Published & Updated as on - 2010-06-13
Refining
its inorganic growth strategy further after carrying out acquisitions in
consulting and analytics areas down the years, Cognizant Technology Solutions
is understood to be scouting for business process outsourcing (BPO) firms
specialising in insurance in the US and Europe.
The
Nasdaq-listed company is looking to acquire companies handling back-office
operations for US and European clients, primarily in insurance support and
related operations, according to an investment banker who spoke on condition of
anonymity. Such a move is expected to strengthen Cognizant’s insurance
practice, which has focused primarily on the property and casualty insurance
industries.
Cognizant
is understood to be targeting BPO firms with revenues in the $5-50 million
range this year. When asked, a spokesman said the company was always open to
new acquisition possibilities, but declined to comment on any speculation to
that effect.
Within the ambit of property and casualty
insurance, Cognizant has been offering back office and front office solutions
in the areas of claims processing, document management, policy administration,
regulatory, reporting and solution frameworks, among others.
Most of the 85,000-plus employees and 50
development centres of Teaneck, New Jersey-based Cognizant are in India. The
company, which offers BPO and consulting services, is seen by analysts as one
of the key beneficiaries of the sharply rebounding $60-billion Indian
outsourcing market.
Cognizant’s net profit for the quarter ending
March 31 rose to $151.5 million (Rs 660 crore), up 34 per cent from a year
earlier and 5.2 per cent quarter-on-quarter. Revenues for the first quarter rose
to $959.7 million (Rs 4,222 crore), up 28.7 per cent from $745.9 million (Rs
3,278 crore) in the first quarter of 2009. Revenues in 2009-10 are expected to
be at least $4.1 billion (Rs 18,860 crore), up by at least 25 per cent over
2009.
Cognizant has carried out eight acquisitions
since 2005, including that of the UK-based program management consultancy, PIPC
Group. PIPC was acquired last month for a little over £23 million pounds (Rs
154 crore). In 2009, Cognizant had acquired Pepperweed Advisors, the information
technology consulting services division of US-based Pepperweed Consulting, for
an undisclosed amount. Source: BS 13/6/10
Cognizant
to hire aggressively this year: CEO
Cognizant
Technology Solutions Corp plans to hire aggressively through the year as it
sees an upswing in demand and the war for talent heats up.
The
IT services provider's India-based rivals Tata Consultancy Services, Infosys
and Wipro have revived hiring after a lackluster 2009.
The
company also competes for talent with the likes of Accenture, IBM and
Hewlett-Packard.
"Given that we've revised our
guidance, my anticipation is that we'll clearly continue to hire throughout the
rest of this year," Chief Executive Francisco D'Souza said in an interview
with Reuters.
Cognizant's solid first-quarter results
prompted the company to project revenue growth of at least 25 per cent for the
year.
"We've done a lot of hiring in the fourth quarter
and the first quarter," D'Souza, 41, said. "We hired 10,000 people in
the fourth quarter. We hired about 7,000 people in the first quarter."
He
added that these were net additions and that the actual hiring was a little
higher.
On the flip side, the battle for staff is resulting
in greater attrition, as employees are finding it easier to switch jobs with
the IT industry recovering.
Attrition on a trailing 12-month
basis was 12.4 per cent, Chief Financial Officer Gordon Coburn said on a
conference call with analysts.
"Similar to others in
the industry, we experienced an increase in attrition during the first quarter,"
Coburn said. "This attrition was primarily at the junior levels."
Cognizant
has been growing faster than its competitors in the industry.
"In
the first quarter, on both a sequential and year-over-year basis, we grew
faster than all our key competitors. The implication there is that we took
share from them or rather expanded our share faster than competition," CEO
D'Souza said.
The company's strategy has been to reinvest
extra dollars into the business to grow the company by maintaining adjusted
operating margins within the target range of 19 per cent to 20 per cent. The
CEO said they expect to maintain margins at the same level.
Cognizant
shares, which have more than doubled over the past 52 weeks, were trading at
$51.91 Tuesday on Nasdaq.
Source:
BS 05/05/10
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