Offshore Outsourcing Model Helps Boost Cognizant Revenue

Cognizant Technology Solutions Corp. leveraged its offshore outsourcing model to increase revenue by 30% from 2000 to 2001.

The Teaneck, N.J., IT service provider, which has four application-development facilities in India, Tuesday reported 2001 revenue of $177.8 million, compared with $137.0 million in 2000. Cognizant's net income for the year was up about 25% for 2001, rising from about $17.7 million in 2000 to about $22.2 million in 2001.

The service provider also reported that its fourth-quarter 2001 revenue was $43.5 million, up from $41.1 million for the fourth quarter of 2000. Net earnings were dragged down, however, by a $1.2 million write-off due to the lagging performance of E-service provider Questra Corp., a venture-capital investment Cognizant made in 2000. Excluding the write-off, Cognizant had a net income of about $5.9 million for the quarter, compared with $5.4 million in the same quarter last year.

Last year was a "treacherous" one for IT service providers, and offshore providers didn't get by unscathed, says Andrew Steinerman, managing director in equity research for Bear Stearns & Co. But the offshore outsourcing service provider segment did show the best growth among service providers for the year, he says, adding, "Cognizant's ability to grow revenue and income in 2001 was particularly impressive as large service providers like IBM Global Services and EDS increased their use of offshore programming talent."