies and gentlemen, welcome to the Cognizant Technology Solutions First Quarter 2013 Earnings Conference Call. [Operator Instructions] I would now like to turn the conference over to David Nelson, Vice President, Investor Relations and Treasurer at Cognizant. Please go ahead, sir.

Thank you, operator, and good morning, everyone. By now you should have received a copy of the earnings release with the company's first quarter 2013 results. If you have not, a copy is available on our website, cognizant.com. The speakers we have on today's call are Francisco D'Souza, Chief Executive Officer; Gordon Coburn, President; and Karen McLoughlin, 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. I would now like to turn the call over to Francisco D'Souza. Francisco, please go ahead.

Thank you, David, and good morning, everyone. Thanks for joining us today. I'm happy to report that Cognizant's first quarter performance was strong and ahead of our guidance for the quarter. First quarter revenue was $2.02 billion, a sequential increase of 3.7% and an increase of 18.1% year-over-year. We maintained our non-GAAP operating margin at the high end of our target range. The revenue includes $8.2 million from the C1 Group acquisition, which we closed this quarter. This acquisition involves 6 companies from C1 Group that will expand our capabilities in Germany and Switzerland. Germany is the largest IT market in Europe, and I'm particularly excited about what this acquisition does to enhance our front-end presence in that market with the goal of bringing the strength of our global delivery model to German clients. Before turning the call over to Karen to outline our financial results, Gordon and I would like to cover 3 topics with you today: first, we'll provide a perspective on customer spending and market demand; secondly, we'll provide you some color on our execution against our 3 Horizon strategy; and finally, we'll share information about our continued drive to ensure that we have the team and operating discipline in place to continue to scale the business. I'll provide you with the headlines on these items, and then I'll ask Gordon to provide you with further details. We'll also spend time on the call today to provide you our thoughts on the emerging topic of United States immigration reform, of which you've no doubt heard. Let's start with -- let's first start with customer spending and market demand. While economic uncertainty is leading some companies to be more cautious, we are encouraged that market demand remains healthy. This demand comes across the 2 dimensions of run better…

Thank you, Francisco. Before I discuss business performance for the first quarter, I'd like to update you on immigration. We realize that immigration reform and its impact on Cognizant is of great interest to many of you, so let's go through the facts, as well as our thoughts and expectations. On April 17, 8 senators, known as the Gang of Eight, introduced a bill addressing comprehensive immigration reform. The bill included inputs from constituencies with interest in family reunification, illegal immigration, border security and many other dimensions, including high-skill labor. This bill serves as a starting point from which the U.S. Congress will begin to debate the issue. We were and continue to be an active participant in this discussion, including the effort to increase the number of high-skilled visas and streamline the green card process for permanent residency. This last point is quite important to us as we are one of the top applicants for green cards in the nation. This is part of our business model of hiring the best talent globally, many of whom want to make their permanent residence in America. We're also a large user of H&L temporary work visas. We're unable to find all the talent we need domestically each year, and we must source globally. Many of the people we bring to the U.S. on H&L visas we expect to stay here permanently as they get their green cards. We also recruit heavily in the U.S. with over 75 full-time recruiters to identify experienced talent. In addition, we recruit hundreds of students from U.S. universities, but that is not enough to serve our clients. Although the recently introduced bill includes some important fixes to the green card process, there are also some clauses that would be detrimental to Cognizant. These clauses include higher…

Thank you, Gordon, and good morning to everyone. As detailed in our press release, our first quarter revenue grew 3.7% sequentially and 18.1% over last year to $2.02 billion, ahead of our guidance of $2 billion from last quarter. Our non-GAAP operating margin, which excludes stock-based compensation expense and acquisition-related expenses, was 19.9%, at the high end of our target range of 19% to 20%, while our GAAP operating margin was 18.1% for the quarter. Consulting and technology services, formerly known as application development, represented 49.7% of revenue; and outsourcing services, formerly known as application management, was 50.3% for the quarter. Consulting and technology services grew 14.2% year-over-year and 2.2% sequentially. Outsourcing services grew 22.1% year-over-year and 5.3% sequentially. 32.9% of our revenue came from fixed-price contracts during the first quarter and grew by 24% year-over-year, reflecting further acceptance of the output-based managed services model of engagement by our clients. As expected, on a sequential basis, our pricing was stable during the first quarter. We closed the quarter with 1,000 active customers, and the number of accounts which we consider to be strategic increased by 7. This brings our total number of strategic clients to 221. We continue to see a trend towards our newer strategic customers embracing a wider range of Cognizant services at an earlier stage in the relationship. Our fully diluted share count for the quarter was 305.2 million shares, an increase of approximately 1.4 million shares from Q4. During the first quarter, we repurchased approximately 216,000 shares at an average price of $75.88 for a total cost of approximately $16.4 million. Since the end of the quarter, we have repurchased an additional 915,300 shares at an average price of $62.80 for a total cost of approximately $57.5 million. Today, the company announced that the Board of…

[Operator Instructions] Our first question is from the line of Darrin Peller of Barclays.

We noticed this morning a number of amendments that have been introduced, including some by Senator Hatch, trying to really address outplacement. On that topic, you also mentioned your trends on U.S. workforce and other green card capabilities. I think what we're looking to hear is really what your clients are thinking about this topic. I mean, have you seen any feedback from some of your customers in the sense of potentially looking to lobby Congress on the efforts? Could really you discuss how low unemployment is in technology and the potential implications of this provision?

Sure, Darrin. The clients have made it very clear to us, they are happy to weigh in. The discussion is when should they weigh in. It's very important to remember this is going to be a long process. The Senate is going to make some amendments, their bill will come out and probably get passed next month. And then, the House is going to discuss it over a matter of many, many months, and obviously, the bill that comes out of the House, if any, will look dramatically different. So clients and the lobbyists for our clients, many of them think the right time to weigh in is much later in the process, not at this point. It's interesting. Senator Rubio, who's one of the Gang of Eight, this past weekend said publicly on one of the talk shows that the Senate bill as written, and I quote, "cannot pass the U.S. House of Representatives." That's the person who wrote the bill who said that. So there's going to be a lot of discussion, not just in amendments to the Senate bill that will go up for vote next month, but much more importantly, with what happens with that House bill, which will probably look fundamentally and dramatically different. So the answer is clearly, our clients are saying, "We will weigh in." But they are thinking very strategically about when is the appropriate time to weigh in.

Our next question is from the line of Steven Milunovich with UBS.

This is Peter Christiansen in for Steve Milunovich. I just want to dig a little bit more into the immigration reform issue and talk about what you're speaking -- what you're talking to your strategic accounts and what is your message to them. And also, in planning for contingencies, would -- in terms of the outplacement conditions, would the use of local subcontractors or even badge trading would those methods be feasible and how would it affect your business model?

It's interesting. It's not so much what are we messaging to our clients, it's what are our clients messaging to us. They are reaffirming that we are essential to them running their businesses and being competitive in the environment. So our clients' messaging to us is, "Cognizant, we need you. And we're going to help make sure you're around so you can continue to serve us both so we can be competitive in the global marketplace and so we can continue to innovate." And obviously, we're messaging a similar thing to clients, and I think both clients and us understand, once again, that the bill as written will not look like the bill that is ultimately passed by Congress, if anything is passed by Congress, because the bill as written would do dramatic harm to the U.S. economy. When we think about contingencies, remember there are so many permutations of what this bill would look like. If you look at the bill right now, it contradicts itself in places, so we obviously have various contingencies that we can leverage. There's no one silver bullet by any stretch of the imagination. But the fundamental issue that Congress is going to have to deal with this, is there are not enough U.S. tech workers. Unemployment, according to the government statistics, for tech work is less than 4%. Based on what I've learned at business school, that is full employment. So it's not as simple as you can say, "Okay, Indian firms and U.S. firms that leverage global workforce can no longer do this work." The problem is there are not enough replacements, the U.S. economy will shut down. So I think when you think about contingencies, you have to think about contingencies that are realistic, and we're obviously -- we work through various scenarios. But there's so many permutations right now, to start talking about specific contingencies, I think, would be counterproductive.

Our next question is from the line of Edward Caso of Wells Fargo.

Are you receiving any pushback from clients on decision-making as they sort of watch this whole visa situation sort of progress here? Are you seeing any of that? And then the second question I had is are -- if the worst or semi-worst case happens, would acquisitions potentially be part of your response?

Sure. So obviously, we gave fairly healthy guidance just now for Q2. If we were seeing pushback from clients, we would not have taken such a bullish tone. We are not seeing any pushback. We are seeing decisions being made. The demand environment is quite healthy. People want our services. People need our services. I think the biggest change in the market is it's not just for cost efficiencies they need us, they're now looking to us very aggressively to help them to innovate and run their businesses differently. In terms of contingencies and would acquisitions play a role in it, would it not, that all depends on what a final bill would look like, if there is a final bill. So obviously, we think about a broad range of contingencies. But I wouldn't want to speculate on any specific contingency because, quite honestly, this -- the bill is going to morph, and right now, even in the bill as written, there's a lot of things that aren't clear.

Our next question comes from the line of Tien-Tsin Huang of JP Morgan Chase. Tien-Tsin T. Huang - JP Morgan Chase & Co, Research Division: Looks like the over -- it's a safe bet on the immigration question, there's a number of questions you'll get there. I'll ask about -- actually I'll just ask about capital allocation. Happy to see the buyback. I'm curious, did you guys consider a dividend? And are you a buyer of the stock at these levels, even with the uncertainty with the immigration reform? It looks like you bought some stock back, but I'm not sure if you were held back with anything pre-earnings?

Sure. So let me start with what we bought back. Obviously, we were in the quiet period, but we had a 10b5-1 program in place the triggered as the stock declined, so that's why you saw repurchases this quarter even though we are in the blackout period. We spent a lot of time thinking about capital allocation. Long term, I think it's important that we articulate a fully comprehensive capital allocation strategy. We're not quite ready to do that yet because the market is changing so quickly and the opportunities for us and things like Horizon 3 are so tremendous right now. We don't want to box ourselves in until we fully understand that roadmap. We have been opportunistic on share repurchases. Obviously, by increasing the repurchase authorization today, we signaled we'll continue to be opportunistic on share repurchases. At this point, we weren't -- there was not active discussion about a dividend. When we think longer term about capital allocation, obviously, any Board of Directors would include all types of components of that. But that's not something that's a near-term item.

Our next question comes from the line of Keith Bachman of BMO.

If I could, just a clarification. Is there any sense you can give us on where you stand relative to the various thresholds or caps, the 75%, 50% kind of thresholds, if you took out the green cards? Just a snapshot of where you are today of your U.S. employee base versus the visa holders. And then secondly, if you could just talk a little bit about the consulting business. I believe you said it grew 2.2% sequentially. I just wanted to see if there's any color -- so it's a little slower than the corporate weighted average sequential growth. If you could just talk about was there any issues there. Or is that just kind of the broader macro slowdown and all consulting getting hurt? But more broadly just talk about the growth of the consulting business if you talk -- if you look at calendar year '13.

Sure, let me touch base on your demographic question, and then Frank will comment on consulting. I understand why people want all these statistics, obviously to model all the potential scenarios that could happen, and there are so many potential scenarios. But as we've said in the past and we're going to continue to say this, for competitive reasons, the information on the demographics of our workforce we've never released, we do not intend to release going forward. In the end, we know investors want us to drive industry-leading growth, and that's what we're focused on. And I'd be reluctant to divulge the demographic statistics because I think that would disadvantage us as we compete in the marketplace, as we navigate these issues. So I appreciate why you asked the question, but we think it's in the best interest of the company, for competitive reasons, not to make that public. Frank, let me -- why don't you comment consulting?

The consulting and technology group, as we talked about it, includes both our pure play management consulting business and also our application development business. And you can think of that as somewhat of a proxy for discretionary spending, or it's a lot of discretionary spending in there. And that's playing out and played out in the first quarter just as we expected seasonally. Typically, in the first quarter, there's a little bit of softness in that business as budgets tend to get finalized in Q1. And we see the incremental discretionary spending kicking in towards the end of Q1 and then really into Q2. We've seen that same trend in past years. In the last couple of years, that trend hasn't quite held because of the sort of volatility in the marketplace. But generally speaking, in normal years, you see that in Q1. So I don't think there's anything to read into that. I think it's just normal seasonality of Q1 where discretionary spending tends to be a little softer than the rest of the year as budgets get finalized.

Our next question is from the line of Bryan Keane of Deutsche Bank.

Just hoping you could give us a sense of the potential client disruption that it cause, some of the things in this bill. I think one of the things you said is it would damage the U.S. economy. So I guess I just wanted to know how easy would it be for clients to switch to other employees, either be multinationals or some other group, because I think the relationships are a lot stickier than people think. And then secondly, you guys kind of highlighted the green card issue. We're hearing that workers applying for a green card would be excluded from some of the H-1B visa count, so just wanted to get if you're hearing the same thing and kind of why you emphasized the green cards.

Sure. So Bryan, I think you've hit a critical point. The work we do is extraordinarily sticky. We are deeply embedded into our clients. We are doing mission-critical work for our clients, both on ongoing maintenance and support, but equally importantly, on innovation work. And it's not like our clients could go out and hire these people. These people don't exist. That's the important thing here. There is a shortage of IT talent, based on virtually every study that you see, so the stickiness of our client base is absolutely tremendous. Bryan, what's the second part of your question again?

Just on the green cards. I know you guys emphasized it, and then we're hearing that even -- potentially, that some of the guys even applying for green cards would be excluded from some of the counts on H-1B visa people?

Yes. So the answer is if you look at the currently proposed Senate bill, some of those are excluded from the H-1B calculation. There's some amendments floating around that clarify some of that. But once again, I want to remind you that there's lots of permutations, there's lots of language that still has to be cleaned up in the Senate bill. But I think we should also have realistic expectations. The Senate bill that eventually gets passed next month will have clauses that are significantly detrimental to our industry. So when people see that, I don't think they should be surprised. That's certainly our expectation. That's very, very different than what would ultimately become law because the House hasn't even begun to debate this. And there's lots of different constituencies in the house that fundamentally don't agree with what's in the Senate bill. So it's -- the real action will happen after the Senate bill is passed, which will have some stuff we expect that would be negative for our industry. And then that as the House deals with this in the fall, you'll start to see something that we believe, or hope, will be palatable to our industry. And not just to our industry but much more important, palatable to our clients because it's going to be the clients that are going to weigh in and say, "If you had everything that's in the Senate bill today, you would be doing irreparable harm to the banking industry, to the insurance industry, to the health care industry and many others." And I don't think senators and congressmen want to hurt the core American industry.

Our next question comes from the line of Joseph Foresi with Janney Montgomery Scott.

I'm actually going to change the topic here at the risk of losing a visa question. But on the financial services front, I think you talked about a large deal you signed. Can you give us some color around what the sizes of the deals are there? And then you're off to a good start in the beginning of the year. Maybe you can give a little color around your view of annual guidance. Are you leaning towards a conservative because of the macro side of things? So first question is on financial services. What are you seeing on the large deal front? When did you sign it? Are you seeing more of those? And then the second one just on the guidance side.

Yes, let me take that. We're -- I was very pleased with our performance in financial services in the quarter. We grew 5% sequentially. And if you look at what's happening there, banking continues to do well. That growth is coming from both our largest clients who are expanding their work with us. But as you said, in prior quarters, we're also starting to see a pickup with mid-tier banks, particularly in the U.S., that are beginning now to more aggressively adopt the global delivery model. We're seeing demand both, as Gordon said, on what we think of as run better and on the run different side, so there's a continued focus on cost consolidation and push for productivity benefits. We see regulatory work starting to pick up. But some of that spend is coming at the expense of dollars that might otherwise go to discretionary development spending. And we're also starting to see growing importance of financial services as a result of mobility and analytics, as our financial services clients start to look at the digital bank kind of topic. When we look at guidance for the full year, we're pleased with how the year is playing out. We think that as we look to Q2 and the rest of the year, demand patterns are playing out as we expected and that gives us confidence that we're certainly on track to meet the full year guidance that we provided you. I think that it's fair to say that, assuming that the current demand trend continues to play out, we think there's some scope for outperformance in the full year. And obviously, we'll update you on that as we progress through the year.

Yes, and let me just add to our thinking and philosophy on guidance this year. We realized, given all the macro events both in the economy and the political world that's going on, people are -- would like to understand that our numbers have certainty to it. So we decided to take a conservative stance on our guidance, leave ourselves some room to absorb some macro hiccups, if they were to occur. But as Frank mentioned, I think it's important to understand, if things continue to play out the way they currently are -- we had a nice momentum coming out of Q1 into Q2, and that's one of the key things that we look for each year. And that played out the way we like to see this year. So if that continues to play out and we don't have macro hiccups, certainly, we think there is room for outperformance this year. But we want to be careful not to get ahead of ourselves.

Our next question is from the line of Arvind Ramnani with BNP Paribas.

Most of my questions have already been asked, but just had a question on the buyback. I realize that's a bit of a subjective process, but what is the process of determining the level of the buybacks? Do you have a particular formula that you use to determine the range of the buybacks?

You're right, it is more of an art than a science. Historically, where we've used 10b5-1 programs, it's been triggered by various -- not necessarily one, but various stock price thresholds. And if you look, last year, as we've executed on our share repurchase, we were more aggressive when the stock price was weaker rather than when it was stronger. So it is a little bit of an art versus a science, so there is no specific formula. The nice thing is, at the current levels, it certainly is accretive to our earnings in future years.

Our next question is from the line of Rod Bourgeois with Bernstein. Rod Bourgeois - Sanford C. Bernstein & Co., LLC., Research Division: So unfortunately, I need to take you back to the visa reform topic. So guys, if the Senate's proposed reforms go through as is, major clients of Indian firms, including JPMorgan, Bank of America, Walmart and GE, these clients could face some operational disruption and a lessened access to needed talent. On the other hand, if the visa reforms would primarily affect new visa holders, the client disruption would not necessarily be immediate for these clients, and these clients have many other things to lobby for in congress. So with that as a context, I have 2 questions. Are clients really aware of the risks that come out of these visa reforms yet? I mean, the checks that we've done, I mean, we've noticed clients that are still sort of figuring out what's going on, and they've yet to really react. And then the second question is are you able to ask your clients to lobby on your behalf in Congress when doing so could actually raise a concern about potential risks down the road of working with Cognizant and other Indian firms? So are the clients aware? And can you really solicit their help kind of in this troubled situation?

Sure. So Rod, our clients are extraordinarily sophisticated, and we work for the largest companies in every industry you can name. So they -- so I'm not concerned about us having the conversation with them that the bill as written would be detrimental to us and to them. They're sophisticated enough, they already know that, so there's nothing to hide here. Clients are different -- depending on the client, there are different levels of understanding what the bill is today. But as clients are understanding the bill, the clear conversations we're having with them, or they're having with us proactively, is that they understand that this bill would be detrimental to their business. And therefore, they're interested in -- so the discussion is around what is the appropriate strategy to communicate that to the Senate and House. Not "Hey, don't do this because it's -- because we like Cognizant." But "Don't this because it will hurt our bank or it'll hurt our insurance company." That's the message they're going to deliver, and that's the message they believe in. The key question is the timing. It's not clear that the appropriate timing for them to deliver that message is now because the Senate bill is going to pass, the Senate bill is going to have some ugly stuff on it and that's fine. The key is as the House picks it up and then it goes into conference late this year, early next year, I think that's when you'll see clients weigh in, in a significant way. But will clients understand it? Absolutely. Our clients have very sophisticated lobbying organizations. But they're going to lobby not based on, "Please be nice to Cognizant." They're going to lobby on they need these people to remain competitive in the global environment. And if this bill passed as is, it would hurt every bank in the country, it would hurt every insurance company in the country, it would hurt every drug company in the country, and I don't think anyone in the Senate or House wants that to happen.

Our next question is from the line of Moshe Katri of Cowen and Company.

Can you spend some time maybe talk a bit about the Healthcare vertical? Are we still expecting to get maybe a better view on where we are, maybe following the June quarter, in terms of demand and fundamentals and kind of the outlook for the industry and maybe we're going to see some better demand coming through?

Yes, so if you think about it, Healthcare, let's break into payers versus pharma. Pharma is going to be tough this year. That's baked into our plans. This is a year that's very challenging for pharma because of patent cliffs. The good news with pharma, when they look out to 2014 and 2015, things look okay. When we're talking to CIOs of pharmaceutical companies, in the last couple of months I've sat down with a fair number of them, they said, "We got to get through '13, but then spending can increase again." So I think we appropriately reflected it in our plans, but pharma will be tough this year. Payers is a little bit more of the wildcard because of everything that is happening with health care exchanges and the Affordable Care Act. So payers is one those ones that could be one thing that could generate some upside opportunity for us. I think we've appropriately risk-adjusted it. But overall Healthcare is not going to be a big driver of growth this year, and we didn't expect it to, but it's playing out as expected or a little bit better than expected at this point.

Our next question is from the line of Sara Gubins of Bank of America.

Just following up on that. You mentioned in your prepared remarks that you are seeing some pockets of weakness. Did that refer to pharma or were there other areas that you were talking about? And then, separately in this SMAC stack work, for clients that are new -- I know that, that's not the majority, but for new clients, what industries do they fall in? Is that any different from your overall mix?

Sure, let me quickly touch on the first thing, and then maybe, Frank, you can touch on the second. When I referred to pockets of weakness, primarily, I was referring to life sciences, that's correct. Yes, there are small things here and there, but that's the main driver of that comment. Frank, you want to talk about SMAC?

Yes, on the SMAC work, most of the work -- or let me say a lot of the work that we're doing in SMAC isn't discrete standalone work. It tends to be work that interfaces or plugs into our clients' bigger IT environment or into their legacy environment. And so by and large, the majority of the SMAC work that we're doing would be in industries that we know, and with our existing client base because we are building on top of an existing infrastructure that we're managing or that we are very familiar with, so largely follow the industry lines that we're operating in today.

Our next question is coming from the line of Jason Kupferberg with Jefferies. Jason Kupferberg - Jefferies & Company, Inc., Research Division: Just a 2-part question here. First, can you give us some estimate of what percent of senior management's time is being spent related to the immigration bill, whether it be garnering political support or doing contingency planning? Do you expect that percentage to increase? And then just a secondary question on gross margins. I know you guys focus more on the operating line, but they were down to what I think may have been the lowest level ever and wanted to see if there's anything semi-structural going on there. Or were there any transient factors in the quarter?

Let me address the first question, Jason, and then, I'll ask Karen to talk about the gross margin. Look, we're keeping an eye on what's happening in Washington. As the senior leadership team, obviously, we're extraordinarily focused on it. But at the same time, we're making sure that it is not a distraction for the team. I've told the team that the most important thing for us to do here is to continue to run a good business. To focus on adding value to our clients, to continue to deliver the good results. And we've got a team of folks in Washington, Cognizant employees and advisers, that are helping us on the immigration front. I don't have a particular percent of time that I can point to specifically that we're spending. I think we're spending a little bit more time than we have in the past, obviously. But I still really don't think it's a distraction to the business at this point. Karen, do you want to talk about gross margin?

Absolutely. So Jason, as you mentioned, obviously, gross margin did tick down about 30 basis points from last quarter, and there's really a couple of things. So we talked on the call about pricing being stable, and pricing absolutely was. We did not see any deterioration in pricing for the quarter. What you did see was utilization ticked down a little bit, and some of that is obviously timing of when we onboard folks. We onboarded several -- quite a few lateral hires in Q1, and it will take a little bit of time for them to ramp up and start billing. So utilization bounces up and down a little bit depending on start dates and so forth. So it's primarily utilization-driven. If you remember, back in middle of Q3 last year, we also started our ING transaction, which took our on-site ratio up slightly from where it's been running so -- versus last year on-site ratio. They're slightly higher than where they typically have been so that's also a little bit of the decline. But it's primarily utilization decline. And that, obviously, we can manage. We've managed utilization up and down over the past.

The last question will be coming from the line of Julio Quinteros of Goldman Sachs.

One quick distinction on the tax rates on GAAP versus non-GAAP. Karen, can you just give us the difference, if there is any, in terms of the EPS calculations that you're citing for the full year?

There was no material difference in the tax rate for GAAP versus non-GAAP.

There shouldn't be? Okay, got it. And then on the growth rates of the different Horizons, can you talk a little bit about the expectations for growth for Horizon 1 versus Horizon 3 as we think about the guidance implied for 2013?

Sure, Julio, it's Gordon. I think the way you should think about it and part of it is because of where they are in their life cycle and part of it is due to large numbers versus small numbers. Horizon 3 should grow faster than Horizon 2 and Horizon 2 should grow faster than Horizon 1, and that's the whole philosophy of these Horizons.

I will now turn the floor back to management for closing comments.

Thank you very much, and thanks, all of you, for joining us today. In summary, we're pleased with our performance in Q1, and we are confident that the -- with our outlook for 2013. In a challenging economic environment, we're encouraged that our value proposition of helping clients run better and run different is gaining traction and supporting a healthy demand for our services. So thank you for joining us, and we'll talk to you again next quarter.

This concludes today's Cognizant Technology Solutions First Quarter 2013 Earnings call. You may now disconnect.