Outsourcer Cognizant posts strong revenue and profit growth despite uncertain market

Cognizant and Tata Consultancy Services have outstripped other outsourcers with predominantly Indian operations

Cognizant Technology Solutions posted strong growth in revenue and profits in the fourth quarter of 2011, indicating that a few focused players continue to grow, even as demand for offshoring is flat because of uncertain economic conditions.

The company has forecast revenue growth of at least 23 percent in 2012, despite facing continued volatility in the European market.

Clients are increasingly turning to Cognizant as they look for cost-savings and innovation, said Francisco D'Souza, CEO of Cognizant, in an analyst call that was webcast.

The Teaneck, New Jersey, outsourcer has 75 percent of its staff in India, and competes with Indian outsourcers like Tata Consultancy Services, Infosys and Wipro both for business and staff.

Among the outsourcers with predominantly Indian operations, Cognizant and Tata Consultancy Services, India's largest outsourcer, have established a lead in revenue growth because they understand customers' business needs better, and have strong domain expertise, which is critical as customers battle a difficult business environment, said Sudin Apte, principal analyst and CEO of Offshore Insights, a research and advisory firm in Pune, India.

Cognizant said Wednesday that revenue in the quarter ended Dec. 31 rose to US$1.66 billion, up by 27 percent from revenue in the same quarter a year earlier. Its net profit was $240 million, up by 16 percent.

The company added over 7,300 staff in the quarter, taking the total to about 137,700 at the end of the year.

The fourth quarter topped a strong year for the company for which it reported revenue of about $6 billion, up by 33 percent from the previous year. Its net profit for the year was $884 million, an increase of 20 percent from the previous year.

During the quarter, 80 percent of revenue came from clients in North America, followed by Europe, which accounted for 16.5 percent of revenue.

TCS said last month that its revenue for the quarter was $2.6 billion, up by 20.6 percent from the same quarter a year earlier, with net profit up 9 percent at $568 million.

John Ribeiro covers outsourcing and general technology breaking news from India for The IDG News Service. Follow John on Twitter at @Johnribeiro. John's e-mail address is john_ribeiro@idg.com

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John Ribeiro

IDG News Service
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