Editor’s note: Competition among India-based information technology service providers Cognizant, HCL, Infosys and Wipro – all of which have operations in North Carolina – continues to intensify. Cognizant is betting on “onshoring” of more talent in other countries to set itself apart, says Technology Business Research.
HAMPTON, N.H. – In its most recent quarter, Cognizant grew revenue 9.1% year-to-year amid ongoing portfolio and talent investments centered on meeting needs of IT and LOB [line of business] buyers
Cognizant continues to shift its business toward using its Digital Business, where its consultants are housed, as a lead-in to engagements as well as an orchestrator for tying in digital operations and digital systems and technology capabilities. The company recognizes the need to grow its industry-specific and technology-versed consultants, evidenced by the purchase of Top Tier Consulting and planned purchases of two digital agencies in Europe.
Cognizant will need to continue to acquire to extend its onshore presence and build out its industry-specific cloud solutions to help move its market perception from a low-cost services provider to a consulting-led digital transformation services partner.
However, the company may even find greater gains in making this shift by partnering with a traditional consultancy with global and/or regional reach.
Cognizant is building onshore presence in Europe to support its Cognizant Digital Business and how acquiring digital agencies may help Cognizant pivot from outsourcing provider to digital marketing services partner.
- As long as Cognizant maintains revenue growth momentum and closes planned acquisitions, the company will far exceed $14B in 2017
In 3Q17 Cognizant’s total revenue expanded 9.1% year-to-year, reaching $3.77 billion, in line with the company’s guidance for the quarter. Relative to its India-centric peers, Cognizant remained No. 2 in revenue growth, trailing HCL Technologies (HCLT) (11.9%) and growing faster than TCS (8.3%), Infosys (5.5%) and Wipro (4.3%).
We believe the company’s momentum is supported by its efforts to enhance its consulting-led digital solutions capabilities, evidenced by key contracts in the financial services, life sciences and automotive industries. Based on its strong 3Q17 performance, the company adjusted its 2017 guidance up slightly, targeting $14.78 billion to $14.84 billion for the year. TBR expects Cognizant’s 2017 revenue to fall squarely within this range.
However, we note that the company will receive an inorganic boost as TMG Health contributes to 4Q17 and as Cognizant plans to close on the purchases of Netcentric and Zone by the end of the year.