February 18 2020
Cognizant does well again
07 August 2012

Net income up on strong demand for outsourcing services

Cognizant has once again overtaken another Indian IT outsourcing major. This time it has raced past Infosys.

The New Jersey-based firm has posted revenue of $1.795 billion in the June quarter, up about 5% from the March quarter and 21% over a year ago, compared to Infosys’ $1.752 billion dollar revenue in the same quarter.

Last year, Cognizant over took Wipro Technologies, on the same basis.

Its net income rose to $251.9 million, up 3.4 per cent sequentially and 21.1 per cent from the year-ago quarter, on the back of strong demand for outsourcing services.

“Clients continue to turn to Cognizant to help reinvent their business models in the face of secular industry changes, evolving demographics, and a new stack of social, mobile, analytics, and cloud technologies,” a release quoted Francisco D’Souza, Chief Executive Officer, as saying.

Cognizant said that its non-GAAP operating margin was 20.0 per cent, at the top end of the company's targeted 19-20 per cent range. 4,700 employees were added during the quarter, taking the global headcount of approximately 145,200 as of June 30, 2012.

Shares up sharply

The company’s shares, listed on the Nasdaq, were up 11.7 per cent at $64.06 after the results were announced. It had closed at $57.86 on Friday.

According to R. Chandrasekaran, Group Chief Executive, Technology & Operations, Cognizant, the retail and manufacturing vertical had another strong quarter, growing 7 per cent sequentially and 22 per cent year-over-year.

“Keeping ahead of transformational initiatives is essential. For instance, a British retailer has engaged us to help them re-design and re-launch its stores, merchandising, pricing and more – through an overhaul of existing IT systems. Growing use of e-commerce has driven fundamental shifts in consumer buying behaviour and we to be on top of that to offer them leading-edge solutions,” Mr. Chandrasekaran said.

“Clients see as a credible transformational partner. We added six strategic clients this quarter. We are comfortable with our ability to deliver our revenue guidance.”

IT services climate

The present climate for IT services, so far, has been mixed at best.

IT outsourcing majors such as Infosys and Wipro Technologies had forecast weak sales, maintaining that global outsourcing spending was slowing down.

Cognizant, however, expects its third quarter revenues to be at least $1.875 billion.

It has also reaffirmed its guidance for 2012 to be at least $7.34 billion, up 20 per cent compared to 2011.



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