'Our ability to cross-sell new services will drive our performance'

Tmajor Cognizant has ramped up its performance year-on-year with impressive
growth since its humble origins way back in 1994. Globally, the company posted
54% growth for 2004-05. For the year ended March 2005, its work force stood at
17,050, with 77% employees based out of India. To meet its growing demand,
Cognizant has committed to invest $76 mn in its India program to construct its
first fully owned techno-complex in Bangalore, and to expand the
techno-complexes in Chennai, Kolkata and Pune. This investment would give it an
additional 9,30,000 sq ft of built up space, including 100,000 sq ft for a
training academy. The academy would house 75 classrooms, to train over 1500
professionals. In an interview given recently to Shrikant G of Dataquest,
Cognizant's president and CEO, Lakshmi Narayanan, talks about the growth
drivers and the road ahead for the company. Excerpts:

How do you characterize Cognizant's performance during 2004-05?

Lakshmi Narayanan, president and CEO, Cognizant "We have a robust and satisfied client base of industry and world-leading companies"

Cognizant had another record year, celebrating strong performance in key
financial and operating metrics. During the year we experienced strong growth
across our key verticals-banking, insurance, capital markets, and healthcare,
including our newer verticals-manufacturing and retail. We also saw traction
in Europe, where growing acceptance of offshore outsourcing is translating into
customer wins, particularly for our application development and re-engineering
services. Our enhanced service offerings-business-technology consulting,
testing, IT infrastructure services and KPO-have allowed us to expand and
strengthen our relationships with existing clients. Our ability to cross-sell
new services and strong customer relationships continue to drive our
performance.

What were the growth drivers for this period?

We attribute our growth to three drivers: One, we deepened our relationship
with key customers through cross selling of new service offerings-such as
business-technology consulting, testing, IT infrastructure services and KPO-to
meet growing demand for a broad range of services. Two, we expanded our
knowledge expertise in service offerings in additional industry sectors such as
manufacturing and retail, as companies beyond financial services increasingly
recognized the value of broadly adopting offshore enabled IT and business
outsourcing. Three, we broadened our geographic presence and expanded our
international executive management team to cater to the increasing demand from
non-US, especially European, customers, interested in adopting large scale
offshore outsourcing.

Can you talk about significant customer wins, and deal sizes, during this
period?

We would not be able to share customer wins or deal sizes because of
customer confidentiality. However, one customer win set the trend for KPO in the
industry. Cognizant signed a multi-year relationship with Pfizer Global Research
and Development (PGRD) to provide high-end business process outsourcing
solutions in the area of clinical data management and biometrics.

Any plans on the anvil to tap European markets further, as Cognizant's
revenues still remain US centric?

We continue to see increasing interest level in Europe for offshore
services, both from European divisions of our global clients, and from an
increasing number of local clients. We are winning strategic European clients
who want our application development and re-engineering services, and we are
enjoying a steadily growing number of inquiries and visits from potential
European clients. In the quarter ended March, our European revenue was 13% of
our total revenue, up 60% year-on-year, and 11% sequentially.

On China:

During the year, we set up a new development center in Shanghai to service
our global customers for whom China is a market, and to service our Japanese
customers from China because of cultural similarities. We have taken a 25,000 sq
ft office space in Pudong IT Park in Shanghai. We are making a cautious entry
into China, and hope to have about 50 professionals by the end of calendar year
2005.

Going forward, can you give your outlook for 2005-06?

Our strong growth has not gone unnoticed by the market. In 2004-05,
Cognizant achieved a significant milestone of being added to the "Nasdaq
100 Index", which currently makes us the only IT services company globally
on the 100 Index, and the first and only offshore services company. Cognizant
enters 2005-06 in a strongest position. We remain dedicated to building on this
foundation and anticipate continued industry leading performance. Backed by a
strong tailwind of strategic customers, we expect 2005-06 to be another exciting
year. We have a robust and satisfied client base of industry and world-leading
companies, and we are dedicated to investing in the development of additional
best-of-breed service offerings, enhancing our ability to meet our existing and
potential clients' growing demands. We believe this will provide a solid
platform for Cognizant's future growth as clients move toward a partnership
that will entail a broader and more comprehensive range of increasingly complex
projects within all levels of their organization. Our pipeline of new business
remains robust, as customer-interest levels continue to increase, and we have
broadened and deepened the nature and scope of our client relationships.