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Offshore Outsourcing Boosts Cognizant

The outsourcing firm posted big gains in revenue and profits and plans to open three more service centers in India to meet growing demand.
Cognizant Technology Solutions Corp. is cashing in on the trend toward offshore outsourcing of IT work, Cognizant, a provider of offshore application development and management services with facilities throughout India, on Thursday reported a 61% increase in fourth-quarter revenue, to $108 million from $67 million in the year-ago quarter,

Net income for the quarter ended Dec. 31 increased 94% to $17.7 million from $9.1 million in the fourth quarter of 2002. Per-share earnings rose 79% to 25 cents. On average, Wall Street analysts surveyed by Thomson First Call expected Cognizant to post per-share earnings of 24 cents.

For all of 2003, Cognizant posted revenue of $368.2 million, up 61% from $229 million in 2002. Net income jumped 65% to $57.4 million from $34.6 million the previous year. Earnings per share increased 56% year over year in 2003, to 84 cents.

Analysts say Cognizant is benefiting from increased use of offshore outsourcing by multinational companies that want to keep their IT budgets in check--they estimate that companies can save from 20% to 40% on application work by moving it to low-cost areas such as India. To meet growing demand, Cognizant is spending $40 million over the next two years to build three service centers in India, adding 600,000 square feet of floor space for 6,500 planned new hires. Among the major companies Cognizant counts as customers are Coors Brewing, RadioShack, Sears, and Sprint.

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