Rank 33: Cognizant Technology Solutions: Staying Focused

Cognizant Technology Solutions has moved out of the DQ Top 20 due to new

reclassification by Dataquest/Nasscom, of foreign-registered MNC companies. It’s

also thus moved down from #6 to #16 in the DQ Top 20 Software Exporters’ list.

Performance Highlights Moved quickly with HIPAA offerings for the healthcare vertical Made senior lateral hires to fill gaps in domain and service line expertise Strengths Very value-focused Has responded quickly to market conditions Weaknesses Despite close to 4000 employees, is not perceived as a ‘big player’ Revenue concentration–53% from top 10 customers and over 85% from the US Cognizant Technology Solutions India Pvt Ltd l Startup: 1994 l Products & services: Application management and eBusiness l Employees: 3,836 l Branches: 11 l Address: 226, Cathedral Road, Chennai — 600086 l Tel: 2540555 l Fax: 2540556 l Website: cognizant.com

Even so, the DQ-estimated Rs 388 crore for Cognizant Technology Solutions

India Pvt Ltd (the Chennai-based India development subsidiary) puts the company

at #2 in the new DQ Top 20 MNC Developers list–just after IBM Global Services

India.

If the global revenues of the US-registered parent Cognizant Technology

Solutions Corporation (which billed over two-thirds of its Rs 864 crore revenues

from outside India) were included, Cognizant would have remained in the DQ Top

20 at #18, and in the DQ Top 20 Software Exporters List at #6. Because of this

transition, Cognizant is presented here on the same pages as the DQ Top 20, for

this year. Globally, Cognizant had a year that was as challenging as it was for

everyone else. Growth dropped from 70% to 23%, though net profit remained at

13%. Billing rate pressures were high, especially for onsite rates (and onsite

revenues increased to 69% of the pie).

Though the topline took a hit, it chose not to gun for high volume, low value

business. Thus application development and integration accounted for 43% of

revenues, with the rest coming from application maintenance. And it picked up

70% of revenue from Fortune 1000 customers. Its verticals’ focus shifted

somewhat from banking/FSI and IT/telecom to Healthcare. It moved quickly once

the HIPAA regulation (Healthcare Insurance Portability and Accountability Act)

was passed in the US and implemented more managed-care systems in FY02 than in

all the previous years combined. It made high-level lateral hires, increased

employee strength by 14% and invested in new facilities.

*Note: Reclassification based on local revenues (earlier on global

revenues). Dataquest estimates for the revenues of Cognizant Technology

Solutions India Pvt Ltd, which is a wholly owned development subsidiary of

Cognizant Technology Solutions Corp, USA. In previous years, we have listed the

full global revenues of parent Cognizant Corp, (about Rs 864 crore for 2001-02)

for the ranking. However, Cognizant Corp is a US-registered company and well

over two-thirds of its revenues is billed abroad. The figures used for ranking

under the reclassification of Indian and MNC companies (see DQ Top 20, 2002

Volume 1 page 114 ) are therefore revenues of Cognizant India only.